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How To Return Car To Bank/trade In?


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#1
merlin1234

Posted 08 September 2014 - 05:33 PM

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I just bought a saga sv earlier jan 2014. i bought under the graduate scheme, 9 years loan under bank islam, i'm just wondering if a situation where i wanted to buy new car. im looking to get a second hand toyota/nissan/honda/volkswagen
my query:

- do i have to pay any penalty to bank?
- do i sell or trade in?
- can i change ownership and the new owner continue payment?
- if i give it to used car dealer will the car still be under my name?what if they default payment?

how do i go about it? and is it possible to reduce the term loan payment from 9 to 7 years if i can afford to pay (if i intend to keep the car)

Please help..

Thank You.

#2
vr2turbo

Posted 08 September 2014 - 10:28 PM

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QUOTE (merlin1234 @ Sep 8 2014, 05:33 PM) <{POST_SNAPBACK}>
I just bought a saga sv earlier jan 2014. i bought under the graduate scheme, 9 years loan under bank islam, i'm just wondering if a situation where i wanted to buy new car. im looking to get a second hand toyota/nissan/honda/volkswagen
my query:

- do i have to pay any penalty to bank?
- do i sell or trade in?
- can i change ownership and the new owner continue payment?
- if i give it to used car dealer will the car still be under my name?what if they default payment?

how do i go about it? and is it possible to reduce the term loan payment from 9 to 7 years if i can afford to pay (if i intend to keep the car)

Please help..

Thank You.


No penalty, you just have to settle the full loan with all interest
You can sell or trade in provided you settle your loan
You can get new owner to take new loan to settle your loan. Loan under your name cannot be transfered
Used car default payment, bank look for you, as the loan is still under you.

As far as I know for car loan if you settle earlier there is no advantage, means no rebate

#3
Gunnerzz

Posted 09 September 2014 - 09:50 AM

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QUOTE (vr2turbo @ Sep 8 2014, 10:28 PM) <{POST_SNAPBACK}>
No penalty, you just have to settle the full loan with all interest
You can sell or trade in provided you settle your loan
You can get new owner to take new loan to settle your loan. Loan under your name cannot be transfered
Used car default payment, bank look for you, as the loan is still under you.

As far as I know for car loan if you settle earlier there is no advantage, means no rebate

if u make an early settlement,u will get rebate but not much.
bnm makes it compulsory for bank to add the words "the bank shall give rebate" in their islamic financing package in order to deter some stubborn bank from imposing a penalty which was deveived as profit.

u cant shorten the loan period legally.u can actually but it involve in refinancing the car with another bank.
bankers just wont entertain yr request to shorten the tenure as its a hassle to do.
i suggest u just pays more than the installment and check yr balance every 6 month to see where u are.

do note thay for hp,extra payment can only be taken as future payment and it wont reduce yr capital as hp in our beloved country is deemed illegal in some.all hp loan or finances have the interest calculated up front.

#4
merlin1234

Posted 07 November 2014 - 01:16 AM

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ok.

my choice at the moment, since i have got no finances to settle the full loan, therefore, i have only two options:

1.find a direct owner who buys by cash and settle the full loan or applies hire purchase loan and use that to settle my loan.
2.sell it to the used car dealer (assuming that i sell it a lower price) but risk they may default on the payment.

Please correct my understanding if i'm wrong.

#5
vr2turbo

Posted 07 November 2014 - 08:26 AM

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QUOTE (merlin1234 @ Nov 7 2014, 01:16 AM) <{POST_SNAPBACK}>
ok.

my choice at the moment, since i have got no finances to settle the full loan, therefore, i have only two options:

1.find a direct owner who buys by cash and settle the full loan or applies hire purchase loan and use that to settle my loan.
2.sell it to the used car dealer (assuming that i sell it a lower price) but risk they may default on the payment.

Please correct my understanding if i'm wrong.

If you have the time, then slowly look for direct buyer, then you can sell higher price. Loan settled, name transferred will be better.
However if you sell to used car dealer, they normally keep under your name until they can sell it. The hassle of too many name transfer. If your car is easy to sell then no problem, but if they keep and default payment you get into trouble... smile_blackeye.gif

#6
Gunnerzz

Posted 07 November 2014 - 10:32 AM

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QUOTE (merlin1234 @ Nov 7 2014, 01:16 AM) <{POST_SNAPBACK}>
ok.

my choice at the moment, since i have got no finances to settle the full loan, therefore, i have only two options:

1.find a direct owner who buys by cash and settle the full loan or applies hire purchase loan and use that to settle my loan.
2.sell it to the used car dealer (assuming that i sell it a lower price) but risk they may default on the payment.

Please correct my understanding if i'm wrong.

Option 1
This is the best way.downside is bank can only finance for certain % of the market price.purchaser need to comes up with deposit and then top up the difference between the market price and your outstanding with the bank.unless u want to top yourself.
imho if i have to fork out soo much money for a saga sv,i rather buy another car with the upfront i can fork out.

option 2
u will still need to fork out cash to settle the difference with the market price.
also live with the chance that the used car dealer default yr payment.

#7
vr2turbo

Posted 08 November 2014 - 09:33 AM

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Buying a car then sell later will always make a loss. Either way now still need money to top up the difference then.... smile_blackeye.gif

#8
Breadman

Posted 10 November 2014 - 09:19 AM

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QUOTE (vr2turbo @ Nov 8 2014, 09:33 AM) <{POST_SNAPBACK}>
Buying a car then sell later will always make a loss. Either way now still need money to top up the difference then.... smile_blackeye.gif


Hire purchase loans are calculated in such a way the interest is front loaded. He may be paying his instalments religiously but for the first few years (especially for a 9 year loan) the principal sum is reduced very little. A 7 or 9 year loan is a financial trap for a young graduate.

And if the guy still have a study loan to repay then it is a double whammy.


"Behind every great fortune there is a crime." ~ Mario Puzo (The Godfather)

#9
Gunnerzz

Posted 10 November 2014 - 10:21 PM

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QUOTE (Breadman @ Nov 10 2014, 09:19 AM) <{POST_SNAPBACK}>
Hire purchase loans are calculated in such a way the interest is front loaded. He may be paying his instalments religiously but for the first few years (especially for a 9 year loan) the principal sum is reduced very little. A 7 or 9 year loan is a financial trap for a young graduate.

And if the guy still have a study loan to repay then it is a double whammy.

Bro,
U mention thebinterest is calculated up front but then u said the capital is reduced very little for first few years.
The statement is not correct as the interest is already calculated and added to the loan outstanding.

The statement u mention applied to housing loan as most of them now are on daily rest interest.last time are on monthly rest.
for the first 5 years,the capital we paid is very minimal.

#10
Breadman

Posted 11 November 2014 - 07:53 AM

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QUOTE (Gunnerzz @ Nov 10 2014, 10:21 PM) <{POST_SNAPBACK}>
Bro,
U mention thebinterest is calculated up front but then u said the capital is reduced very little for first few years.
The statement is not correct as the interest is already calculated and added to the loan outstanding.

The statement u mention applied to housing loan as most of them now are on daily rest interest.last time are on monthly rest.
for the first 5 years,the capital we paid is very minimal.



Say I owe the bank 200k and I reduce by 100k today. Tomorrow my interest will be calculated on 100k. This is daily rest.

Say your HP interest is 3% p.a. for a 9 year loan the total interest is 3x9 = 27%. This 27% is straight away added to the principal sum. This is what is meant by front loaded. But when you settle, the interest is not deducted on a prorate basis.

Can you see the difference now? It is very convenient to confirm with a bank if you must.
"Behind every great fortune there is a crime." ~ Mario Puzo (The Godfather)