High Loans & Full Loans – What they are, How they work and What you should know

YouTube video

Do note the interest rates/prices etc. stated in this video are just examples, because in practice, they vary from dealer to dealer.

Everything shown in this video is for illustration purposes only.

  • 0:38 – What is high loan/full loan
  • 1:18 – Full loan example
  • 2:58 – High loan example
  • 4:25 – What to know
  • 5:43 – Example on Sgcarmart
  • 8:50 – Breakeven point

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Video Transcript

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okay class welcome to car financing 101.

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today’s topic will be high loans and

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full loans

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so we’re gonna be talking about how they

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work what you need to know

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and i’ll give you an example so you can

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better understand

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what it is okay first things first uh

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high loans and food loans how they work

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to be honest i forgot what i typed

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behind here

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so let’s uh take a look uh

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oh okay now i know okay example

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all right how they work um let’s say you

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want to buy a car

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that cost hundred thousand dollars let’s

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say you’re opting for a full loan

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okay first of all high high loan what it

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means is

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um you take a loan that does

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not you you put some money down towards

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the car let’s say the car is hundred

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thousand you put maybe

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five thousand dollars or ten thousand

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dollars basically it doesn’t meet the

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mas requirement of

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30 or 40 down payment okay

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so that’s what it means by high loan

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full loan

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means the car is hundred thousand

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dollars you take a

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loan of hundred thousand dollars yeah

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basically it’s like the full amount of

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the car

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you take a loan okay full price of the

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car you take a loan so

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full loan all right let’s say

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you’re taking this is a full loan

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example okay

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but it works the same way whether it’s a

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high loan or full loan it works the same

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way

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so let’s say the selling price is a

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hundred thousand dollars

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you don’t pay zero dollars okay

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so if you don’t pay zero dollars the

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dealer will tell the bank that they are

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selling the car 143 000

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because 100 000 the amount that you want

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to borrow 100 000

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is percent of the car selling price

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which is hundred and forty three

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thousand

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okay so let’s bring up the calculator

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here so

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hundred thousand okay i just put hundred

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divided by 0.7

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you get 142.85 which if you round up

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will be 143.

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okay so 143k multiplied by 0.7

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you get about 100 000 dollars okay so

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this is the

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the dealer of the bank they are selling

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it 143 000

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and you won a loan hundred thousand

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dollars only

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and you don’t pay the 43 000 okay you

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dp 43k dp cents for down payment okay

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not

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whatever the stuff you guys are thinking

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of

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all right so you don’t pay 43 000 which

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is 30

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of the cash price okay assuming um the

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minimum down payment is

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30 okay and then you loan hundred

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thousand

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okay which is actually the cast price

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okay yeah that’s about it for how they

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work okay so it’s quite straightforward

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how they work basically the dealer will

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mark up the price to the bank

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and then they will ask for the amount

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that you want to borrow

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and state that as the 70 of the cast

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price okay

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just like that and if let’s say it’s a

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high loan okay let’s say it’s a high

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loan

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you just maybe let’s say you don’t pay

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10 000 okay 10k

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the dealer so right now um you only need

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to loan

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90 000 correct you only loan 90 000

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so 90 000 will be 70 percent of the cast

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price

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okay so your down payment will be lesser

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your

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down payment down payment is with open

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apostrophe surrounding it okay down

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payment

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down payment will be 90 divided by 0.7

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128.57 roundup is one two nine okay so

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the bank

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well the dealer will tell the bank they

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are selling the card 129k

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all right because uh 90k is 70

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off 129 okay so you down pay

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1 2 95 minus uh 19

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39k okay so if you take one two nine

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multiplied by zero point seven

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is ninety k about delta ninety point

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three ninety thousand

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then uh one two nine times zero point

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three is thirty eight point seven which

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if you round up is not 39

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okay so you don’t pay a open of course

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apostrophe 39k and then you learn 90k

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all right so that’s how they work quite

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uh

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straightforward okay next so what do you

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need to know about full loans or high

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loans okay

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uh first things first is that your

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interest rate will be higher

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i believe that’s what i type oh yeah

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okay correct okay higher interest rates

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versus traditional loans okay uh

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traditional loan

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means a loan where you don’t pay 30 or

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40

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so higher interest rate okay first of

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all if you take a traditional loan from

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a bank for a path car

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your interest rate you’re looking at

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maybe 1.88 1.98 2.48 2.68

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around this range okay for high loans or

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full loans you are looking at a

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interest rate of like 2.68 onwards to i

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won’t say 4

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it’s more like 3.98 you have 4

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plus percent um five percent

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also i’ve seen before which is quite

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high but

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um yeah okay

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this is a kind of range we are looking

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at

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and uh higher admin fee okay higher

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admin fee because there could be more

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paperwork involved for

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um high loan okay the bank will require

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maybe more documents from you

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um they may require a guarantor and

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stuff like that so there will be more

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paperwork therefore

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higher admin fees the last thing is

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high loans and full loans may not be

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that easy to get

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why i say this is because banks right

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they have their own valuation of cars

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okay i’ll give you an example okay so we

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are sg command let’s say we are looking

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at a 2018 registered audi a4 okay let’s

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say this one

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all right we go to the financial tab and

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we look at this okay so the for this car

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the

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down payment the minimum down payment is

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46 000 which i believe is

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40 of this car’s uh selling price okay

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four

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six one two zero divided by 1.5 300

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yeah it’s 40 okay so let’s say

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um you want to take a high loan for this

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car or full loan

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whatever it is the bank they only value

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this car for example let’s say

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2018 uh audi a4

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okay everybody is selling it at 115k

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to about 121k okay everybody is selling

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it at this price

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so maybe they only value the car at 125k

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maximum okay 125k 125k

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right your what’s this your

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loan amount that you can borrow one two

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five

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the maximum loan amount that you can

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borrow is 75 000 okay because you have

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to downplay 40

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right so 75 000 is 60 of the cars

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price when i say they have a valuation

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of the car they may only

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value the car 125k therefore they can

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only borrow or they can only lend you

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75 000 okay maybe this is bank a maybe

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bank

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b has a higher valuation maybe bank b

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values the car 140 000 only

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140 000 okay so the down payment

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required for

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um this car 840 000 sorry the

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loan amount that you can borrow the car

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if the bank values it at 140

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000 the amount of financing you can get

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is

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84 000 maximum okay so the bank will not

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give you anything more than 84 000

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dollars

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and let’s say you want to buy this car

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okay this car costs how much of you and

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i forgot

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115k okay so let’s say you want to take

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a high loan for this car

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the bank only gives you 84 000. so if

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you minus

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five three hundred you are still short

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of thirty one thousand three hundred

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dollars

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which is the amount that you have to

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[ __ ] out if you wanna get this car okay

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you have to pay this in cash

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that’s why i say it’s not that easy to

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get because banks may not give you the

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amount that you

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want when i say banks i mean i’m

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grouping all the

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banks credit companies finance companies

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i’m just referring to all of them as

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banks okay for the

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purposes of this video so that’s why i

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say it’s not easy to get because of the

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financing amount that they are willing

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to give to you because they only value

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the car in a certain amount

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and they are not willing to go beyond

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that amount you can try but

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it’s not as easy to get if you get then

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good for you at this point some of you

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may be asking okay so now you mentioned

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all this already

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should i go for a high loan or a full

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loan honestly at the end of the day

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your money is your money okay what you

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do with it is

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none of my business um but

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i just want to point something out okay

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let’s say we look at this car

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go to the financial debt when you take a

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high loan right

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you or a full loan you may want to pay

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attention to this

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thing here okay the loan break even

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basically what this table shows is when

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your loan amount well how much you owe

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the bank

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uh equals um the value of the car okay

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whether you can break even or not

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basically break even means

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whether you can sell the car and get

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back some money or sell the car and

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don’t have to [ __ ] out any money

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okay one thing on the ad is that this

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table isn’t the most accurate

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because even though your cost people

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value is this much

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you may consign it or you may sell it to

267
00:09:31,440 –> 00:09:35,360
a dealer and they may offer you

268
00:09:32,880 –> 00:09:36,160
somewhere very close to this amount okay

269
00:09:35,360 –> 00:09:37,519
it depends

270
00:09:36,160 –> 00:09:39,760
it depends on how you sell your car

271
00:09:37,519 –> 00:09:41,920
usually consignment will fetch higher

272
00:09:39,760 –> 00:09:44,080
price than selling to a dealer but it

273
00:09:41,920 –> 00:09:46,000
depends okay so this table is just a

274
00:09:44,080 –> 00:09:49,120
rough indication don’t

275
00:09:46,000 –> 00:09:51,440
um you know refer to this like by heart

276
00:09:49,120 –> 00:09:52,399
not say by heart always the phrase to

277
00:09:51,440 –> 00:09:53,680
describe like

278
00:09:52,399 –> 00:09:54,959
don’t take this too seriously uh

279
00:09:53,680 –> 00:09:55,920
basically don’t take this table too

280
00:09:54,959 –> 00:09:58,640
seriously

281
00:09:55,920 –> 00:10:00,399
okay because you won’t very likely you

282
00:09:58,640 –> 00:10:02,160
won’t sell your car at this

283
00:10:00,399 –> 00:10:04,000
price at this paper value you will sell

284
00:10:02,160 –> 00:10:04,880
it at a higher price this is just to

285
00:10:04,000 –> 00:10:07,040
give you an

286
00:10:04,880 –> 00:10:08,800
indication of when you can break even

287
00:10:07,040 –> 00:10:10,480
based on your car’s paper value

288
00:10:08,800 –> 00:10:14,480
so i’ll give you an example let’s say

289
00:10:10,480 –> 00:10:16,240
you the car price is 115. okay 15300 you

290
00:10:14,480 –> 00:10:19,040
don’t pay the minimum

291
00:10:16,240 –> 00:10:20,560
amount which is 30 or 40 i need to

292
00:10:19,040 –> 00:10:21,440
calculate but anyway it doesn’t matter

293
00:10:20,560 –> 00:10:25,120
so you

294
00:10:21,440 –> 00:10:28,000
take a loan of 69 180 your car’s d

295
00:10:25,120 –> 00:10:28,560
registration value is only 50 about 56

296
00:10:28,000 –> 00:10:30,480
000.

297
00:10:28,560 –> 00:10:32,079
in practice right in reality what

298
00:10:30,480 –> 00:10:35,680
happens is let’s say you borrow

299
00:10:32,079 –> 00:10:37,680
70 000 okay 69 000 sorry and your car is

300
00:10:35,680 –> 00:10:40,160
only worth this much

301
00:10:37,680 –> 00:10:41,839
let’s say you within the first year you

302
00:10:40,160 –> 00:10:43,600
you know you lose your job or something

303
00:10:41,839 –> 00:10:45,519
and you have to scrap your car or you

304
00:10:43,600 –> 00:10:48,000
have to sell your car your car is only

305
00:10:45,519 –> 00:10:49,680
your paper value is only this much but

306
00:10:48,000 –> 00:10:51,120
the amount that you owe the bank is this

307
00:10:49,680 –> 00:10:53,760
much

308
00:10:51,120 –> 00:10:54,480
so let’s say you sell your car to a

309
00:10:53,760 –> 00:10:57,760
dealer at

310
00:10:54,480 –> 00:10:59,760
60 000 for example okay your loan amount

311
00:10:57,760 –> 00:11:01,600
is still 69 000 that means you have to

312
00:10:59,760 –> 00:11:04,000
fork out like another

313
00:11:01,600 –> 00:11:05,440
nine thousand dollars yeah to make up

314
00:11:04,000 –> 00:11:07,120
the difference because you owe the bank

315
00:11:05,440 –> 00:11:09,040
more than what your car is worth

316
00:11:07,120 –> 00:11:11,279
you can only break even in the fourth

317
00:11:09,040 –> 00:11:11,920
year when your car is worth more than

318
00:11:11,279 –> 00:11:15,040
what you

319
00:11:11,920 –> 00:11:15,839
owe the bank all right okay so this is

320
00:11:15,040 –> 00:11:18,000
when

321
00:11:15,839 –> 00:11:18,880
this example here is when you take a

322
00:11:18,000 –> 00:11:20,399
bank loan

323
00:11:18,880 –> 00:11:22,880
or when you don’t pay the minimum

324
00:11:20,399 –> 00:11:25,040
requirement as required by mes

325
00:11:22,880 –> 00:11:26,560
let’s say we take a high loan okay let’s

326
00:11:25,040 –> 00:11:28,320
say you don’t pay only ten thousand

327
00:11:26,560 –> 00:11:29,279
dollars and then your interest rate will

328
00:11:28,320 –> 00:11:32,399
be uh

329
00:11:29,279 –> 00:11:32,959
let’s say three point nine eight all

330
00:11:32,399 –> 00:11:34,640
right

331
00:11:32,959 –> 00:11:36,240
so you look at that you can only break

332
00:11:34,640 –> 00:11:40,079
even in your six

333
00:11:36,240 –> 00:11:41,600
six year okay where your car co is going

334
00:11:40,079 –> 00:11:42,320
to end a day because you look at these

335
00:11:41,600 –> 00:11:43,680
two different

336
00:11:42,320 –> 00:11:45,760
the price difference between this and

337
00:11:43,680 –> 00:11:49,440
this is only like 20k

338
00:11:45,760 –> 00:11:51,839
to 10k it’s about 3 000 difference

339
00:11:49,440 –> 00:11:52,880
yeah your car depreciates at more than

340
00:11:51,839 –> 00:11:55,600
1k a month

341
00:11:52,880 –> 00:11:56,800
okay 13 point about 14k a year more than

342
00:11:55,600 –> 00:11:58,880
1k a month

343
00:11:56,800 –> 00:12:00,079
so your car coe is going to end already

344
00:11:58,880 –> 00:12:02,720
then you can break even

345
00:12:00,079 –> 00:12:05,360
so that’s the thing about high loans or

346
00:12:02,720 –> 00:12:08,399
full loans your break-even point

347
00:12:05,360 –> 00:12:11,839
will be um further in the future

348
00:12:08,399 –> 00:12:12,480
okay likely it will be when your car seo

349
00:12:11,839 –> 00:12:16,000
is gonna end

350
00:12:12,480 –> 00:12:20,720
then you can break even um yeah

351
00:12:16,000 –> 00:12:22,560
so other than that i think um

352
00:12:20,720 –> 00:12:24,000
yeah that’s pretty much it for high

353
00:12:22,560 –> 00:12:27,040
loans and full loans i

354
00:12:24,000 –> 00:12:30,079
don’t know what else i’m gonna

355
00:12:27,040 –> 00:12:31,839
share with you but yeah

356
00:12:30,079 –> 00:12:34,160
okay if you guys have any other

357
00:12:31,839 –> 00:12:35,600
questions whatsoever about car financing

358
00:12:34,160 –> 00:12:38,240
just leave a comment down below and i’ll

359
00:12:35,600 –> 00:12:40,880
try to do a video on that and yeah

360
00:12:38,240 –> 00:12:42,800
thanks guys for watching hope you

361
00:12:40,880 –> 00:12:46,320
enjoyed this video and yeah i’ll see you

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00:12:42,800 –> 00:12:46,320
guys in the next video

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