What are the secrets behind the car loan?
Secret 1
When we take a car loan, the current interest rate is about
2.98%-3.25% per annum, if we check the time deposit rate in
commercial bank, it also close 3% now, How do the banks make money
from car loan?
I guess the secret is here:
If we deposit $10,000 in the bank for 1 year, we can only withdraw
this $10,000 at the end of maturity.
But when we take a $10,000 car loan, from the 1st month or 2nd
month we start to pay the installment, so the actually interest
rate is 35%-40% higher than the nominal interest rate, this 35%-40%
is a good profit for the banks.
The nominal interest rate here is a common trick of all installment
loan, am I right?
Secret 2
This is something I can not understand, need someone to enlighten
me.
When I go to Nissan car showroom, the SE told me that if I can take
$30,000 loan for just 1 year, they will give me S$1500 rebate;
interest rate 3.25% if do not need rebate, interest rate goes down
to 2.98%.
Mitsubishi Lancer: S$35000, 5 years (but only lock-in 3 years),
S$38000 cash rebate in 1 month later. interest rate 3.25%
Toyota Vios: Take min S$25000 loan for 1 year, the list price goes
down S$1000.
Chevry Aveo: Take 50% loan, (roughly S$21000), give S$3000 rebate,
they did not specify the term.
Even follow the secret 1 to calculate the interest, for Nissan
case, the total interest amount is only S$975, and they give S$1500
rebate!, in all the other case, the same scenario, whats wrong
here?
Is it because:
1: If someone pay all the cash in full, then this guy is too rich,
the dealers must chop more from him, and if someone take car loan,
then the dealers willingly to reduce the price, we all know that
calculate by Open Market Value, all the car dealers earn a very fat
profit, there is enough room for them to reduce price, so car loan
rebate is just a good excuse for them to reduce the price for some
not so rich customers?
2: The car dealers have other arrangement with banks, the bank and
dealers can earn profit in other hidden ways?
