Conventionally, the bank loan you take to finance a car purchase is a fixed-rate loan. This is pretty straightforward – your interest/profit is calculated upfront based on an unchanged rate of the amount you’re borrowing, spread out over your financing period.
What if you could have the flexibility to control the total profit charges throughout the tenure, just like in your home loan? RHB’s Vehicle Financing-i (Variable Rate) Flexi Redraw offers just that. As a variable-rate financing product, the profit charges – known as interest payable in a conventional loan – are calculated based on the daily rest and reducing balance method.
While it may sound like it may cost you more, variable-rate financing actually tends to have lower financing rates (initially) compared to fixed-rate financing, and any upward fluctuation means a minimal increase given that the financed amount in the auto financing is typically much less than your average mortgage.
So if you pay extra, even by a few ringgit or a day earlier, you can reduce your principal amount and in so doing, reduce the profit charges (which RHB will calculate on a daily basis), giving you savings in the long run. You can also withdraw from these excess payments as and when you need to.
Whenever you have more to spare (like when your year-end bonus comes in, or the business did especially well last month), why not pay more or early to lock in those savings? Learn more about variable-rate financing and how it can benefit you here.
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