Interest rates?? Loan??? ARGH!

[lost_status]

Hi all!

 

Ok Im going to try and make this a quick one, but I need some finacial advice. Can someone explain the whole interst rate thing? I would like to slowly take out a loan but Im not really sure.

 

LOL as you can tell I didnt pay too much attention during maths in high school

 

Thanks!

[Mr Mister1]

What do you meanby slowly taking out a loan?

 

When you take a loan, you end up paying a bit more than the actual amount you borrowed (in nominal terms at least), the interest rate shows how much you have added on for a certain period. For example if you take a loan of 10,000, with a interest rate of 10% pa, and say you pay off 1,000 in the first year then 10% of the remaining amount you owe (9,000) is added on so you end up owing (9,900).

Is that what you meant?

[lost_status]

By slowly taking out a loan I meant like to think about it, get my information and everything together (sorry, just a figure of speech) hehe

 

....hmm.. I kinda get it, so every year it goes up by 10% of what I have remaining to pay off?

[annie24]

what do you need a loan for. banks don't just give out money for no reason (unless you have a credit card, then they do gladly).

 

basically, interest is your "side charge" to the bank because they are allowing you to borrow their money. depending on what kind of loan you are looking for, and the term, you could be paying anywhere from 0-30% interest.

 

link removed

 

here is a calculator.

 

So, yes, if you take out a $10,000 loan at 10%, at the end of the year, you will owe $11,000. interest can accumulate very quickly.

[lost_status]

30% interest!!! *faints*

 

 

I need a laon because I want to move out (it will sorta help me get this organised) and I need a new car, my car is starting to die out and I doubt its worth putting nearly 1k on it just to get it fixed.

 

I would just get rid of my car all together and stick to public transport but its not worth it, it takes me nearly 40 mins to get to uni driving, with public transport it used to take me nearly 2hrs!! Plus I work really late at night and its just too dangerous to travel via public transport

[annie24]

well, you can try to get a car loan, and a student loan. those both should be reasonable. go to your university's financial aid office and ask for help there, and go to your bank to inquire about a car loan.

 

banks won't lend you money unless they are sure you will wind up paying it back. or they may give you a loan, but not for as much as you would like.

 

if you need, try to have your parents co-sign the loan for you.

[lost_status]

ok thanks!!.... would there be a way of not getting my parents in it? I dont want them to help me, Im not moving out on good terms... I doubt they would even let me get a loan!!

[annie24]

well, talk to the people at the university - maybe you can find housing closer to campus so you won't need a car.

[Mr Mister1]

One thing first, Do you have a job or some way of earning money? Do you think you'll be able to pay off the loan over time?

You need to think of these things first.

[lost_status]

I have two jobs... One is granteed but the other 1 is agency work... so I get called whenever they want people. I dont make allot, but I think I could pay it back if I had like a specific monthly payment (that wont go up)... for example $300 a month would be good for me.

[Mr Mister1]

Ok then, well if you can demonstrate to the bank that you have a permanent job then that will help your case.

[lost_status]

cool!!

 

Thanks for your help!

 

Annie, I also appricate your help too

[skyjuice]

Hi

 

Regarding loan calculation, I might able to help you a bit. However, this calculation is practiced in my country which is in Asia.

 

I don't know how it was practice in Europe or US.

*IMPORTANT: The below calculation should be treat as a reference. Please seek advice for qualified professional.*

 

The interest calculation between housing loan and car loan (hire purchase) is very much different.

 

For car loan, the interest is fixed and calculated and included inside the loan amount(principal). For example, if you borrow 100K at 3% for 8 years, your total interest is 24K. The instalment is 1,291.Total Interest plus principal =124K. At the end of the loan tenure, you will need to pay RM124K.

 

For housing loan, the interest rate is normally subject to the based lending rate (BLR) changes which is affected by overnight policy rate and determined by the center bank. Thus, the total interest payable is subject to changes. Instalment calculation is based on the current BLR + the spread determine by the commercial bank.

 

The interest is calculated based on the number of days in that month X (BLR + spread) X outstanding amount / 365

 

Let say the BLR is currently at 6.75%, while the spread is at +1% per annum. The interest payment for that month is 658.

 

If the BLR increase to 8%, the interest payment for that month would be increase to 764.

 

The instalment payment amount is the amount you pay monthly to the bank, while the interest payment is one portion of the instalment amount. The difference between the instalment amount and the interest payment amount is the principal repayment. (i.e. the amount to be used to deduct the outstanding loan/principal)

 

Based on my analysis and in my opinion, comparing car loan and housing loan. The earlier you settle the housing loan the better. This is because car loan interest is fixed and it is already included inside the loan amount. If you do advance payment, it would not save up any interest. However, If you settle (full payment), you might get some rebate.

 

However, if you do prepayment or advance payment to the housing loan, it will deduct directly from the principal. Thus, the interest payment will subsequently reduced and more portion of your instalment will be used to do principal repayment. The earlier you make advance payment to pay for the housing loan the more interest you save as compare to car loan.

[Beec]

A student loan may be your best bet. Some loans are subsidized or guaranteed by government. As at your school, I am sure someone there can tell you mroe than we can.

[Fallout]

Hi S...I mean lost_status first of all congratulation again for doing this

 

I don't know much about rates and stuff like that...but I wanted to say before taking the loan you should first estimate what your expenses are going to be every month - rent, food, gas, male strip club membership etc. taking into account what your best rent situation would be - could be better with 1 or more roomies and you get to make friends too hehe.

 

After that substract that average monthly expense estimate from your average monthly income, and you end up with say 1,000$, so you know exactly how much you can afford to pay..and don't overreact on the loan either just get it for what you need right now, you can buy a porsche later