Jump to content
ferrytales

Why you should NEVER do $0 driveaway or 10 years loan

Recommended Posts

Supersonic
2 hours ago, thebutcher said:

Nothing wrong in getting a car loan if he/she can service the payments. 

Same like housing. 

Housing is a need. And housing isnt cheap, something that u cant pay full easily. 
 

unlike car u got the option to buy brand new or coe car or opt for public transport. Getting a car is more of want than need. Its also a depreciating asset, so u take loan, pay more interest just to depreciate more. 
 

 

↡ Advertisement
  • Praise 3

Share this post


Link to post
Share on other sites
6th Gear

Just don’t wear a bigger hat than your head in summary. 

  • Praise 2

Share this post


Link to post
Share on other sites
Turbocharged
5 minutes ago, Daniu82 said:

Just don’t wear a bigger hat than your head in summary. 

Fake it till you make it

  • Praise 1

Share this post


Link to post
Share on other sites
Twincharged (edited)
5 hours ago, Macrosszero said:

I took loan even though can full cash because the finance rebate let me put the proceeds from the loan into a FD that earned me a few hundred dollars more at the end of the loan lock out period. 
 

But if you need a loan to afford the car you want then you must really consider the stability of your income.

There is nothing wrong with your case of taking loan and neither his case of full cash,  but i am curious where to find a FD that offers a higher interest than car loan interest ?  Many full cash MCFers are waiting for that, other than full cash for cars , they still have a lot of full cash waiting to put in high interest FD.😅

Edited by Ct3833
  • Praise 1
  • Haha! 3

Share this post


Link to post
Share on other sites
Moderator
7 hours ago, RadX said:

And can see quite a no of idealistic ppl too... high coe.. high selling bla bla 

wonder which well sgp has? That keeps these

Pulau Ubin well. 

Share this post


Link to post
Share on other sites
Twincharged
8 hours ago, Philipkee said:

 ......

 So I think his point is dont think $0 driveway is lose money.  Either it is lost up front or later.  All will lose money anyway unless you hold a car till ten years or you are lucky to buy at low COE and sell at high COE or you get a model of car that is in really great demand at point of selling.

......

it is not about the difference between losing up front and losing later, the real difference is : 

Pay upfront with a smaller loan amount and shorter loan period 

- relative to the $0 payment, the interest rate and net interest amount will be smaller for one who pay more $ upfront.  

- when selling the car a few years down the road, he does not have to fork out additional cash before selling his car.

$0 upfront cash with 10 year loan

- higher interest % and much higher net interest amount to be paid

- when selling the car a few years down the road, this person will have to fork out cash top up before he could sell off his car, but he may(likely will)  not have enough money to top up the difference.  

 

  • Praise 1

Share this post


Link to post
Share on other sites
4th Gear (edited)

Great discussion fellow mcf-ers, hope this gains more awareness so lesser people will fall into the debt trap. 

Especially with the rising coe now and more people aspiring to own a car, hat is gonna get bigger with more fanciful loan schemes. Most of these loans are offered in house and interest rates are absolutely batshit insane. 

 

Edited by ferrytales

Share this post


Link to post
Share on other sites

4th Gear (edited)
13 hours ago, thebutcher said:

Bro, depre not exactly linear.. The 6.5k is averaged out over its COE life.. 

If you sell off the car in the 3rd or 4th year, the depre can be up to 10k.

You are right actually with my calculations, already lost 77k which is truckloads within the first 3 years. 

I don't even wanna calculate what's the depre for that 77k. 🙄

Edited by ferrytales

Share this post


Link to post
Share on other sites
4th Gear
1 hour ago, Daniu82 said:

Just don’t wear a bigger hat than your head in summary. 

I was at the mercs showroom a while back and I saw the SE frantically doing calculations for the customer too. Same for audi where the SE did the same for the customer.

Share this post


Link to post
Share on other sites
Turbocharged
7 hours ago, Ct3833 said:

There is nothing wrong with your case of taking loan and neither his case of full cash,  but i am curious where to find a FD that offers a higher interest than car loan interest ?  Many full cash MCFers are waiting for that, other than full cash for cars , they still have a lot of full cash waiting to put in high interest FD.😅

I think he mentioned finance rebate plus FD interest made it more worthwhile to take loan vs full cash. 

  • Praise 1

Share this post


Link to post
Share on other sites
Twincharged
7 hours ago, Ct3833 said:

it is not about the difference between losing up front and losing later, the real difference is : 

Pay upfront with a smaller loan amount and shorter loan period 

- relative to the $0 payment, the interest rate and net interest amount will be smaller for one who pay more $ upfront.  

- when selling the car a few years down the road, he does not have to fork out additional cash before selling his car.

$0 upfront cash with 10 year loan

- higher interest % and much higher net interest amount to be paid

- when selling the car a few years down the road, this person will have to fork out cash top up before he could sell off his car, but he may(likely will)  not have enough money to top up the difference.  

 

I agree.  

But we have this thing called COE. If it spikes, even $0 driveway, you still make money.

Some people are probably banging on this also. 

It happened before.  So people bang on it happening again.

  • Praise 1

Share this post


Link to post
Share on other sites
Turbocharged
17 minutes ago, Philipkee said:

I agree.  

But we have this thing called COE. If it spikes, even $0 driveway, you still make money.

Some people are probably banging on this also. 

It happened before.  So people bang on it happening again.

Sure but unless you give up driving or have multiple cars to sell. I think there are better ways to make money work rather than punting on coe. 

  • Praise 1
  • Haha! 1

Share this post


Link to post
Share on other sites
Turbocharged
12 hours ago, thebutcher said:

Bro, with this logic, the whole of singapore must really consider the stability of our incomes before getting a house. 

That’s how the subprime started. Over leverage .. 

During that era bus driver in US were buying 4 to 5 houses without much care as if anything happened they loose their Low Low deposits. If cannot pay up the bank holds the baby of all the loan

Share this post


Link to post
Share on other sites
2nd Gear (edited)
7 hours ago, ferrytales said:

I was at the mercs showroom a while back and I saw the SE frantically doing calculations for the customer too. Same for audi where the SE did the same for the customer.

Had the impression, people can still afford despite the recession. However the real scenario , they no money still want to buy🤣

Edited by Ginyu

Share this post


Link to post
Share on other sites
Twincharged
7 hours ago, ferrytales said:

I was at the mercs showroom a while back and I saw the SE frantically doing calculations for the customer too. Same for audi where the SE did the same for the customer.

It's either there are rich people or the coffee is really good.

True story.  :D

Serious.  But better not say more before I get blacklisted from car showrooms.

  • Haha! 2

Share this post


Link to post
Share on other sites
Turbocharged
9 hours ago, Ct3833 said:

There is nothing wrong with your case of taking loan and neither his case of full cash,  but i am curious where to find a FD that offers a higher interest than car loan interest ?  Many full cash MCFers are waiting for that, other than full cash for cars , they still have a lot of full cash waiting to put in high interest FD.😅

Come I do the math for you

Mandatory loan was 50k for 5 years at 1.99%. 

Rebate was $1500.

The plan was to take that 50k to a CIMB fixed deposit for a year at 1.85% and redeem the loan after a year. This was for late 2019.

Interest incurred at the end of year 1 would be $995 + 20% of the remaining 4 years’ interest under rule 78 which would be $796 for a total of $1791.

Taking the rebate ($1500) and adding the $925 earned from the 1.85% FD I am up $2425 as opposed to the interest and penalties incurred from taking the loan for a year and then ending it early.

Its not a lot, but if it’s there, why not?

  • Praise 3

Share this post


Link to post
Share on other sites
Twincharged
2 hours ago, Mkl22 said:

I think he mentioned finance rebate plus FD interest made it more worthwhile to take loan vs full cash. 

Seriously!

Additional 2k to 3k upfront penalty for no loan relative to interest rate over 5/7/10 years and FD rate better?😬

 

 

↡ Advertisement

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×