Malaysians have a huge passion for cars. However that doesn’t translate completely into seeing how interest rates work with regards to applying for a car loan. On the off chance that you have attempted to understand what you are really paying as car loan interest but discovered that it is not quite the same as the rates charged by banks, this article will help you completely.
With regards to car loan or be it any other loans, there are various approaches to figure out the financing amount you will pay as opposed to the ones mentioned by banks in fine print. Because interest rates and loan amount offered varies from individual to individual based on factors like credit score and affordability. This is clearly seen when you take an auto loan – the publicized rate is almost never similar to what you end up paying at the end of your car loan tenure.
This isn’t a trick or a marketing gimmick from banks. it’s simply a norm when it comes to car loans as external factors like car type, variable interest rates, and your personal financial portfolio come into play.
A-Z info about car loans: If you want to know more about car loans in detail, reach out to Hong Leong Bank with your enquiries and clarifications.
Calculating interest rate on Car Loan
For car loans, the expressed loan fee isn’t equivalent to the actual financing cost (effective interest rate). Because what banks advertise is actually the flat financing rate or interest rate.
So ultimately, it comes down to understanding the difference between effective interest rate and flat interest rate.
Let’s do a sample calculation for a loan sum of RM80,000 at an interest of 3.2% p.a over an 8 -year tenure.
Loan amount = RM80,000
Repayment tenure = 8 years
Interest rate = 3.2% p.a
Interest levied over the tenure = (3.2/100) x 80,000 x 8 = 20,480
So, when you close out the dues on this car loan, you will have paid a total of RM100,480 (principal amount + interest paid) for a borrowing sum of RM80,000.
Interest per month = 20,480/(8 x 12) = RM213
Installment to be paid per month = (80,000 + 20,480) ÷ (8 x 12) = RM1046
But to make things simple…
Hong Leong Bank’s car loan calculator is a one-of-a-kind, intuitive tool that only requires you to fill in with your desired interest rates, principal loan amount, and tenures. What makes this car loan car calculator stand out is that it factors in
This also helps you in the self-evaluation of your financial standing with respect to the monthly installments that you are required to pay. Give this tool a chance–and also make sure you apply for a car loan at a bank that doesn’t force you to pay attention to the fine-print!
