Balloon Scheme loan

[Texas5]

dont know much about this "Balloon Scheme" loan thing, saw a few 2nd hand dealer offer this loan.

anyone care to explain wth is "Balloon Scheme"? how the thing goes? calculation? anything that consumer mus know about this "Balloon Scheme" loan... good side, bad side...

cheers

now down pouring on tampines... drive safe

[Ken1898]

I am curious to know too.

[Greytis]

(EXP) For 5 years loan, Full loan.

 

If Car = $40k

If Parf = $10k

So, $40k - $10k = Loan $30k x 5yrs..

 

Normal loan ( $40k x 60 mths = $730 pm @ (1.88%))

Ballon Loan ( $30k x 60mths = $567 @ (2.68%))

 

Ur Parf will be gone even you finish the 5 yrs loan. But you pay lesser lnstallment..

Edited March 5, 2012 by Greytis

[Yattokame]

example

 

you buy a $100k car with 5 yrs left on COE, and OMV is 80k

interest rate is 2.68% pa

 

so total interest = 5 x 2.68% x 100k = $13.4k

Total loan = $100k + $13.4k = $113.4k

 

remove PARF value (50~55% of OMV depending on year of reg)

since car is pre-2008, parf is 55% of OMV

 

Total loan - 55% of 80k = $113.4 - $44 = $69.4k

 

divide this by no. of months (5x12 = 60)

 

monthly installments = 69.4 / 60 = $1,157

 

-------------------------------------------------------------------------------

 

if normal loan,

assuming 1.88% pa

month instalment is $1,823

 

 

[Yattokame]

  On 3/5/2012 at 2:09 AM, Greytis said:

(EXP) For 5 years loan, Full loan.

 

If Car = $40k

If Parf = $10k

So, $40k - $10k = Loan $30k x 5yrs..

 

Normal loan ( $40k x 60 mths = $730 pm @ (1.88%))

Ballon Loan ( $30k x 60mths = $572 @ (2.85%))

 

Ur Parf will be gone even you finish the 5 yrs loan. But you pay lesser lnstallment..

 

from the document sent to me by the financing company, you loan+interest the full amount, then less the parf

[Liuz0004]

it means u only loan the car amount without the parf rebate.

 

example car price $50,000

parf rebate end of 10th yr $20,000

so u only need to loan $30,000 throughout the remaining years of COE.

 

interest rate is 2.68%

[Yattokame]

Early settlement wise,

 

they will put back the parf and calculate the full loan principle, then use rule of 78 and less 20% (<-- this part i don't quite understand).

 

And I was told can only do so for cars >3yrs old, i.e. 4yrs and above

[Old-driver]

So meaning at the end of the car tenure, u get nothing as the PARF value is owned by the finance company?

[Greytis]

  On 3/5/2012 at 2:11 AM, Yattokame said:

from the document sent to me by the financing company, you loan+interest the full amount, then less the parf

 

 

Think so ba,, But i know is they less away the Parf amount..

[Yattokame]

  On 3/5/2012 at 2:12 AM, Liuz0004 said:

it means u only loan the car amount without the parf rebate.

 

example car price $50,000

parf rebate end of 10th yr $20,000

so u only need to loan $30,000 throughout the remaining years of COE.

 

interest rate is 2.68%

 

The example given to me by the financing company is you have to take loan WITH the parf value. from the full loan+interest THEN then remove the parf.

[Yattokame]

  On 3/5/2012 at 2:13 AM, Old-driver said:

So meaning at the end of the car tenure, u get nothing as the PARF value is owned by the finance company?

 

that's right.

 

not keen in getting back the parf - inflation over the years actually reduce its value.

[Yattokame]

  On 3/5/2012 at 2:13 AM, Greytis said:

Think so ba,, But i know is they less away the Parf amount..

 

the point where they remove the parf value can mean around $100 diff in monthly installments.

[Nooby]

Buy car and have a loan already can change to this scheme?

[Yattokame]

  On 3/5/2012 at 2:31 AM, Nooby said:

Buy car and have a loan already can change to this scheme?

 

I am told only tokyo finance offers this scheme. You probably have to check with your bank.

[Texas5]

so if i drive till coe expire, i get $0 back from my car omv (parf rebate?) coz i take the parf value to offset my car price for loan? is that correct?

[SimonTan]

Then who is the one holding on to the PARF value?

The loan company?

 

Tis should be legalized long ago!!

Right now we are paying interest on the PARF value due to high loan amount(that artificially added in the PARF amount).

 

I support ballon scheme, as the loan amount is lower!

 

[Maroon5]

  On 3/5/2012 at 2:13 AM, Yattokame said:

Early settlement wise,

 

they will put back the parf and calculate the full loan principle, then use rule of 78 and less 20% (<-- this part i don't quite understand).

 

And I was told can only do so for cars >3yrs old, i.e. 4yrs and above

 

the less 20% refers to the penalty on the total interest rebate. ie u early termination, the total int rebate shd b 10k but they wil deduct 2k.

[So_nice]

sounds interesting..the miserable 7k i get back for my car after another 4 yrs also sounds quite useless. maybe can change bigger car now. lolx. need to understand more abt the scheme though.