Break Even

[Dreamer_toons]

Hi all, I had heard pple saying they will wait till 'break even', then change car. How to calculate this 'break even', any formulas?

 

I have a old ride, registered in 92 and coe expires in 2011. The last monthly instalment will be in 2010, which left me 1 yr free. COE that time was 18444. So how to calculate the break even?

[Swatdila]

breakeven point simply is the point where your scrap value of your car is more or equals to your outstanding loan amt....

[Greekgod]

is rule 78 used to calculate your outstanding loan?

[Greekgod]

If I take a full loan, 10 yrs, is it true that on average, I can breakeven in 5-6yrs time?

[Swatdila]

i doubt so. 100% loan n calculating worst case scenario, breaeven will be abt 8yrs. rough estimate la.

 

just fyi, i got an 80% loan for 7yrs, based on my coe, omv, my breakeven is 4.5yrs...

[Lucien]

Break even is as to say

 

Outstanding Loan VS Car Worth(PARF+COE)

Everyone's break even is different, depend on the amt you loan.

 

You loan 80% or you loan 100%, of course 80% faster.

For those who actually loan 100% @ 10yrs. There is no break event point. Cuz by the time you spend paying up, ur car is 0% ARF value COE is also 0.

[Kanr]

definitively a right item to use??

[Dutch]

buy used car with high coe, you will see it is earlier to break even, low price = less interest.

[Wrath]

really?

[Drumstick]

People always talk about break even and change car every 3 yrs.

To calculate it, take 60%-70%, 7 yrs loan.

Eg.

car = $60k

Deposit = 20k

Loan = 40k

Monthly = 570 (include interest) 7 yrs loan

 

Balance 4yrs = $27360

Scrap price for a 3 yr old car worth 60k on the average is 30k

 

$30k - $27360 = $2460 (break even or gain back rebates)

[Jrage]

Normally for breakeven, ppl only consider :-

1) Any downpayment

2) COE price / OMV

3) Interest rate

4) Tenor

5) any cash rebate

6) the 78 rule, you buy under hire purchase or others.

 

However, you also need consider the following :-

1.Upfront cost ( for 2nd hand car , you need to pay for transfer fee etc outside your loan)

 

In most case now, it make more sense to buy a new car than a 2nd hand if you taking a full loan.

1) interest for new car ~ 2.5- 3% , while 2nd hand is at 3.2 ~ 4.0%

2) You need to pay transfer fee, renew roadtax etc

3) Difficult to sell the car after 3-5 yrs because the remain age.

 

However, 1 thing is true, 2nd hand car has lower depreciation because of higher COE. But beware of the high interest cos' it is 30% more :P

Edited February 2, 2007 by Jrage

[Keltai]

hmmmm.......????

[Car4u]

its a expenses after all isn't it

?

[Throttle2]

my personal rule in buying a car is that i make sure that i more than breakeven on the first day i drive it out of the garage, otherwise i deem that i cant afford it and wont buy it.

 

This one, learn from my father.

[Redwood]

Hi all, I had heard pple saying they will wait till 'break even', then change car. How to calculate this 'break even', any formulas?

 

I have a old ride, registered in 92 and coe expires in 2011. The last monthly instalment will be in 2010, which left me 1 yr free. COE that time was 18444. So how to calculate the break even?

 

 

Your car registered in 1992. So now it's a COE car. PARF value is 0 since more than ten years. Thus your breakeven equation should be:

 

COE Rebate + Interest Rebate + Scrap Metal Value + Mthly-Car Install X (Months) = Loan Amt

1. For simplicity, scrap metal you can assume 0, meaning the metal is not worth a cent.

2. COE Rebate = (Remaining COE in month)*COE Amt/120

3. Interest Rebate is base on Rule 78.

4. Loan Amt is inclusive of interest.

 

The unknown in the above equation is only Months . Due to Rule 78, the equation is a second degree polynomial and Month is the variable that you wants to find.

Edited January 19, 2008 by Redwood

[Redwood]

This is a very good rule to apply.

 

A rule of thumb for down-payment so that once you brought the car, it's considered as break-even.

 

Down-payment = Car-Price - (0.825*OMV + COE) ---- (1)

Example, Car-Price = $60k, OMV = $12k, COE = $14k

Down-payment = $60k - (0.825*12k + 14k) = $36,100

 

Loan year and interest rate is immaterial in the equation 1 if there is no early redemption charges from the bank base on rule 78, thus the only variable that we can play with is down-payment. If there is penalty, the equation will be slightly different and of course more interesting depending on how the bank calculates the penalty.

[Chrispie]

Use this xxxxxxx.com website.. can show you the payment plan and breakeven month by month.. very useful

[Subaru003]

Erm, can procide more details on where I can find the info?

 

Tx in advance.