Car loan cash rebate - Hong Leong Finance
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Hi,
I went down to Mazda showroom and the SE told me that if I take the Hong Leong Finance loan for 10 years, I could get the 20% case rebate on interest. This guy said the cash rebate which is based on my loan amount is one time full payment 3-weeks after the car is registered.
Is this true ? I keep asking the SE and he said he has to submit the loan application which mean I have to commit first.
Anyone taking such loan which has a cash rebate (one-time full payment and not like every month pay back $30-$40 ?
On the other hand I think this kind of cash rebate might have a lot of "restrictions" and tough terms and conditions when we want to sell or settle the car before fulfilling the 10 years loan tenure.
Any guys take such loan ? Care to share your experience. Thanks ! -
Cash rebates is very common these days to attract pple to take up more loans. It's true that you may see a lum sum given to you by check after 3 weeks from the bank (upon your loan kick started).
There's a catch, If you refinancing/selling your car before the loan period, you may need to return the prorated amount back to them.
2nd, as if you take 10 years, you must commit for at least 5 years, Else, Rules 78 will applies.. Another penalty I guess... More details.. Ask your Bankers!
I also agak agak.. onnnie! -
Hi,
I took HL car loan 4 years ago, and I just recently redeemed early my car loan with them. Let me tell you, their loan terms and conditions are not attractive.
I suggest you go for DBS auto loan, which could be paid by credit card, and with other benefits.
DBS just advertised their auto loan on Sat Straits times.
HL auto loan at 2.45% for 10 years.
20% rebate means 1.99%, it's standard.
You should check if there is any additional penalty if you redeem loan early, besides the standard rule of 78 penalty.
Normally there is "no free lunch" with promotion, with lots of restrictions.
Compared to BM HSBC loan offers 12 mth interest rate rebate for 7 years, effectively at 1.89%.
Smarter way will be to take normal loan(non-promotional loan package), with lock-in period of 1 year.
Then re-finance from 2nd year onwards at 1.6% from other banks. -
However, when you considering a new car. You have to take up their financial loans. Else, there will be void of Car rebates. As for MM, you may need to pay up addition 4k if you choose not to finance your car with their financer.
This happens to almost all of the dealers (eg. TC, BM etc) -
If MM really charge additional 4K if not taking up their finance package, then MM is special...
MM is not in the top 3 dealers for car market share, I am surprise they have these 4K additional if finance from other banks.
BM is different. More reasonable.
If buy vios/Altis, HSBC rebate is $1500. Minimum loan amount is 20K, Minimum loan period is 1 year. Generally, loan lock-in period is 1 year, except if take their promotional 12mth interest rate rebate package ( lock -in 2 years).
The interesting part here --> If take 20K loan for 1 year, total interest is $440 with 2.2%. Hence, after 1 year, effective difference is HSBC rebate ( 1500) minus $440, equals $1060 gain by buyer. Rule of 78 does not apply here because it's 1 year loan here.
In the long term, I still feel that 1.6% or lower will be available, even 1 year from now.
Reasons :
(1) Singapore interest rate is not really correlated with rising US Fed interest rate.
(2) Govt forecast economic slow down for this year, with GDP growth bet 3 to 5 %. Partly due to the high crude oil price effects. Hence, loan demand will slow due to slowing economic activity.
(3) Govt direction is towards lower car ownership cost gradually, with potential further ARF cut during Feb annual finance budget in parliment. Also, with record 2004 number of car scrap, LTA may release even more COE from Apr to Sep 2005. And this will see more people buying cars, auto loan market will become more competitive, and banks and Finance will need to come out more attractive, competitive loan package to grab greater share of the lucrative auto loan market.
So....Why tied up with 10 year loan, with those many restrictions/penalty if redeem early, when there are many other attractive loan packages from other banks ? -
do calculation, and findout when can breakeven. best is 5 year; i think!
car over 5 year, maintenance cost go up and car value go down alot. Maybe next 5 year, COE might go lower and lower. I have my 1st car with COE 40K++, 6 year later, COE drop to 25K. Then I get a new car with COE 27K, just less than a year, now it is 18K!
Try to shorten the loan if posible, else might you have to drive a old car with same cost or higher compare with new car. -
Originally posted by vicky05:
Rule of 78 applies regardless of how long you commit to your loan. As long as you settle your loan early, you are subjected to it.
[b]Cash rebates is very common these days to attract pple to take up more loans. It's true that you may see a lum sum given to you by check after 3 weeks from the bank (upon your loan kick started).
There's a catch, If you refinancing/selling your car before the loan period, you may need to return the prorated amount back to them.
2nd, as if you take 10 years, you must commit for at least 5 years, Else, Rules 78 will applies.. Another penalty I guess... More details.. Ask your Bankers!
[b]
Lock-in period: if you settle your loan before this period, you are liable to pay back all the cash rebate, plus you are subjected to Rule of 78 as well. -
An even smarter way is to choose a package with NO lock-in period. Why choose to be tied down for 1 year if there is nothing to gain?Originally posted by owak:Smarter way will be to take normal loan(non-promotional loan package), with lock-in period of 1 year.
Then re-finance from 2nd year onwards at 1.6% from other banks.
If you want to refinance, why wait till the 2nd year? Under Rule of 78, the longer you drag, the lower the interest rebate will become.
Besides, the 1.6% loan might not be available anymore 1 year down the road. -
The best rebate is still to take a shorter and smaller loan.Originally posted by wt_know:Hi,
I went down to Mazda showroom and the SE told me that if I take the Hong Leong Finance loan for 10 years, I could get the 20% case rebate on interest. This guy said the cash rebate which is based on my loan amount is one time full payment 3-weeks after the car is registered.
Is this true ? I keep asking the SE and he said he has to submit the loan application which mean I have to commit first.
Anyone taking such loan which has a cash rebate (one-time full payment and not like every month pay back $30-$40 ?
On the other hand I think this kind of cash rebate might have a lot of "restrictions" and tough terms and conditions when we want to sell or settle the car before fulfilling the 10 years loan tenure.
Any guys take such loan ? Care to share your experience. Thanks ! -
Sorry, but what is Rule of 78? Anyone can explain?? ThanksOriginally posted by mushigen:Rule of 78 applies regardless of how long you commit to your loan. As long as you settle your loan early, you are subjected to it.
Lock-in period: if you settle your loan before this period, you are liable to pay back all the cash rebate, plus you are subjected to Rule of 78 as well.
!! -
It is a funny rule that determind the amount of interest you pay during the first few years of your loan. For example, if you take a $100,000 loan for 10 year @ 2.45% interest, you total payable interest will be 2.45%x100,000x10=$24500.Originally posted by DarthVdr:Sorry, but what is Rule of 78? Anyone can explain?? Thanks !!
If you dont know rule78, you will probable assume that your monthly interest payment is 24500/10years/12month = $204. (ie. every month you pay your installment, $204 is used to pay your interest). And this is the WRONG and this is the CATCH.
In rule 78, the installment you pay in the first few years, most of it will be used to pay the interest instead of the $204 you have calculated. So the bank is actually drawing all the profit from you first before using your monthly payment to settle your principle loan amount.
So if you decided to sell the car by the 3rd year, you will realise that what you have been paying so far are mostly interest and only a small percentage are used to settle your principle. -
Thanks for the info. But will the banks let you know the percentage of the monthly installments that is used to offset the interest upfront?Originally posted by Gazelle:It is a funny rule that determind the amount of interest you pay during the first few years of your loan. For example, if you take a $100,000 loan for 10 year @ 2.45% interest, you total payable interest will be 2.45%x100,000x10=$24500.
If you dont know rule78, you will probable assume that your monthly interest payment is 24500/10years/12month = $204. (ie. every month you pay your installment, $204 is used to pay your interest). And this is the WRONG and this is the CATCH.
In rule 78, the installment you pay in the first few years, most of it will be used to pay the interest instead of the $204 you have calculated. So the bank is actually drawing all the profit from you first before using your monthly payment to settle your principle loan amount.
So if you decided to sell the car by the 3rd year, you will realise that what you have been paying so far are mostly interest and only a small percentage are used to settle your principle. -
http://www.sgforums.com/?action=thread_display&thread_id=76762Originally posted by DarthVdr:Thanks for the info. But will the banks let you know the percentage of the monthly installments that is used to offset the interest upfront? -
1 year lock-in is actually quite reasonable. I dun think anyone in the right mind will change a car within 1 year unless he has lots of cash to throw down the drain.Originally posted by mushigen:An even smarter way is to choose a package with NO lock-in period. Why choose to be tied down for 1 year if there is nothing to gain?
If you want to refinance, why wait till the 2nd year? Under Rule of 78, the longer you drag, the lower the interest rebate will become.
Besides, the 1.6% loan might not be available anymore 1 year down the road.
Also, there's not many finance product on the market without lock-in. Consumers are now acustomed to some sort of freebies & goodies thrown in. Matter made worse by dealer who insisted buyer take their in-hse finance or risk cash penalty.
1.6% interest may sound low now, but who knows it will go even lower. Just like COE, nobody expect it to go so low now. Just my 2 cents worth of opinion. -
here is the rule78 calculator http://cgi.uticaod.com/cgi-bin/calc/rule78.cgiOriginally posted by DarthVdr:Thanks for the info. But will the banks let you know the percentage of the monthly installments that is used to offset the interest upfront?
you can see how bank "eat" your hard earn money.
theoritically, rule78 means
1st year = 19% of the total interest
2nd year = another 17% of the total interest
3rd year = 15% of the total interest
if you settle your loan after 36 months, the bank already earn 51% of the interest of what they suppose to earn you in total 100% ... whether you are taking 7 years or 10 years loan. so they are not worry whether you want to cancel or fully settle your loan because they will try to earn as much as possible in the first 3 years.