Wise to do early settlement?

[cleavage]

Since my savings bank interest rate is so low now, is it a wise move to do early settlement for my outstanding car loan? I have paid 2 years out of the 7 years loan at 1.99%. Please advice. Thanks!

 

[EJB]

I did mine at the 3rd year, tired of setting aside the amount every month to do payment.

Free as a bird now. Feeling is good. No liabilities to hold down.

 

[myviowner]

Since my savings bank interest rate is so low now, is it a wise move to do early settlement for my outstanding car loan? I have paid 2 years out of the 7 years loan at 1.99%. Please advice. Thanks!

Financially allows why not?

 

[colin03]

Why not especially if you cannot find a better investment payout of 1.99%

 

[kebinu]

Why not especially if you cannot find a better investment payout of 1.99%

No because you still have to pay 80% of the interest + any admin/early settlement fees.

 

[cleavage]

No because you still have to pay 80% of the interest + any admin/early settlement fees.

Thats what holding me back.. end up i paying more than the original interest rate for the amount that i have paid.. So not sure if it is worth it.

 

[wlalala]

if u dont pay, your money doing what?

If do nothing then might as well just pay it off.

While there's rule of 78 and early settlement penalty fact is still that the earlier you pay it off the less total interest you pay.

 

[TitanSmall]

Thats what holding me back.. end up i paying more than the original interest rate for the amount that i have paid.. So not sure if it is worth it.

But you still save the 20%. No right or wrong. Just see if you think it's worth it

 

[wlalala]

Thats what holding me back.. end up i paying more than the original interest rate for the amount that i have paid.. So not sure if it is worth it.

Sure if you annualised it it's going to be higher. But in terms of total paid, it will be lower.

So unless the money is being invested and growing at a rate higher than the interest rate it makes more sense to pay it off now.

What you really have to look at it is your financial position at the end of the 7 years.

 

[EJB]

No wonder they say SG people like to be in debts, can pay off don't want...

 

[myviowner]

Full cash up front, then no problem like know... settle or dun settle...

 

[kebinu]

$100k loan outstanding with $10k interest, total $110k.

If repay now, pay $108k.
If hold, 5 years pay $110k.

This $108k 1% interest a year, $1.08k interest gained. 5 years, $4k gained assuming $ go lower?

Or is my calculation wrong? I'll only pay off the loan if i'm letting go of the car (sell or trade in), no other reason.

If it's a property loan, it's good to pay off early but since interest rate is so low now, hold it for investment.

 

[mp4005 help]

Just call the bank and check what is the settlement amount all in first ..

Then you will know how much you can save.

Towards the later part of your loan , because of the 1% of loan amount clause , you likely end up losing money if you settle early . Weird but that is the way the formula is.

Rule of 78 * 80% then add 1% of original loan amount.

It really all depends on the total loan quantum and duration of loan.

Hard to advice with all the maths. As you didn't provide the full sums and details.

 

[veryhonestguy]

Citi gold for new account is 0.8% for 6 month haha

Since my savings bank interest rate is so low now, is it a wise move to do early settlement for my outstanding car loan? I have paid 2 years out of the 7 years loan at 1.99%. Please advice. Thanks!

 

[sinicker]

I also intend to pay off. Savings and fixed deposit ir are going down..

But there's also the feeling to change...

 

[warr]

wise or not, only you can tell. but pay 4% effective interest on a car is stupid.
the rich never pays car loans, i.e. not the same as not taking a loan.

 

[mel1888]

If u can, pay off. Couple hundred or thousand saved is still money saved. But times like this is uncertain, if your job is 101% secure and you don't intend to use money for large purchases in the foreseeable future then why don't pay off.

 

[cleavage]

The int is about 9k plus for 7 year loan. I will save about 3k plus if i do early settlement. Also meaning that interest for the past 2 years paid will be 6k plus. Will it make a big difference if i do settlement next year which is at the 3rd year of the loan,

 

[myviowner]

Save 3k liao. Go ahead lor... You buy car in SG is oredi drop pants liao.

 

[itedino]

Pay off early worth it. The interest rates of 1.99% is incurred yearly based on your principal loan amount.

I also left 3 years to clear my car loan. Stuck monthly 1400. Must set aside.