Car loan - Pros and cons of paying full

ureshiman SG

Hi, i am a first time car buyer and would wish to get advice on taking up car loan.

I am not sure if the SE allows me to pay in full or is it advisable to take a minimum loan and period? Or should i take the loan and opt for early full loan payment after a year?... Juz do not wish to pay too much interest.

Will i lose out on the freebies?

Would like to hear any advice or experience. Cheers ! Very Happy

huoye SG

Tip: ask for all the freebies or discount on the price....only when all is done den u let them know u going pay in full.....den lidat its very hard to go back on their word and even if they do its only minimal.......dats wad i did for my previous car anyway..
I rem the SE face quite black..haha

wbucket SG

I agreed on the "don't let your SE know how much you down until the last minute" law.

As for loan amount, if you have the money, my logic is to pay some keep some. Only down the minimum if you know about investments that can profit you enough to cover the interest of the loan. For me, I down enough to reach S$500 installment per month.

huoye SG

hehe mine better mine only 300+ monthly…....... anyway if u ask my opinion i wun wan to take more den $50k loan…....the most get a cheaper car lor…and yes u shld save some for a rainy day but no i disagree on paying the min. instalment wad if ur investment go bust and u got to sell the car and haf no $$ to top up….. i haf seen too many of this cases

pqr SG

now can buy car in full payment? Shocked

I though the mininum loan is 3 years?

wbucket SG

Never heard from such logic.
Must be a con-artist at work.
Anyway, no-one can force you to take loan.
They can only interest you into taking loans with rebates and goodies......
One of my friend only took up 1 year loan for Vios.

cyberpug SG

One should always set aside 6 to 12 months of your monthly expenses for rainy days. If extra is enough to pay in full then i'll do it for sure.
The cost of your loan is effectively 4% to 5% p.a.

The other consideration u should have here on whether to pay in full or not is if u can get better returns by investing it elsewhere.

Eg. If u can get investment returns better than 5% p.a. then by all means get the maximum loan u can and invest your money. By doing this, u will get a net net positive returns!!!
Otherwise, why let your money sit in the bank account which effectively will earn u less than 2% and pay the loan at 5%??!!

houndy SG

Long loan is high interest rate….and if you take a full loan.. you did be paying for at least an extra 10K just for the interest… better put a down and if possible take a short loan…

Lancerlot SG

i do not agree wif the down minimum n invest money to get higher returns. There is a risk involve in doing an investment, whereas if you pay in full, the instant savings (or earnings) is the 4-5% interest earn over the next 7-10yrs. Whcih is definately guaranteed n no risk involved!! no investments is sure guarantee so if you take minimun plus ur investment all kanna eaten up by sum broker or bank, like that you got to pay 4-5% interest on top of the investment loss in principle!!!double wammy. my 2 cent worth.

btw i paid my car in full, and am very happy now as i don't have to worry bout interest, or instalments, just operating cost only