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Institut Perguruan Tun

Hussein Onn
Mathematics Short Assingment
TITLE : Car Loan
PPISMP JUN 2010 Intake

Students’ Name : EA SUK YONG


JANE TAN
NEO SAU ROU
HOI HER YI

Group/Option : BC/PJ/KS(1)
Semester : PPISMP SEM 1
Subject : Basic Mathematics
Lecturer’s Name : Mr.ABU BAKAR
Submission Date : September 2010

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Contents

No. Contents Page


Number
1. Loan 1-3
1.1. Defination of Loan 1
1.2.Types Of Loan
1.2.1 Secured Loan 2
1.2.2 Unsecerud Loan 3

2. Tips On Buying A Car 4


2.1. Selecting The Car 4
2.2.Negotiating The Car 4
2.3.Financing The Car 4
3. Steps Before Having A Car Loan 5
3.1.Find The Best Car Loan Rates 5
3.2.Understand The Car Loan Rates Factors 5
3.3.Compare Car Loan Rates 5
3.4.Get The Best Car Loan Rate 5
4. My Ideal Car 6-7
4.1.Properties of Car 6
4.2.Price List 7

5. Interest 8-9
5.1 Defination Of Interest 8
5.2.Types Of Interest
5.2.1.Simple Interest 9
5.2.2.Compound Interest 9
6. Calculation Of Various Car Loan 10-12
6.1.Proton Edar Sdn Bhd 10
6.2.Fumigawa Motor Sdn Bhd 11
6.3.Seong Hoe Motors Sdn Bhd 12
7. Comparison On Repayment Period And Interest Rate 13
8. Comparison Between Repayment Period And Total Payment 14
9. Personal Budget 15-18
9.1.1.Defination Of Personal Budget 15
9.1.2.My Monthly Budget 16
9.1.3.Percentages Of Monthly And Annual Expanses 17
9.1.4.Percentage Of Income On Car Loam
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10. Conclusion 19-20

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11. Bibliography
12. Appendix

Loan

A loan is a sum of money that is given by one party to another for a limited
amount of time. It is to be repaid according to terms of the loan agreement which
includes any interest to be charged and a time frame for repayment.

A loan is a type of debt. This article focuses exclusively on monetary loans,


although, in practice, any material object might be lent. Like all debt instruments, a
loan entails the redistribution of financial assets over time, between the lender and
the borrower.

The borrower initially does receive an amount of money from the lender,
which they pay back, usually but not always in regular installments, to the lender.
This service is generally provided at a cost, referred to as interest on the debt. A loan
is of the annuity type if the amount paid periodically (for paying off and interest
together) is fixed.

A borrower may be subject to certain restrictions known as loan covenants


under the terms of the loan.

Legally, a loan is a contractual promise of a debtor to repay a sum of money


in exchange for the promise of a creditor to give another sum of money.

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Types of loans

1.Secured Loan

A secured loan is a loan in which the borrower pledges some asset (e.g. a car
or property) as collateral for the loan.

A mortgage loan is a very common type of debt instrument, used by many


individuals to purchase housing. In this arrangement, the money is used to purchase
the property. The financial institution, however, is given security — a lien on the title
to the house — until the mortgage is paid off in full. If the borrower defaults on the
loan, the bank would have the legal right to repossess the house and sell it, to
recover sums owing to it.

In some instances, a loan taken out to purchase a new or used car may be
secured by the car, in much the same way as a mortgage is secured by housing.
The duration of the loan period is considerably shorter — often corresponding to the
useful life of the car.

There are two types of auto loans, direct and indirect. A direct auto loan is
where a bank gives the loan directly to a consumer. An indirect auto loan is where a
car dealership acts as an intermediary between the bank or financial institution and
the consumer. Auto loan is a personal loan to purchase an automobile.

A type of loan especially used in limited partnership agreements is the


recourse note.A stock hedge loan is a special type of securities lending whereby the
stock of a borrower is hedged by the lender against loss, using options or other
hedging strategies to reduce lender.

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2.Unsecured Loan

Unsecured loans are monetary loans that are not secured against the borrowers
assets. These may be available from financial institutions under many different
guises or marketing packages such as :

• credit card debt


• personal loans
• bank overdrafts
• credit facilities or lines of credit
• corporate bonds

The interest rates applicable to these different forms may vary depending on the
lender and the borrower. These may or may not be regulated by law.

Types of Loan

Secured Loan Unsecured Loan

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Tips On Buying A Car From an Individual

A large percentage of the vehicles we finance are used cars, and a good
share of those are purchased from private individuals. To help us make this very
common way to buy a car a satisfying transaction, here are some tips based on the
successful experience of our members.

1. Selecting The Car

Do our homework before we decide to make a purchase. Knowing the repair


records and market prices of specific types of cars we have in mind can help keep
our search realistic. Also, it pays to get a mechanical evaluation of a used car before
we make our decision to buy it. Most private sellers will allow serious prospective
buyers to take the car to an independent mechanic. Investing in a thorough
examination may save our thousands of dollars down the road.

2. Negotiating The Deal

"Dealing with cash" has the same advantage in any car purchase negotiation,
so having your financing pre-approved will strengthen your bargaining position.
Setting the price is always a challenge in a private sale. A useful rule of thumb is to
use the midpoint between the "trade in" and the "retail" values as listed for the car in
the NADA "Blue Book" of used .

3.Financing The Car

Once we have found the car and settled on a deal, be sure to ascertain
whether there is an outstanding loan on the car. If there are no outstanding loans,
the seller will have a copy of the car's title. The title can be signed over to you at the
time of loan closing.

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Steps Before Having A Car Loan
1.Find the Best Car Loan Rates
To find the best car loan rates before applying for a car loan we must
understand what factors determine the rate a car loan lender will offer. Car loan
lenders will quote a rate called the Annual Percentage Rate.Compare this rate with
other lender's rates. Once we know our expected annual percentage rate, loan
length and the car price, we can estimate our total car loan amount.

2.Understand the Car Loan Rate Factors


Lenders will consider many factors when determining your car loan rate.
The size of your down payment can reduce your rate; a larger down payment usually
means a cheaper rate.The type of vehicle we're buying may affect our car loan rate
as well.

3.Compare Car Loan Rates


To accurately compare car loan rates look at similar down payment
requirements and terms (the length of the car loan). Ours car loan terms will
depends on our credit history, kind of car we buy and the size of our down
payment.Once we have all of our car loan quotes in hand. Sit down with a calculator
and compare their rates side-by-side.

4.Get the Best Car Loan Rate

Most car loan lenders give higher rates if we relocate often. Loan lenders
want to be able to verify our address at a minimum and long term residence helps
secure a lower rate. on our credit report.

Before committing to any car loan, make sure we're getting the best rate
by applying to several lenders. Having car loan offers in hand makes negotiating for
the best rate much easier!

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My Ideal Car

Proton Saga 1.3 (M) Base-Line

Properties Of
Proton Saga 1.3(M) Base-Line

 Engine :CAMPRO 1.3 + Intake Air Fuel Module (IAFM)

 Engine output : 70KW(94BHP)/6000rpm

 Rev :120/4000rpm

 LxWxH : 4257mm X 1680mm X 1502mm

 Cabin size : 413L

 Petrol tank :40L

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 Colors :Metallic Tranquility Black

 Warranty :3 year or 150000 KM

 Petrol Consumption : Manual: 5.5L/100KM

Price List

CONTENT RM RM
NET SELLING PRICE
(inclusive of Sales Tax,
Excise Duty & Government 32,936.80
Approved Standard Accessories)
TOTAL SALES PRICE 32,936.80
METALLIC PAINT 450.00
ROAD TAX 70.00
REGISTRATION FEES 150.00
HP OWNERSHIP CLAIM 50.00
NUMBER PLATES 50.00
SECURITY ETCHING 35.00
INSURANCE PREMIUM 1,041.20
ACCESSORIES PACKAGE 215.00
ON THE ROAD PRICE 34,998.00
INSURED VALUE: 32,000.00
LOAN (90%) 31,400.00
DOWN PAYMENT 3,598.00

Accessories package inclusive of:


 Power window
 Central Locking System
 Alarm
 Anti-Rust
 Radio CD player
 Air Conditioner
 Coil Mats
 N.Plate Holder

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Other Standard Features:
 Steel Wheel with Full Wheel Cap
 Bumper-Body Colour
 Power Steering

Interest
According to Oxford Advanced Genre, interest is the extra money that you
pay back when you borrow money or that you receive when you invest money or The
charge for the privilege of borrowing money, typically expressed as an annual
percentage rate.

There are two types of calculations for interest which is simple interest and
compound interest.

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1. Simple interest

 refers to interest that is paid only on the original amount of money that you
invested and not on any interest that it has earned.
 simple interest is calculated on the original principal only.
 The formula below can be used to calculate simple interest.

Simple Interest =

p = principal
i = interest rate for one period
n = number of periods (year)

2. Compound interest

 is the interest that is paid both on the original amount of money paid and on
the interest that has been minus to it.
 Although the interest may be stated as a yearly rate, the compounding
periods can be yearly, semiannually, quarterly, or even continuously.
 It’s an exponent function in terms of time. This type of interest can be
calculated by using the formula below:

If the compounding period is yearly.


1.Principle x rate of interest = interest for the first year I

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2.(Principle - I) x rate of interest= interest for the 2nd year
Total interest need to be paid after X years
= Interest for the first year + interest for the 2nd year +……

Calculation Of Various Car Loans Offered

A. Proton Edar Sdn.Bhd


Interest rate for repayment period of 7 years
Interest Charge :
I. Loan × Interest Charge × Years = Interest
RM31,400× χ % × 7years = RM γ
RM31,400× χ / 100 × 7years = RM γ
RM3,14χ × 7years = RM γ
RM2,198χ = RM γ-----

II. Interest RM γ:
RM31,400+ RM γ = RM475.86 × 84 Months
RM31,400+ RM γ = RM39,972.24
RM γ = RM39,972.24– RM31,400
= RM8,572.24 -----

III. Subs into


RM2, 198χ = RM γ
RM2, 198χ = RM8, 572.24
Χ = RM8, 572.24 ÷ RM2, 198
Interest rate = 3.90%

Interest rate for repayment period of 9 years


I. Loan × Interest Charge × Years = Interest
RM31,400× χ % × 9years = RM γ
RM31,400× χ / 100 ×9 = RM γ
RM3,14χ × 9years = RM γ
RM2,826χ = RM γ-----

II. Interest RM γ:
RM31,400+ RM γ = RM398.03× 108Months
RM31,400+ RM γ = RM42.987.24
RM γ = RM42,987.24– RM31,400

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= RM11,587.24 -----

III. Subs into


RM2, 826χ = RM γ
RM2, 826χ = RM11,587.24
Χ = RM11,587.24 ÷ RM2,826
Interest rate = 4.10%

B.Fumigawa Motor Sdn Bhd


Interest rate for repayment period of 7 years
Interest Charge :
I. Loan × Interest Charge × Years = Interest
RM31,400× χ % × 7years = RM γ
RM31,400× χ / 100 × 7years = RM γ
RM3,14χ × 7years = RM γ
RM2,198χ = RM γ-----

II. Interest RM γ:
RM31,400+ RM γ = RM475 × 84 Months
RM31,400+ RM γ = RM39,900
RM γ = RM39,900– RM31,400
= RM8,500 -----

III. Subs into


RM2, 198χ = RM γ
RM2, 198χ = RM8, 500
Χ = RM8, 500÷ RM2, 198
Interest rate = 3.87%

Interest rate for repayment period of 9 years


I. Loan × Interest Charge × Years = Interest
RM31,400× χ % × 9years = RM γ
RM31,400× χ / 100 ×9 = RM γ
RM3,14χ × 9years = RM γ
RM2,826χ = RM γ-----

II. Interest RM γ:
RM31,400+ RM γ = RM395× 108Months
RM31,400+ RM γ = RM42,660
RM γ = RM42,660– RM31,400
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= RM11,260 -----

III. Subs into


RM2, 826χ = RM γ
RM2, 826χ = RM11,260
Χ = RM11,260 ÷ RM2,826

Bank Down Loan Interest Charge(%) Total Interest Charge(RM)


Car Agent
Offered Payment (A) (B) =(A) X (B) X Years

(RM) (RM) 7 yrs(RM) 9 yrs(RM) 7 yrs(RM) 9 yrs(RM)

Proton
RHB
Edar Sdn
Bank 3,598 31,400 3.90% 4.10% 8572.24 11,586.60
Bhd

Famigawa
AmBank
Motor Sdn
Group 3,598 31,400 3.87% 3.98% 8506.26 11247.48
Bhd

Interest rate = 3.98%

Comparison on repayment
period and interest rate

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Car Agen Bank Monthly Payment(RM) Total Payment(RM)

Offered (A) =(A)XRepayment


duration(years)

7 yrs(RM) 9 yrs(RM) 7 yrs(RM) 9 yrs(RM)

Proton RHB
Edar Sdn Bank
Bhd 475.86 398.02 39,972.24 42,986.16

Famigawa AmBank
Motor Sdn Group
Bhd 475.00 395.00 39,900 42660.00

Comparison Between
Repayment Period And Total Payment

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Personal Budget

A personal budget is a finance plan that allocates future personal income


towards expenses, savings and debt repayment.

Past spending and personal debt are considered when creating a personal
budget. The idea behind individual budgets is to enable people needing social care
and associated services to design that support and to give them the power to decide
the nature of the services they need. Key features are:

 A transparent allocation of resources, giving individuals a clear cash or


notional sum for them to use on their care or support package
 A streamlined assessment process across agencies, meaning less time spent
giving information.
 Bringing together a variety of streams of support and/or funding, from more
than one agency.

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 Giving individuals the ability to use the budget in a way that best suits their
own particular requirements.
 Support from a broker or advocate, family or friends, as the individual desires.

Debit Credit
RM RM
Basic Salary 1967.20 KWSP 298.89
House allowance 250.00 SOSOC 13.25
Public Service Allowance 300.00 Net Spendable 2405.05
COLA Allowance 200.00

2717.20 2717.20

Our Monthly Budget

Individual Monthly Income Statement

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Percentage of Income Used On Car Loan

Bank Percentage of Income Used On Car Loan


Car Agent
Offered (Monthly payment / Monthly income RM 2405.06)

7 years(RM) 9 years(RM)

Proton Edar RHB


Sdn Bhd Bank 19.78% 16.55%

Famigawa
AmBank
Motor Sdn
Group 19.75% 16.42%
Bhd

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Conclusion
After a few of observation ,calculation, and comparison,finally we decided to
purchase Proton Saga 1.3(Manual) Base-Line as my first car when I graduate .

The main reason why do we chosed Proton SAGA 1.3(Manual)Base-Line is


because the price is affordable for us who are just graduated for teacher tranning
programme with just about RM 2405.06 as net salary.

Secondly , the new SAGA has greater fuel efficiency and affordable for us
which the petrol consumption is only 5.5L/100KM.Nowadays,the petrol price is keep
on increasing .but the new SAGA consumption only 5.5 little for 100 kilometre ,due to
the smoother delivers cruising ,we chosed to the New SAGA as the car we plan to
buy.

In addition ,the New SAGA also consider have enough capacity for us. The
new Proton Saga is shorter, wider and taller than the outgoing model, resulting in
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more interior room for passengers and there are key areas in which space is gained
and efficiently mustered .The New SAGA has 1,947mm interior long, 1,355mm
interior wide and 1,210mm interior tall .The new SAGA has generous cabin space
and provides best-in-class luggage space.

Additionally, the quality level and safety features of the new Saga are also
superior for a car in its class. It is also designed to provide the spaciousness and
comfort for family needs on the road.

The new SAGA taking similar emphasis on safety as other vehicles designed
and engineered by PROTON, comes with a chassis that is 75 per cent made of high
tensile steel, thus provides passengers with a basic "protection cage" and eventually
minimizes the risks of injury in case the vehicle is involved in road accidents. These
safety features are all combined in a modern, contemporary and stylish design.
We also found that the IAFM system added to the Campro engine will enhance the
drivability and competitive performance of the car.

For the repayment period for the car ,we would like to chose the repayment
period of 7 years .The reason why do we chose 7 years to pay back the loan is
because the interest offered by all the car loan agent is lower than the repayment
period of 9 years.Besides,the total payment of the loan for 7 years is much more less
than loan duration of 9 years.

After a few of calculation on the monthly budget ,we found out that we are
still manage to afford our car loan for 7 years which we need to pay about RM 475
monthly. According to my monthly income and monthly expanses ,we manage to pay
the car loan monthly although the money need to pay for the duration of 9 years is
lower ,but after a few of calculation ad comparison on the repayment period ,we
found out that the total payment of 9 years loan duration is higher than the loan
duration of 7 years which is RM 2760 extra cost. Thus ,we decided to take 7 years
as my repayment period of my car loan.

For car loan agent we would like to purchase my ideal car form Fumigawa
Motor Sdn Bhd .The main reason why do we chosen Fumigawa Motor Sdn Bhd is
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because the interest offered is much more lower than the another car loan agent
which offered 3.87% for 7 years loan duration .For the another car loan agent
,interest rate offered by them is slightly higher than Proton Edar Sdn.Bhd which is
3.90%..Moerover, we chosen Fumigawa Motor Sdn Bhd as the agent for our car loan
because the finiancial afford for this car loan agent is AmBank Group which is
trustable.Thus means that we just need to pay RM 475 monthly in order to afford my
car loan for 7 years.

In conclusion ,after a few of comparison ,calculation and observation ,finally


we decided to buy Proton Saga 1.3(M)Base-Line as my first car after graduated from
teacher tranning programme ,we also would like to chose Fumigawa Motor Sdn Bhd
as the agent for my car loan .and the repayment period for our car loan is 7 years
which is a appropriate duration of our car loan.

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Appendix

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