how to calculate

• wuming78

  30 Jan 06, 22:29

  when a first-hand car "breaks even"? simply put, if one intends to sell his first-hand car with the intention of changing his car, how does he know when would be the time to sell his car, so that he can keep his losses to the minimum?
• irage

  31 Jan 06, 01:00

  Very interesting question about breakeven. I thought you can only breakeven when there are returns. Bro, car is about losing $$$.
• kentheman

  31 Jan 06, 01:15

  Originally posted by irage:

  Very interesting question about breakeven. I thought you can only breakeven when there are returns. Bro, car is about losing $$$.

  i think in sg context, breakeven means when u sell away ur car, u dun have to repay anything to bank... some cars breakeven in 5 yrs, some longer, some shorter...factors tt affect breakeven point will be amt loaned and how long...the longer and more u loan, the longer ur breakeven point..
• wuming78

  31 Jan 06, 09:57

  Originally posted by kentheman:

  i think in sg context, breakeven means when u sell away ur car, u dun have to repay anything to bank... some cars breakeven in 5 yrs, some longer, some shorter...factors tt affect breakeven point will be amt loaned and how long...the longer and more u loan, the longer ur breakeven point..

  ok. so how do i determine this "break-even" point? yes the word is probably used wrongly but well, that is the only term i know and have heard being used in this context.
• sohigh99

  31 Jan 06, 11:21

  My Own Method:
  Balance=(Loan Balance)
  - [(Down Payment)
  +(Trade In Amount, Or Scrap Value)
  +(Interest Rebate)
  +(COE Rebate, if any)+(Some Rebate)]
  
  - Loan Principle=(List Price + Interest)
  - Loan Balance=(Loan Principle - Amount Paid)
  - Trade In Amount=The amount you can fetch from 1st car
  - Interest Rebate {(Year till mature)*(Interest Rate)*0.01}
  - COE Rebate (for example, signed COE was 12,000 but bid COE is 9,000, then you may get 3,000 rebate)
  - Other Rebate (e.g., 3 month free installment etc.)
  
  Examaple:
  - List Price of 1st Car: 100,000
  - Interest Rate: 2.5% per Year (3 year ago for example)
  - 7 years bank loan=84Months
  - Downpayment: 20,000
  - Loan Principle: (100,000-20,000)+80,000*7*0.025=94,000
  - Interest to Pay: 14,000
  - Monthly Amount to Pay=1,120
  
  Now I want to change current car after 3 years driving:
  - Total Loan Paid=1120*36=40,320
  - Bank Loan Balance=94,000-40,320=53,680
  - Interest for 4 left years=14,000*4/7=8,000=Interest Rebate
  - Trade In Amount=65,000 (Depreciated 35,000 the 1st 3 years)
  - COE Rebate=3,000
  
  Target=53,680-(65,000+8,000+3,000+2,000)=-24,320
  For this example 24,320 can be cach on hand which can be used for downpayment for new car purchase.
  
  * Other consideration
  - COE Price
  - Interest Rate Change
  - Gas Price
  
  Please note that I did not calculate this conservative manner, as I need to justify my changing car every three years to my family members.
  
  The amount I've lost by owing a car is too big but I could not resist the charm of the latest cars.
  
  CONCLUSION: 3 year seems acceptible for me.