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Borrow $100,000 to buy a car in Singapore?

Saturday, May 13, 2017


Hi AK, 
When I get back to Sg next year, i'm planning on getting a car (depreciating asset boohoo!)

Now, on my previous car purchase, I felt i made a mistake of buying too early and had to take a full car loan. It ate up a lot of my monthly pay. So this time round, I wanted to do my sums right before diving in. 

I do have enough to pay upfront for a car (eg 100k). But could you talk to yourself if paying upfront for a car is a good idea? 

My alternative could be taking this 100k and throwing it into the Sg savings bonds/safer type of bonds, and earning the interest. As long as this "bond interest" is more than the "car loan interest", this would make it worthwhile? Am I missing a blind spot here? 

Can I just compare a 2% car loan interest vs a 3% interest earned from bonds and conclude that I will earn 1% interest? 

Could you talk to yourself on this issue? I will be eavesdropping!
thank you!!!



Hi,

You have to understand that when they say your car loan interest rate is X.X%, it is really more than that:

http://singaporeanstocksinvestor.blogspot.sg/2014/04/a-car-loan-is-different-from-home-loan.html

I don't like the idea of borrowing money to fund consumption and if we have to borrow money to buy a car, keep the loan quantum as small as possible:

http://singaporeanstocksinvestor.blogspot.sg/2016/05/what-new-mas-rules-for-car-loans-mean.html

Welcome back to the land of expensive cars!

Best wishes,
AK

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