Lowest Effective Interest rate for car loan

[chopra]

Hi,

I'm a first timer here in terms of buying a car. I have 3 questions here and wld like to consult u all.

1. Does anyone know what's the lowest car loan in the market right now?

2. I visited Borneo Motors. The salesperson told me that I would need to take up a loan with their ASSOCIATED Bank, in order to get rebates.
Am I allowed to secure my own car loan with other banks instead?

3. I was using the following calculator to calculate the EFFECTIVE interest rate and realise Citi Direct is v low, i.e. 2.85%, for a $60k loan for 5years.
This means i can park $60k in 3.55% BOC Smartsaver and arbitrage on this. Is there any catch?


www.onemotoring.com.sg/publish/onemotoring/en/autoshop/car_loan_calculator.html
Results (with the rate you are getting) /Results (with a Citi Direct Car Loan)

Monthly Installment:
$ 1114/$ 1074

Flat Add-on Interest Rate:
2.28%/1.48%

Total Interest Paid:
$ 6840/$ 4440

Effective interest rate based on my annuity calculation:
4.34%/2.85%

 

[SBS2716G]

If u use citi direct then u won't enjoy the finance rebate given by BM ( maybe $1000-$2000) so the interest is not much different.

 

[chopra]

If u use citi direct then u won't enjoy the finance rebate given by BM ( maybe $1000-$2000) so the interest is not much different.

True. So the effective i/r is like 2.XX% only!
Sounds wonderful to arbitrage!

 

[chopra]

Newbie here.

Can I also confirm take loan is the best way, even if you have the $ to pay in full, is simply because of the
1. purchase rebates if you take up the borneo motors car loan
2. Rule of '78'. Borrow 1 year car loan of $30k and pay 1 month into the car purchase. Cost of extra saving = (~0.8) * (11*12)/(12*13) * 30000 * i/r

 

[Shingoz]

I don't think rebate will be more than discount. Else dealer earn lesser....

They usually ask u to take large loan and long duration. Then give u some discount
Unless u are good with investment can use cash off hand to invest.

 

[dork32]

I don't think rebate will be more than discount. Else dealer earn lesser....

They usually ask u to take large loan and long duration. Then give u some discount
Unless u are good with investment can use cash off hand to invest.

wrong, for mitsubishi lancer: discount is more than interest rate.

Discount is now 7k
Interest is 2.48% on 50k for 5 year = 6.2k

 

[chopra]

ith investment can use cash off hand to invest.

Yes, i already mentioned - BOC Smartsaver at 3.55%.

 

[Shingoz]

Does this make business sense? For a bank loan, they don't even get 100% commission, maybe 30%? Not sure if anyone has more info
...

wrong, for mitsubishi lancer: discount is more than interest rate.

Discount is now 7k
Interest is 2.48% on 50k for 5 year = 6.2k

 

[Shingoz]

Oh sorry I missed this. Hmm sounds like a good deal. But 3.55%?! Wow I'll read up on this haha

Yes, i already mentioned - BOC Smartsaver at 3.55%.

 

[Shingoz]

Oh sorry I missed this. Hmm sounds like a good deal. But 3.55%?! Wow I'll read up on this haha

It's not a straight forward fixed deposit.. So much requirements and fine prints... I think interest given could be pro rated too....dun think can it's worth all the trouble.

http://www.bankofchina.com/sg/pbservice/pb1/201510/t20151023_5857863.html

 

[dork32]

Does this make business sense? For a bank loan, they don't even get 100% commission, maybe 30%? Not sure if anyone has more info
...

you are right, it makes no business sense. i am not working as a car distributor. i also dont know why.

 

[chopra]

Does this make business sense? For a bank loan, they don't even get 100% commission, maybe 30%? Not sure if anyone has more info
...

put it this way.
i can pay in full. but borneo motors told me if i get a bank loan for a year, i get $2k rebate.


I even wrote into MAS+Bank association + Credit bureau to tell them to moderate the banking-car industry. Something is not right. Prices are highly marked up, and forcing ppl to get into debt.

 

[playstation76]

put it this way.
i can pay in full. but borneo motors told me if i get a bank loan for a year, i get $2k rebate.


I even wrote into MAS+Bank association + Credit bureau to tell them to moderate the banking-car industry. Something is not right. Prices are highly marked up, and forcing ppl to get into debt.

Pay in full? Looking at the way you calculate until crazy in the other thread, I say you better dun tua kang

 

[chopra]

This is not edmw. Intent is to do ample homework, optimise finance, and know all the options.

Sent from ew line is so sloooow using GAGT

 

[dork32]

This is not edmw. Intent is to do ample homework, optimise finance, and know all the options.

Sent from ew line is so sloooow using GAGT

sorry it is do not get angry. edited

do not have to get angry with this guy. he goes around scolding and doubting everyone in the cars forum. he scolded me before as well.

my car is now 1 month old. i went through all the calculations, considered all the permutations and combinations before buying my car. I paid my car in full (0 loan) but still i wanted to squeeze every cent out of the money i earn

 

[playstation76]

This is not edmw. Intent is to do ample homework, optimise finance, and know all the options.

Sent from ew line is so sloooow using GAGT

Then which car u buying?

 

[Shingoz]

If ts needs to to take their loan, then getting 2k rebate is not alot for 6k interest paid.

End up paying 4k more.

If u use citi direct then u won't enjoy the finance rebate given by BM ( maybe $1000-$2000) so the interest is not much different.

 

[dork32]

If ts needs to to take their loan, then getting 2k rebate is not alot for 6k interest paid.

End up paying 4k more.

but if you take a loan, you will have cash on hand. this cash can be invested to earn interest/dividend. there are so many banks giving nice interest rates now. i see the interest rising in the years to come.

the calculation should be 2k + interest earn greater or less than 6k

 

[Flex11]

If ts needs to to take their loan, then getting 2k rebate is not alot for 6k interest paid.

End up paying 4k more.

But TS is looking to put the funds on hand into higher yield savings account like BOC Smartsaver at 3.55%

 

[dnsfpl]

Does this make business sense? For a bank loan, they don't even get 100% commission, maybe 30%? Not sure if anyone has more info
...

10 years ago, i took 1 year loan due to $1500 rebate

save like $700