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-   -   What does it mean by No Early Settlement Rebate? (https://forums.hardwarezone.com.sg/cars-cars-204/what-does-mean-no-early-settlement-rebate-6062160.html)

Dumbkkj 14-06-2019 03:38 PM

What does it mean by No Early Settlement Rebate?
 
Hi was recommended by dealer to take up No Early Settlement Rebate to get loan discounts.

What does it mean?

Orphan 14-06-2019 03:57 PM

Quote:

Originally Posted by Dumbkkj (Post 121282243)
Hi was recommended by dealer to take up No Early Settlement Rebate to get loan discounts.

What does it mean?

Using a 5 year loan as example:
When you get a 5 year loan, you can do early settlement before the full 5 years to pay off everything. This way you save on total interests that the bank charges you. (There's normally a penalty to pay, but will be less than the remaining interests).

So for your case, the bank is willing to give you some rebate if you dun try to settle early. They lose a bit of earnings, but potentially keep you as a customer in their books, and can reach out to you to recommend other products.

They might even still give you an option to settle earlier, but charge more penalty than normal.

Dumbkkj 14-06-2019 03:59 PM

Quote:

Originally Posted by Orphan (Post 121282530)
When you get a 5 year loan, you can do early settlement before the full 5 years to pay off everything. Thus way you save on total interests that the bank charges you. (There's normally a penalty to pay, but will be less than the remainung interests).

So for your case, the bank is willing to give you some rebate if you dun try to settle early. They lose a bit of earnings, but potentially keep you as a customer in their books, and can reach out to you to recommend other products.

They might even still give you an option to settle earlier, but charge more penalty than normal.


Thanks for the reply. Does it affect if I take up a loan of 7 years with no early settlement rebate.. But I sell the car at the 3rd year?

Orphan 14-06-2019 04:06 PM

Quote:

Originally Posted by Dumbkkj (Post 121282566)
Thanks for the reply. Does it affect if I take up a loan of 7 years with no early settlement rebate.. But I sell the car at the 3rd year?

Yes, coz generally have to pay back the loan before selling.

However, maybe can chut pattern. See this article:
https://www.finder.com/sell-financed-car

Best is to ask the bank.

giraffey 14-06-2019 04:30 PM

Quote:

Originally Posted by Dumbkkj (Post 121282566)
Thanks for the reply. Does it affect if I take up a loan of 7 years with no early settlement rebate.. But I sell the car at the 3rd year?

Check the terms on what is meant by no early settlement. In the worst case scenario, if you want to sell before the loan amount is repaid fully, the bank may ask for the full sum with interest even for the remaining loan period.

If the discount is insignificant, might be better to go for a normal car loan (more flexibility) . Sometimes, we could have a scenario such as change of car required where the car needs to be sold earlier than expected.

Dumbkkj 14-06-2019 04:52 PM

Quote:

Originally Posted by giraffey (Post 121283046)
Check the terms on what is meant by no early settlement. In the worst case scenario, if you want to sell before the loan amount is repaid fully, the bank may ask for the full sum with interest even for the remaining loan period.

If the discount is insignificant, might be better to go for a normal car loan (more flexibility) . Sometimes, we could have a scenario such as change of car required where the car needs to be sold earlier than expected.

They only give me a $1000 discount for a 40K loan.. So better not to take up right?

anytime 14-06-2019 05:42 PM

Of course no. 40k for just 5 years will cost you around 5k interest

GenuineSeller 19-06-2019 11:31 AM

Normal Case, Say $40K loan, 7yr, 2.28%... Interest payable $6,384 over 7yrs.

After paying for 36mths (3yrs), if you sell your car and make full redemption, the left over interest unpaid is $3,648.... based on Rule 78, you can get back Interest rebate of $2,102.96 (depending on T&C, there might be 20% penalty charge).

SO in your case, even if you sell your car.... you will need to pay $2,102.96.


After 36mths, full settlement amount is:-

Normal without 20% penalty....$24,402.18
Normal with 20% penalty.........$24,822.77
No rebate..............................$26,505.14

veryhonestguy 19-06-2019 12:13 PM

Is ok for non settlement , but max is 5 years loan . 7 years is just too long .

bh10101 19-06-2019 08:22 PM

Quote:

Originally Posted by veryhonestguy (Post 121357842)
Is ok for non settlement , but max is 5 years loan . 7 years is just too long .

:s12: :s12: :s12:

mel1888 20-06-2019 08:41 AM

Quote:

Originally Posted by GenuineSeller (Post 121357129)
Normal Case, Say $40K loan, 7yr, 2.28%... Interest payable $6,384 over 7yrs.

After paying for 36mths (3yrs), if you sell your car and make full redemption, the left over interest unpaid is $3,648.... based on Rule 78, you can get back Interest rebate of $2,102.96 (depending on T&C, there might be 20% penalty charge).

SO in your case, even if you sell your car.... you will need to pay $2,102.96.


After 36mths, full settlement amount is:-

Normal without 20% penalty....$24,402.18
Normal with 20% penalty.........$24,822.77
No rebate..............................$26,505.14

Does interest rebate mean the interest he saves?
If so why he still need to pay tho.

GenuineSeller 20-06-2019 10:08 AM

Quote:

Originally Posted by mel1888 (Post 121370997)
Does interest rebate mean the interest he saves?
If so why he still need to pay tho.

Because he is offered a special term.... for No Early Settlement Rebate. No interest rebate means he has to pay for the entire interest payable.


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