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Get Best Deal in Motor
Insurance here! (no extra charge)
Get Best Deal in Motor Insurance here! (no extra charge)
which insurance companies provide better rates for
Motor Insurance? In the past, you need to get quotes from different
agents for different insurers. Now, you can save time and hassle by
just emailing to us at
info@motorinsurancesg.com
We'll provide you with the most competitive quotes since we can get
quotes from ALL insurers in Singapore.
Do you know your CPF investment s are not covered by CPF Nomination?
Recently, someone suggested doing away with CPF nomination. Actually, this would actually cause more problems (for details, refer to my letter to Straits Times Forum which was published in Straits Times online Forum, the url is:
http://straitstimes.asia1.com.sg/forum/story/0,5562,351987,00.html (article is at end of email).
These are what I like to share:
Other things you might not be aware of:
Step 1 we explain what are things you need to decide (no extra charges)
Step 2 you tell us your instruction, we can do this
even at your home or office or anywhere in Step 3 your instructions drafted by in-house lawyer of Will specialist firm. (This firm does nothing except writing Wills and providing will custody. Step 4 we arrange 2 witnesses for you (no extra charges) to sign the Will and will help you register with Will registry (for free, no extra charges). Step 5 arrange safe custody at CISCO (optional, charges imposed by CISCO).
It is NEVER too early to write your Will. Don’t leave it till it is too late to do so. For those who might be interested to find out more, just call Dennis at 6737 8801 or email info@motorinsurancesg.com for a no-obligation discussion.
CPF Cut is Deeper than you think
After the recent announcement of impending changes to CPF system, many people have the wrong impression that CPF changes from 36% to 33% just mean an impact of 3%, which is untrue for some people. Do you know that the impact of CPF changes varies from person to person depending on a few variables:
Do you know that if you’re earning $6,000 a month or above, your contribution to CPF Ordinary account will be reduced by $480 per month to $780 per month, depending on your age group? The decrease in percentage terms range between 8% to 13% (please see table below). Assume a Person earns $6,000 per month currently. Current salary ceiling for CPF contribution is $6,000, to be reduced to $4,500 by year 2006.
If you’re currently using all of your monthly contribution to CPF Ordinary account to pay your housing loan, you might want to do a “restructuring” of your loan now than wait till year 2006. For those who are contemplating to purchase a property, they might also want to factor in these changes to avoid buying a property which they might not be able to afford come year 2006.
Useful Tips on Personal Credit Line (Unsecured Loans)
Dennis from Leverage Holdings was interviewed by Capital Radio 95.8 FM on 7 Aug 2003 to share useful tips on Personal Credit Line. Here's the summary of what was discussed:
What is a Personal Credit Line? Unlike Housing Loans and secured overdrafts, which are “secured” against collateral such as property or shares, Personal Credit Lines are Unsecured Loans ie. There’s no need to provide collateral.
How does it work? Basically once approved, typically Bank will provide you with a cheque book and some banks even give you an ATM card.
What can you use Personal Credit for? Good to act as a “spare tyre” – standby cash to cater to any emergency need for cash. We should have cash which can last about 6 months of our expenses. Having a Personal Credit line can help act as a buffer too to mitigate against risk eg. accidents, medical fees, retrenchments etc.
Basically, customer can use Personal Credit for anytime, anywhere, for anything they want. Eg. one advertisement shows a daughter buying an antique camera for the father.
Credit line is also useful for situations where credit cards are not accepted or less commonly used. Eg. making downpayment for purchase of a car, or downpayment for renovation.
Any criteria for qualifying for Personal Credit? Basically you need to be:
Personal Credit can also be used to help save interest on your credit card balances: If you have credit card balances, based on usual rate of 2% per month that bank charges, the annual effective interest rate is not 24% but actually 26.82%. Do you know that? A typical Personal Credit line interest rate is about 14%, over 40% lower. Thus, it make sense to transfer your credit card balances to Personal Credit line, an example will show this clearly:
Eg. if you have credit card balances of $5,000, by transferring to Personal Credit and repay over 5 years:
Another eg. if you have credit card balances of $20,000, by transferring to Personal Credit and repay over 5 years:
From above examples, it shows that it makes sense to transfer credit card balances to Personal Credit to cut down interest by almost 50%.
What are things to look out for in choosing Personal Credit Line.
In S’pore total of 9 banks provide this loan, each offering slightly different terms and conditions and each has very fanciful names eg. Ready Credit, Cash Plus etc.
What are the things to look out for?
1. Don’t mistake promotional interest rate as the
normal interest rate you pay.
4. Beware how interest rate is calculated,
use effective interest rate to compare. Eg. one bank advertise
their rate as 3.8%. Actually the effective interest rate is close to
8%, much higher than what it appears to be. 5. Don’t fall into a debt trap
As a guide, monthly instalment on personal loans should not exceed 15% of a person’s income. Total monthly debt payment including housing loan, car loans and Personal loan should not exceed 50% of a person’s income.
To conclude, Personal Loans has its uses eg. as a standby cash, to meet sudden urgent need for money. You can also transfer your credit card balances to Personal Loan to reduce interest by over 40%. However, please do not fall into the debt trap and end up in unable to pay for debts.
Car Loan at 2.6% interest rate, you're actually paying 4.75%, do you know?
Many people are unaware that when it comes to calculations for Car Loans, the way financial institutions calculate interest is quite peculiar. Someone asked me to clarify how “Car Loan” interest and “instalment” payment are calculated for your reference please.
Cheers!
Leverage Holdings Pte Ltd Car Loan calculations is quite peculiar, Calculation 2 is what you use for Housing Loan Calculation. For Car Loans, it’s using Calculation No. 1. As you can see, the actual “effective annual interest rate” Is 4.75% instead of 2.6%. Thus, you’re paying 4.75% in reality when the rate is 2.6% for Car Loans.
I can tell you that this is something many Financial Planners themselves are ignorant of. Therefore, don’t just get advice, get competent advice.
Subject: Calculation of Loan Repayments Hi Dennis, I would like to seek your professional advice as to how monthly loan payments (equal repayment of principal and interest) should be calculated based on the following example:
Assuming that I borrow $62,000 on a car loan for 10 years at 2.6% interest, how much will my monthly payments be?
Calculation No. 1 Total Interest for 10 years = $62,000 x 2.6% x 10 = $16,120 Principal + interest = $62,000 + $16,120 = $78,120 Equal repayment each month = $78,120 / (10 x 12) = $651
Calculation No. 2 Amount Borrowed (PV) = $62,000 Interest rate (i) = 2.6 / 12 Term (n) = 10 x 12 Monthly payment (PMT) = $587 (using financial calculator) Which method of calculation is more appropriate? Please advise. Thank you.
Here's how to cut interest on Credit Card by over 50%...
Personcal Credit eg. Ready Credit by CITIBANK, Prestige Credit by OCBC etc, can be used to cut interest on credit card by over 50%....we'll show you how.
Personal Credit can also be used to help save interest on your credit card balances: If you have credit card balances, based on usual rate of 2% per month that bank charges, the annual effective interest rate is not 24% but actually 26.82%. Do you know that? A typical Personal Credit line interest rate is about 14%, over 40% lower. Thus, it make sense to transfer your credit card balances to Personal Credit line, an example will show this clearly:
Eg. if you have credit card balances of $5,000, by transferring to Personal Credit and repay over 5 years:
1. your monthly instalment reduced from $152 to $116.
2. total interest savings of $2,110.21 or more than
40% of your original loan amount. From above examples, it shows that it makes sense to transfer credit card balances to Personal Credit to cut down interest by almost 50%.
Feel free to forward this article to your friends so that more people can benefit. If you have further questions or like to contact us, email to info@motorinsurancesg.com or call us at +65 6737 8801.
Leverage Holdings Pte Ltd
Are you over-borrowing without knowing it?
The current low interest rate creates an "illusion" of affordable housing loan instalment payment. For example, a couple buys a $500,000 house. They pay $100,000 downpayment and borrowed $400,000. For a loan period of 20 years, at current low interest rate of about 2% for housing loan, the monthly repayment only works out to $2,024. However, if interest rates move back up to long term average of about 5.5%, the monthly repayment will increase to $2,752 or almost $730 more!
The question is if you buy this house, would you be comfortable to
come up with this "additional" $728 when interest rates move up?
If interest rates move to 6%, the amount would be $2,866 or $842
more!
written by Patricia Hung Leverage Holdings Pte Ltd
P.S. this article was published in The Edge (a weekly Buinsess and Investment newspaper) on 27 Oct 2003.
Why Debt is a Double-edged sword?
Debt, or borrowing, is a form of leverage Debt enables us to "do more with less". Leverage comes from the word “lever” in Physics. Debt is a form of financial leverage, in that you’re using the lender’s money (financial institutions). Debt is a double-edged sword, but we can make it work for us. However, if we are not careful and over-borrow beyond our ability to repay, we might end up in financial abyss.
In what way is debt a double-edged sword? Well, if you take on more debt than we can afford to repay, should you be unable to meet the agreed debt repayment, the lender (typically a financial institution) not only would charge you late payment fees and charges but might even institute bankruptcy proceedings against you! Thus, debt can work for or against us. Debt is just a tool and it is up to us to manage and use debt wisely.
P.S. this is part of an article written by Dennis Ng of Leverage Holdings Pte Ltd in a regional magazine "Executive Inc" 4th quarter issue of year 2003.
Next, we'll share how you can make debt work for you and not against you....stay tuned...
P.S. this is part of an article written by
Is having "Debt" necessarily bad?
As you might know, I speak on the Radio Financial Planning Talkshow
on Capital Radio 95.8 FM
every TUESDAY
This
additional segment is introduced as many listeners in the past
called in but couldn’t get through The line. Attached below is a
summary of the discussion on
Topics discussed:
Dennis Ng, 9852 0663 www.LeverageHoldings.com - Financing Made Easy
DJ I-Ling: in the past on various occasions listeners called in to ask:”how much debt should I borrow?” “If I have some cash or CPF, should I use the money to reduce my loan?” So today, we have invited Dennis Ng to share with us how we can actually use debt wisely and how to make debt work for us. What’s the first thing you like to share with us?
Dennis: many people, including myself when I was young, my parents used to tell me not to owe others money…….it seems like owing money or taking debt is bad…but only after I became a Financial Planner that I realized that there’s a difference between good and bad debts.
DJ I-Ling: there is good debt and bad debt, what do you exactly mean, can you explain?
Dennis: what I’m saying is that some debt is bad. What is bad debt? In my opinion, any debt you incur for “consumables” is bad….thus, I feel that one should not owe people money for consumables, such as a vacation, or buying furniture and electrical appliances. Owing credit card is an example of bad debt. Why? Becos the interest rate on credit card can be as high as 24% a year. Once you start owing credit card debts, the debts may get bigger and bigger becos of the high interest rate and you end up forever in debt..
Thus, buying consumables such as furniture and electrical appliance on credit is also bad debt.
DJ I-Ling: why is using debt to buy furniture and electrical appliance bad debt?
Dennis: well. Just imagine you use instalment credit to buy a TV set. Once you buy the TV set, even if 1 month later you want to sell the TV set, you would realise that the value of the TV set has dropped easily by 30% to 50%....so the value of the asset has dropped while you’re still paying interest on the debt….thus, you will definitely make a financial loss if you need to sell this TV…thus, this is a bad debt.
DJ I-Ling: I see. So any debt we incur to buy consumables is bad, becos the value of such consumables typically drop after purchase while still have to pay interest on the debt. So what is a good debt?
Dennis: in my opinion, a debt is considered good if you borrow money and there’s a chance that your returns can be more than the interest you paid.
DJ I-Ling: so is borrowing money to buy a house a good debt?
Dennis: borrowing money to buy a house is ok as long as we do not over-borrow. In my opinion, your housing loan instalment should not exceed 1/3 of your monthly income. Thus, if your income is $3,000, the maximum housing loan instalment you should borrow is $1,000 per month.
DJ I-Ling: so based on a person’s household income, is it possible to work out the maximum housing loan a person should take?
Dennis: definitely. In the above example, a person with household income of $3,000, housing loan instalment should not exceed $1,000. So if the loan tenor is 25 years, and the interest rate is 4%....the maximum loan this person should take is about $200,000. A person with household income of $6,000 maximum loan is $400,000 and one with $9,000 household income maximum loan is $600,000 and a person with household income of $12,000 maximum loan is $800,000.
DJ I-Ling: so a person’s monthly debt repayment should not exceed 35% of his income. If a person has CPF and Cash and can buy a house without taking up a loan, should the person take up a loan?
Dennis: in my opinion yes. You might ask if someone has enough cash and CPF to buy a house, why should he take up a loan and pay interest? Well, let me use an example to illustrate.
Example a couple has combined $300,000 in CPF and another $200,000 in cash. Firstly, we must remember that the interest rate paid on CPF Ordinary account is 2.5%...while currently, first year interest rate for loan is about 1%....so his $300,000 in CPF will earn him annual interest of $7,500. While borrowing $300,000 at 1% interest, a person only need to pay total interest of $3,000. So instead of using CPF to pay for the house, by borrowing money, this person can gain $4,500! He gained more than the interest he paid!
DJ I-Ling: so in current low interest rate environment, it is possible for a person to borrow money and gain instead!
Dennis: yes, currently, interest rate is the lowest in the last 40 years’ history. It is a very rare opportunity for people to borrow money at low interest rate. If you don’t grab this rare opportunity now, you might not have another opportunity to gain at low interest rates.
DJ I-Ling: in last week, you explained that the effective interest rate for car loan is about 4%, so if a person is planning to buy a car and a house at the same time. What can he do to minimize his interest?
Dennis: if a person is planning to buy a car and a house at the same time. He might consider borrowing a higher housing loan amount and reducing his car loan amount to minimize interest expense becos interest rate on car loan is higher than housing loan.
DJ I-Ling: can you use an example to illustrate?
Dennis: definitely. Let’s say a person is going to buy a car costing $70,000 and buying a house costing $400,000. Originally, he planned to borrow up to 70% for the price of the house, or $280,000. He also intend to borrow 70% on the car loan or $56,000. The maximum limit for housing loan is 80% of purchase price, so in this case, he can consider increasing housing loan to 80% of purchase price, or $320,0000 instead. Since he is borrowing additional $40,000 on his house, he can thus have more cash to pay for his car and can reduce his car loan by $40,000, from $56,000 to $16,000. Thus, he can cut down his interest rates as interest rate on car loan is about 4% currently while interest rate on housing loan is only about 1%.
DJ I-Ling: so by proper planning we can actually maximize our benefit from borrowing. As you mentioned, currently interest rate is very low, do you see such low interest rates to continue?
Dennis: yes, currently interest rates is at 40 years’
low. I think with economic recovery and
DJ I-Ling: if interest rates on housing loan move to 3% or 4%, how would it impact a person?
Dennis: let me use an example to illustrate. If you take up a housing loan of $400,000 repayable over a period of 20 years. at 1% interest rate, your monthly instalment is only about $1,840. At 3% interest rate, your monthly instalment goes up to $2,218 or almost $400 more!. And if interest rate goes up to 4%, your monthly instalment will go up to $2,423 or almost $600! So if you didn’t prepare for the possibility of your monthly instalment going up by $600 in the next few years…you might end up unable to repay your housing loan when interest rates move up.
DJ I-Ling: so for those people who are planning to buy a house, when you work out your budget for monthly instalment, please make sure you’re able to afford the monthly instalment even if interest rates move up in future, so as to ensure you won’t be in the position of unable to pay your housing loans.
DJ I-Ling: different banks have different packages, other than checking with each bank individually, is there a easier way to find out and compare different banks’ packages?
Dennis: In the past, you need to check with individual banks. Now, there’re some companies which provide a 1-stop service. For example, you can come to me and I can help you generate an analysis comparing different bank packages and letting you know the pros and cons of each package. You then make your own decision. Once you decided which bank to choose, we’ll help you apply the loan. You need not go to a bank at all. As the entire service we can provide to you at your convenience, whether at your home or office.
Thank you Dennis for your sharing. Now, it’s time for listeners to call in if you have questions.
10 Reasons why clients choose Leverage Holdings...
The directors of Leverage have 20 years of experience in approval of loans in banks and finance companies and can help increase your chance of getting loan approved. Currently, we have a total of 52 certified consultants.
Why get a business loan through us? Here’re 10 reasons why many satisfied clients have chosen us:
Please feel free to call us at 6737 8801 or 63399 255 to arrange for a no-obligation discussion.
How to make Debt work for you?
How can we make debt work for you? Debt can be used to boost our investment returns. For example, if we buy a property costing $1 million, if we use all our money to buy and the property’s price appreciated to say $1.2 million, our return on investment is 20 per cent. (assuming net of transaction cost).
However, if we use only 30 per cent of our own money and a 70 per cent bank loan, our invested capital is only $300,000. Assuming interest an payment of about $50,000 for the loan, we would end up with a net capital gain of $150,000 when the price appreciated to $1.2 million. Since our invested capital is only $300,000, a net capital gain of $150,000 works out to a return on investment of 50 per cent or 250 per cent higher!
How and when to use credit? In purchasing big-ticket items such as a house or a car, most of us might not be able to pay for them in cash; therefore, it is alright to borrow money for such purposes. Of course, the question is: "How much to borrow?" And, "How long should the loan tenor be for" have to be considered.
Rule of thumb for comfortable debt levelIn order to avoid over borrowing, you should ensure that your debt level is comfortably affordable. A rule of thumb is not to use up more than 50 per cent of your net income in debt repayments. For instance, if your monthly net income is $4,000, your total debt repayments, including housing loan, car loans and other loans should not exceed 50 per cent of your income, or $2,000.
What about using credit for consumables?
Some strongly advise against accumulating credit card
balances for consumables such as a vacation, or furniture and
electrical appliances including refrigerators, home theatre systems
etc. Why? Interest rates on credit card debt are usually very high.
In
Therefore, as far as possible, pay off all credit card bills when due. And if you have rolling balances on a credit card, start a disciplined program of paying it down monthly (e.g. $200 per month) and pay it off as soon as possible.
P.S. this is part of an article written by Dennis Ng of Leverage Holdings Pte Ltd which was published in a regional magazine "Executive Inc" 4th quarter issue of year 2003
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