fixed or linked interest rate

[SlyFly]

I basically want an indication of what we can expect the next few months in-regards to the prime rate.

 

[DJ...]

I basically want an indication of what we can expect the next few months in-regards to the prime rate.

So does every single person in the financial markets. You're looking at flat to half a basis point increase. Longer term there is simply no way to tell, whatsoever. Consensus is increased interest rates though...

 

[SlyFly]

So does every single person in the financial markets. You're looking at flat to half a basis point increase. Longer term there is simply no way to tell, whatsoever. Consensus is increased interest rates though...

Haha, I understand this as well... But the debate so far already give me at least some confidence in my decision.

 

[DJ...]

Haha, I understand this as well... But the debate so far already give me at least some confidence in my decision.

The decision being?

 

[SlyFly]

The decision being?

Bumping it down to 60 months, taking the fixed rate at 9% and selling the car if the interest rate goes above 11% (Haha)?

 

[HavocXphere]

Take the linked rate...set your debit or as if you took the fixed rate.

Win win.

Well if the interest rate does go up then he's basically already compensated for it, if it doesn't be scores.

So he can only do better with the linked rate or break even.

That logic is a little bit scary tbh.:erm: You can't take two independent decisions and mix & match outcomes only to conclude win-win. Whether the fixed/linked decision pans out depends purely on the rate movement.

I can afford it, I'm actually planning on paying more than the monthly installment (Up to R1000 some months), I just prefer committing to less.

Recently arrived at a similar conclusion...its the optimal route...if you've got self-discipline.

I basically want an indication of what we can expect the next few months in-regards to the prime rate.

My crystal ball says its going up. Not soon, but since you're looking at 2% gap & 7 years fixed sounds better to me....esp with all these thing putting pressure on inflation (etoll, electricity prices etc).

 

[SauRoNZA]

That logic is a little bit scary tbh.:erm: You can't take two independent decisions and mix & match outcomes only to conclude win-win. Whether the fixed/linked decision pans out depends purely on the rate movement.


Recently arrived at a similar conclusion...its the optimal route...if you've got self-discipline.


My crystal ball says its going up. Not soon, but since you're looking at 2% gap & 7 years fixed sounds better to me....esp with all these thing putting pressure on inflation (etoll, electricity prices etc).

Well I wouldn't take a car loan at 70 months in the first place, but we aren't going to change that are we?

So personally if I accept the loan term I would gamble the lower linked rate.

But like I said I wouldn't touch anything over 54 preferably 36 months.

 

[DJ...]

Well I wouldn't take a car loan at 70 months in the first place, but we aren't going to change that are we?

So personally if I accept the loan term I would gamble the lower linked rate.

Logically you shouldn't. Your time risk increases, so you're exposing yourself to more interest rate risk with a longer term, hence you'd want to mitigate risk rather than increase it...

 

[SauRoNZA]

Well like I said the first part in migrating risk would be not having such a long loan term.

 

[HavocXphere]

Well I wouldn't take a car loan at 70 months in the first place, but we aren't going to change that are we?

So personally if I accept the loan term I would gamble the lower linked rate.

You mistake my point. The solution you arrived at for this set of circumstances is pretty solid & is reasonably low risk and would serve you well in life. I'm just say that from a purely analytically point of view the path you took to reach said conclusion is flawed. Perhaps next time round luck will favour you again in that a flawed process will lead to the correct answer. Perhaps it will not. Either way I can conclusively say me not highlighting the flaw after spotting it would be decidedly borderline from an ethical PoV.

But like I said I wouldn't touch anything over 54 preferably 36 months.

As I said in my previous post above, the longest possible term available & then paying more seems optimal to me (assuming one has self-discipline). I'd love to hear any arguments against this point of view though..I'm planning on acting on this so I'd rather hear counter arguments from mybb than my banker.

 

[DJ...]

Nothing wrong with that. They've done away with early settlement fees iirc. Or largely done away with them at least...

 

[Chevron]

As I said in my previous post above, the longest possible term available & then paying more seems optimal to me (assuming one has self-discipline). I'd love to hear any arguments against this point of view though..I'm planning on acting on this so I'd rather hear counter arguments from mybb than my banker.

Problem is everyone says that, then doesn't do it.

I hope you aren't fooling yourself here.