Tuesday, April 10, 2007

"A New Car, and Your Money Back!"

"New Car, and Your Money Back in 5 or 6 Years!"

Sounds great, doesn't it, but is it possible?

This could be achieved, using the "Double Your Money in 5 Years" Time Deposits, but in practise, would mean you covering any Deposit on such a car, and depositing funds, rather more than the cost of whatever car you want to buy?

However it is a better way to buy a car than taking money out of you Bank Deposit to buy a vehicle for CASH (IMHO) - here's why:-

  1. Dealers don’t seem to offer discount for CASH, (well not here in Cebu, on latest models, anyway).
  2. Once the car leaves the showroom, having been bought for CASH (and insurance sorted, and LTO fees, number plates, delivery charges etc), it has already depreciated, and quite considerably usually.
  3. Try selling, and almost impossible, to get back what you paid for it!
  4. Taking money from the Bank, lowers you capital held, and perhaps you ’status’ with the Bank.
So what is the Alternative?

Well it my case, it was utilising the - 6 Year ‘Hybrid’ CTD from certain Rural Banks,

Rather than withdrawing funds from a commercial bank, to buy a car, for cash, I ‘borrowed’ against the funds, I had on deposit.

I borrowed Php1M, and placed these as Php250K deposit, in my name, Php250K in my wifes name. We also opened a ‘Joint’ account with me and my wife, for another Php250K, and also with me and my 21 year old step-daughter.

So 4 x Php250K deposits placed in 6 Year Hybrid CTD, all covered by PDIC insurance.

With this ‘Hybrid’ TD, you get the interest for months 61-72, up front, in ‘advance’.
So we received Advance Interest of Php200K Cash (this being 20% of Php1M) immediately!

The vehicle I bought, was a Hyundai 1.5CRDi VGT, costing Php700K, in Cebu.

This 'Advance Interest' of Php200K covered the 20% Deposit on the Hyundai purchase, as well as the LTO Fees (3 Years worth), Delivery Charges, Fully Comprehensive Insurance, and some extras on the vehicle like extended anti-corrosion treatment, high level spoiler with LED Brake Lights, and Wireless Central Locking/ Alarm.

The 80% Balance on the car was funded via a 48 month AutoLoan of Php15,262 a month, in arrears.

Since the monthly Interest from the Php1M 6 Year ‘Hybrid’ CTD, was to be Php16,666.67 a month, this easily covered that. The balance could be used for vehicle services or saved up to cover the Comprehensive Insurance renewal.

So at the end of 6 years, I have:-
  • 6 year old vehicle, (fully serviced, insured, and maintained)
  • Extras:
    - Anti-Corrosion Warranty,
    - Hi Level Spoiler/Brake Lights,
    - Remote Central Locking & Alarm system
  • Php200K (interest from months 49-60),
  • Php1M refunded Deposit.

Seemed a better deal to me, than having withdrawn Php700K from a commercial Bank, to buy the Hyundai Matrix 1.5CRDi VGT, for cash!

The point here is that it can be done - because I am doing it.

BUT think you need the 6 Year ‘Hybrid’ TD, with the 20% ‘Advance Interest’, to cover the Deposit on a new car, You probably need to Deposit more than the purchase price, to fully cover the Auto Finance over 5 years, or less, as well as LTO Fees, insurance, service costs etc.

1 comment:

boostah said...

Holy crap! you make me smile, you are genius! I hope you like beer coz next time im in cebu i owe you a few.