YOURSAY 'Mustapa is trying to hoodwink Malaysians with this preposterous tale that prolonging the repayment period would soothe the burden of high car prices.'
'Longer repayments won't solve high car price woes'
nine years for car loans (probably the longest in the world) is already
untenable as many financial institutions have realised.
reason is that the market value of the car falls below the remaining
loan balance after five years, so borrowers may just let the car be
repossessed instead of continuing to pay the loan.
International Trade and Industry Minister Mustapa Mohamed is suggesting
that the loan period be increased further. Either he is dumb, or
insensitive, to the plight of car buyers.
How can stretching out
repayments be the solution to high car prices? Do we want to pay 20
years for a car? Shall we sleep in the car instead of buying a house?
Mustapa might think that lengthening the period for car loan repayments
can help reduce the burden of high car prices, but the reality is that
it will make little difference to the student's disposable income
For example, a brand new Proton purchased for RM60,000
paid over nine years at a compound interest rate of 3 percent would cost
the buyer around RM725 in monthly mortgage.
If the repayment
period is extended to 12 years, the monthly payments would work out to
be RM594. The difference is a mere RM131 in disposable income per month
over the life of the loan, but RM7,260 in extra interest payments over
the additional three years in repayment period.
This hardly sounds like a good recipe at all by the government for reducing the public's cost of living pressures.
Aries46: Changeagent, your example of RM60,000 hire purchase loan at 3% interest would incur the following sums as interest:
Repayment over nine years would entail an interest of RM18,300, which
works out to 30.5% of the principle loan amount, while repayment in 12
years would entail an interest of RM25,536, which works out to 42.5% of
the principle loan amount.
Mind-boggling figures no doubt, but if
this is Mustapa's remedy to beat the scourge of exorbitant government
car taxes and prices that snatches away the hard-earned money of poor,
he ought to be ashamed of himself.
Mustapa is trying to hoodwink Malaysians with this preposterous tale
that prolonging the loan repayment period would soothe the burden of
high car prices.
He omitted to mention that extending the loan period would simultaneously hike up the interest payable.
housing loans, the car hire purchase scheme is rather vicious in that
interest is applied at the very onset at a flat-rate multiplied by the
For instance, on a loan of RM100,000 at 4%
interest repayable in 10 years, the interest amounts to RM40,000. On day
one, the loan of RM100,000 is computed as RM140,000 and is mandatorily
repayable in 120 monthly installments.
Even if one decides to
make an early settlement he would still be accountable for the sum of
RM140,000 less a negligible sum allowed as rebate for early settlement.
tell, how this would offset the burden of long-suffering Malaysians who
have been victimised in the name of protecting the national car?
First, let's get one thing straight. As I've said before, I am not a
supporter per se of Pakatan Rakyat; therefore, any comments I make
criticising Umno-BN are made from neutral ground.
This is yet
another instance of Umno ministers talking pure rot. Extending the
repayment period merely reduces the quantum of the monthly installment.
apparent benefit is negated many folds by the longer period the
customer is a debtor as well as the bigger amount he has to pay in
You do not have to be a mathematician, neither an
Economics graduate nor an accountant, to figure all this out. What has
eaten into Mustapa's brain?
Mushiro: This was a
very dumb answer by our minister to solve the high car price problem.
Drag the payment period longer and let the poor buyer pay more and
suffer. He does not want to reduce the excise duties on cars as Umno
cronies will suffer.
Guna Otak Sikit: Longer
repayment period to overcome the high prices of cars? This is the best
way to lose even more money and to use up your future earnings now. What
a stupid idea from a so-called minister.
The minister knows
fully well that longer repayment period just adds more debt to
borrowers. He could not care less as long as BN is in power.
calculating monthly repayment sum for car installment, a very simple
method is used - (Loan sum x no of years x interest rate) / No of months
- so the longer you borrowed, the more interest you pay.
prolonging the repayment period, one will end up paying more at the end.
Which maths teacher taught you that you will pay less if you prolong
the loan period?
ThisLandIsMine: BN, you really
enjoy to see the miseries of the rakyat in paying high taxes when they
purchase cars. These negate all the fuel you subsidise.
banks are financing the taxed portion which is imposed by the
government and earning substantial interests from this.
multiplying effect result in silent suffering faced by the rakyat while
the fuel subsidies are progressively withdrawn. No wonder car financing
is a top income earner for banks.
Absalom: How Malaysia continues to survive with such stupid men in charge is one of those mysteries of life.
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