Advice Needed - Personal Loans to fund Next Bike purchase.

[Danus24]

American Express interest rate on my credit card is only 12.5%

If you intend paying the 30k bike off in 6 months - it's only gonna cost you around R 1,800...

 

Make sure the bike is insured!

 

Enjoy that S-Works! Doesn't get better than that!

 

Thanks. Thats what I was saying.

[Danus24]

Simple loan calculator attached (Excel not allowed so image attached)

 

I agree with most of the above sentiments, but make an informed decision. See if the installment fits in your budget.

 

Note the Effective Interest rate (Including all fees etc), and the Total Repayment.

 

The lookup table can be used as a quick reference to what you wil be repaying in total given a term and interest rate.

 

Thanks this was very useful. Quick question if you take a loan over say 5 years and pay it off within the 1st year how much do you end up paying? penalties etc?

[gadget]

Thanks this was very useful. Quick question if you take a loan over say 5 years and pay it off within the 1st year how much do you end up paying? penalties etc?

 

I've been out of banking for a while, but I'm sure the NCA (National Credit Act) prohibits penalties on early settlement. You can work out what fees and interest you'll pay by taking the difference between the loan amount with no interest (R30 000 divided by 60 i.e. R500) and the actual installment (in this case at 20% it will be R1 022). So if you have a 5 year loan but settle it in 12 months time, you will pay R1022 x 12, instead of R500 x 12. So R12300 vs R6000. I.e. you will be paying R6300 interest in the first year.

 

You must remember that as with any loan, you settle mostly interest and less capital in the beginning of your loan. The longer the term, the more interest (as less capital is serviced).

 

Shoot me a PMM with your e-mail address and I'll send you a small excel file that you can play with. As I said, I agree that Personal loan should be the last option, but that is your choice. I'm hoping to assist you make an informed choice.