Car loan break even time frame. Pls help

[Duffy]

Dear all,

 

apprecaite any bros out there who can advise the above mentioned cos looking at buying a new car with 10yr or 7 yrs loan but seems like it will take very much loking just to breakeven for car value and loan . target to scrap car b4 5yrs

 

assume the following and figure are estimated.

 

case 1: new car

$80000, omv 24k, parf 13.5k, coe at 17k

10 yr = 80k x 2.8% x 10 yr

=80k + 22400=102400

mthly =102400 / 120=854

total loan repaid=854 x 59mths=50386

scrapped value at 59 mths=parf 13.5 + coe (17k x 0.5)=22000

assume body abt 5k + 22k = 27k

> am i right that scrapped value of car at 5 yr is onli 27k?

if so, 102400 - 50386 - 27000 = 25014

I still have a outstanding loan of 25k at end of 5 yr if i took a 10 yr loan?

 

 

case 2: used car (2 yr old car)drive for balance 35 mth b4 5 yr and took 3 yr loan

buy at 55k, omv 24k, parf 13.5k , coe at 21k

loan=55k x 3.18% x 3 yr=60247

mthly = 60247 / 35 mth =1721

scrapped value of car at 5 yr= parf 13.5k + coe (21k x 0.5) + 5k body =29000

>am i right that since scrapped value is 29k, the 3 yr will cost 60247-29k=31247 / 3 = 10415 yearly depre?

 

really appreciate any kind advise thks.

[Falc]

1. PARF (55% of OMV) is if u scraped at the end of 10 years. If u scrap before end of 5th, IIRC it's 95% thereabouts of OMV.

 

2. If you redeem your loan early, the bank will calculate a rebate on the outstanding interest that you did not use on the period you redeem early. Your outstanding amount for Case 1 at end of 5th year should be abit lesser.

 

Anyway, case 2 makes financial sense for sure, as long as the used car is in good condition.

[Flow]

Bro, u have not factored in the Rule of 78 when calculating your outstanding loan. Rule of 78 entitles you to a rebate of a certain percentage of the total interest.

 

Based on your calculations, the outstanding loan amount after say 5 years will be less than what you have calculated.

[Gz0707]

interesting ... quite rare to see this kinda threads here ...

 

Noted 1 error - ur Parf rebate leve at yr 5 shd be 82.5% of OMV and not 50% (55% is rebated at yr 10).

 

so for case 1, figures shd be :

parf 19.8k + coe 8.5k + body value (if any) 5k = 33.3k

so assuming u have paid up 854 x 59 mths = 50,386, u still owe (102,400-50,386) = 52,014

since ur car value is now 33.3k, so ur balance now is 52,014 - 33,300 = 18,714

btw ur true depreciation for 5 yrs is (102,400 - 33,300)/5 = 13,820

but dont tell anyone, they don't know it themselves either ...

do likewise for case 2.

 

see good egs below ...

http://forums.asiaone.com/showthread.php?t=6201

[Sniperben]

for the first 5 years, you are getting back 82.5% of your OMV rebate. assuming OMV is 24000, the figure should be 19800. plus the COE rebate is 8500 at end of 5 year, rebate should be 28300 instead of what you calculated.

 

taking 80000 loan for 10 years at a interest rate of 2.8%. assume that you paid 59 month already. full settlement figure should be $47385.74. the calculation is assuming that you are only subjected to rule 78 and no other clause.

 

lastly,

 

dude, accord price at 80k+ have OMV of 20000 end to 21000+ only. stream RSZ which is price at 80k+ have OMV at roughly 19000 end to 20000+ also. you sure you can find a new 80000 car that have a OMV of 24000? can intro me this good lobang? thank in advance!

[Gantan88]

I used to calculate a lot on this kinda thingy....

 

Put all the details aside....

 

The fact is, if u take up a 10 years loan with zero down, no way u can break even on the 5th year. on the 8 or 9th year maybe.....

 

Horrible man...

 

So always pay a downpayment and take a 6 or 7 years loan if u dun intend to drive the car until the 9th year....

[Duffy]

thks all for info,

 

always thought (info from friends) that for 7 yr loan breakeven is abt 3 yr and 10 yr loan, breakeven is 5 yr......

 

so scary to think that many took 10 yr ever since govt change the parf system..... wonder did they know abt this....moreover.... cash rebate.....

[Evilernie]

Guys if I intend to get a brand new car say abot $70K, but currently got a COE car with outstanding $16K for about 3 years to go What the the charges or cost I need to bear?

 

1) Assuming I intend to sell the car (private selling) either exactly at $16K to clear all outstanding loan or maybe $18K due to (proper & good maintenance of the car plus some add ons to the car).

 

2) Bring back car dealer and quote (estimate $12-14K)

 

3) Bring in to new car dealer to trade in (place to buy new car)

 

Which option would be feasible? Thanks.

[Gl240]

Is the same, either you put Downpayment now or you kenna cough out $ to redeem outstanding loan. But people still chose to spend future $ cos they take future eranings into consideration. Anyway, even if you pay all cash outfront, we still don't own a car in Singapore, cos we have only 10 years lease.

[Iziz]

If u wan to breakeven at 5th yr and dun intend to put any dp, pls take the 7yr loan instead.

 

U r just pushing back the inevitable (the cash portion) if u take a 10yr loan/0 downpayment... Think of it this way, instead of paying upfront when u purchase the car, u r paying it when u sell it.

[Windwaver]

Dear all,

 

apprecaite any bros out there who can advise the above mentioned cos looking at buying a new car with 10yr or 7 yrs loan but seems like it will take very much loking just to breakeven for car value and loan . target to scrap car b4 5yrs

 

1) How much you loan determines when you break even.

[Duffy]

Hi all

 

any kind soul out there who is familiar or who is a car loan banker which can advise taking into account all items such as role of 78 and the interest rebate upon srapping/selling the car at 59 mths/5 yrs. really want to chk out the exact or nearest figure before commit.

 

i)car price 80k, omv 24k, coe 17k, scrap body at 5k

ii)loan of 10yr s & 7 yrs loan at 2.8% with no rebate

 

thks alot

 

bro Sniperben , are you car saleman, so familiar with car OMV etc. pls advise

[Sniperben]

check your PM.

[Hummer]

There's a doc in Tips and Resources forum on how to go about calculating your interest rebate on your car loan, break even point blah blah....go check it out.

It was written by a fellow forummer.

[Watwheels]

It's not advisable to take 10yr loan IMO. U'r paying too much interest. Once committed u cannot back out if anything happens to your car. I see some ppl paying for two car installments cos something happened or something went wrong with their first car.

 

Save some money to pay for downpayment first. Take lesser loan better. Can break even early too.

[Felipe]

my rule of thumb is this. if can put 20% down, buy new. if 0 down, buy used.

[Duffy]

Hi Hummer,

 

thks for your info info on links at T & R nvr chk that section b4.

[Richard_Peh]

If i buy a used viva at 27k and i pay per mth for 305. Can i break even around 4yrs to trade in a new car? Please advise.