Downpayment for car

[chopra]

Some dealers offee discount for taking longer bigger loans. U need work out e sums.

 

[Mecisteus]

Some dealers offee discount for taking longer bigger loans. U need work out e sums.

They offer discount so as to entice you.

1 party has to lose and the other has to gain.

If a bigger loan is beneficial to the dealer, then buyer has to lose out on the savings.

 

[chopra]

They offer discount so as to entice you.

1 party has to lose and the other has to gain.

If a bigger loan is beneficial to the dealer, then buyer has to lose out on the savings.

Intuitively yes.

For my case specifically, it was better taking a longer loan. I have worked out all scenarios to arrive at my decision. The breakeven point for my case was around 2.3 opportunity cost which i can beat at current ocbc360/uob1/maybank/bocssv climate.


2yr
2 yr rule 78
3yr
3yr rule 78
5yr + $2k discount
5yr + $2k discount + rule 78

 

[DeadPeople]

i agree.. i personally know more than 10 people who pay full cash, or full downpayment for cars at one shot.

your connecction to the richest is good.. mine is opposite.. know less than 10 ..

:

 

[mcylo]

I can see some of you guys here are hopeless in understanding the different type of interest. A car loan does not use interest rate on reducing balance like a mortgage loan. Interest rate on reducing balance is also effective interest rate since you only pay interest on what you owe. A car loan quote a simple interest rate aka a fixed rate base on the amount you borrowed and not the amount you owe. Let's say you take a car loan of 100k of 2.78% interest for 5 years, it mean that you pay interest of $2.78k every year even when the amount you owe decrease over time. To answer your question, a FD of 4% is lesser than the effective interest rate of the car loan of >5% so you should pay off the car loan ASAP. 2.78% is not effective interest rate, go and learn some finance if you still don't understand.

Well i m not surprise. Some of my friends even did an over loan in order to pay for road tax and insurance

Needless to say, the sales agent happy like ****. It a "win win" situation for everyone

 

[wahkao3]

Well i m not surprise. Some of my friends even did an over loan in order to pay for road tax and insurance

Needless to say, the sales agent happy like ****. It a "win win" situation for everyone

become slave to the bank
that's not wise

 

[mcylo]

become slave to the bank
that's not wise

U think they care? Some of the ppl have car drive they happy lor, worry later.

100% loan, 10 years repayment. Drive new car out of the show room. During festive session drive whole kampung out, very satki

 

[trd2970]

Depends la
Some people need liquidity for other things eg down payment for property

 

[focus1974]

For cars.. even if i can pay in full.. i am willing to take as much loan as they allow me.

I dont mind paying the interest .

the assumption here is .. i can make more than the 5% within the 7yrs timeframe.

 

[dork32]

For cars.. even if i can pay in full.. i am willing to take as much loan as they allow me.

I dont mind paying the interest .

the assumption here is .. i can make more than the 5% within the 7yrs timeframe.

even if you can make 5%, you still lose out.

the 2.75% interest charged is more than 5% effective.

 

[wahkao3]

For cars.. even if i can pay in full.. i am willing to take as much loan as they allow me.

I dont mind paying the interest .

the assumption here is .. i can make more than the 5% within the 7yrs timeframe.

how about...... thinking that you are buying a 100% risk free bond that yield 5%?

good deal?

 

[Happygirlzz]

Depends la
Some people need liquidity for other things eg down payment for property

ya lor.,,,, i agree

 

[focus1974]

how about...... thinking that you are buying a 100% risk free bond that yield 5%?

good deal?

how abot you think of it this way..
I never touched the capital ..and only used passive income to pay for the car..

 

[dork32]

how abot you think of it this way..
I never touched the capital ..and only used passive income to pay for the car..

unless your passive income is earning more than the 5++% interest, you would be better off not taking the loan

 

[Mecisteus]

how abot you think of it this way..
I never touched the capital ..and only used passive income to pay for the car..

it is not right to think it that way.

i am earning salaries more than i spend. does it mean i eat and travel for free?

 

[V_for_Vanilla]

unless your passive income is earning more than the 5++% interest, you would be better off not taking the loan

I did a side by side comparison before. It is better to take the loan and invest the now-available cash. No need 5++% return. Even at 3% return the overall car depreciation is lower than not taking loan.

 

[focus1974]

I think all the answers to the question are right.
Because it all depends on the personal circumstances and how the person manages the money.

For example, if you buy a car that cost you an installment of $1000 monthly.
Your passive income (like stockbot) generates $1,000 monthly.

Would you choose to pay in FULL Cash or would you just take the $1000 monthly installment(without touching the capital). again, have to assume , if the person do pay in full, he has to take out part of the capital which helped him generate the $1,000 passive income, which means he might be down to $800-900 income per month (not for 5yrs, but for the whole of the duration assuming again market don't go anywhere and he's stuck with the dividend yield which is unchanged...again assumption).

To top it off.. if the person is investment saavy and have proven himself to be able to generate at least 50% return on his investment within a 5 year cycle. Would he be better off investing it or paying down in full. It really depends on the person's appetite for risk and aptitude for investing.

This is discretionary spending ..so there is no right or wrong.. really..
it's like why some buy a mercs instead of a toyota given that the wiser choice would be to buy the cheaper one since all cars last 10yrs in Singapore.

 

[dest1ny]

U think they care? Some of the ppl have car drive they happy lor, worry later.

100% loan, 10 years repayment. Drive new car out of the show room. During festive session drive whole kampung out, very satki

yeah tons of people have these kind of mentality nowadays. That's why when they retire they have no money

 

[wahkao3]

I did a side by side comparison before. It is better to take the loan and invest the now-available cash. No need 5++% return. Even at 3% return the overall car depreciation is lower than not taking loan.

why u suddenly mentioned car depreciation?

 

[wahkao3]

To top it off.. if the person is investment saavy and have proven himself to be able to generate at least 50% return on his investment within a 5 year cycle. Would he be better off investing it or paying down in full. It really depends on the person's appetite for risk and aptitude for investing.

problem is most ppl are not savy.. 80% make less than 2.5% and are better off putting them into cPF


but i think for u, should be ok. U are pretty savy
let me GPGT some stats