1. What is "flat rate"?

Flat rate is the fixed rate charged on the full amount financed for the entire hire purchase term.

2. What is "effective interest rate"?

Effective interest rate is the actual interest rate you pay as a hirer on your loan over a specific time period.

3. What is the quantum of financing?

You can loan up to 100% of the sale price or valuation whichever is lower. As a potential customer, there is no mandatory minimum deposit. However, a deposit may be required by our Credit Department

4. Early Termination

Full settlement of the hire purchase account will be subject to 20% penalty on interest rebates following the Rule of 78 (Interest Rebate calculations)

5. Instalment computation under fixed flat rate

Fixed Flat Rate means that the interest rate and your monthly loan instalment remain the same throughout the duration of your loan. This protects you against any interest rate fluctuations.

    Illustration 1

Suppose you take a loan of S$50,000.00 over 7 years at an interest rate of 3.50%. The computation would be as follows:

6. Computation For Early Termination

For any standard Hire Purchase car loan, you are required to pay all principal and interest that would have accrued over the entire loan period. However, in the event you decide to repay the outstanding loan before the loan period ends, you will receive a rebate on the interest.

The interest rebate will be calculated by the method of Rule of 78 less 20%. This is to cover some of the costs which the bank will incur when a loan is repaid early.

Suppose your loan is S$50,000.00 over 7 years at 3.50%. If you repay the entire loan outstanding after making 36 monthly instalments, the computation is as follows:

    Computation For Loan Redemption

Original Loan Amount	S$50,000.00
Total Interest (based on illustration 1)	S$12,250.00
Total payable (principal + interest)	S$62,250.00
Less : instalment paid	(S$741.08 x 36) (S$26,678.88)
Less : Rebate of Unearned Interest using Rule of 78 method (less 20%)+	(S$3,228.24)
Total amount payable to bank to fully redeem your loan	S$32,342.88

7. How do you explain the interest rebate calculation?

Interest Rebate Calculation:

The interest rebate calculation is based on the formula below:

Interest Rebate (R) = n(n+1) X TC / t(t+1)

where R = Term Charges Rebate,

n = unexpired term ( in months ),

t = total repayment period,

TC = Term Charges

For example:

Amount Finance = S$100,000,

Interest rate = 2.7% p.a. flat rate,

Loan (number of yrs) = 7 yrs (84 mths),

Hirer full settles after 5 yrs, unexpired hiring period is 2 yrs or 24 mths

Thus, interest rebate is computed as follows:- Interest Rebate (R) = 24(24+1) X (S$100,000 X 2.70% X 7) / 84(84+1)

= S$1,588.26

8. What documents are required?

a. Latest income proof (IR8A) for Used Cars or income declaration for New Cars.

b. Insurance can be arranged.