Charlie T asked 3 years ago
Dear KC Lau,
I have been reading some of your material in the early years since university.
Thank you for providing such good content all these while.
I have a question regarding PTPTN Loan and I hope to seek your advise on this.
Remaining Balance : RM 19500
Monthly Repayment : RM 110
Upah : RM 27.27
Effective Return Rate (per year) after 20% Discount : 5.82% (from your excel sheet template)
A little bit of history there. My PTPTN has been restructured in 2016 before and I extend the payment term to the longest period available. The original repayment amount is RM 220.
I’m in the cross path of making full settlement or continue the monthly payment for another 20+ years.
Part of my repayment method is to withdraw 10k and cover the remaining balance with cash (approx 5-6k, from 2022 bonus).
Currently this is my only servicing loan and there would be another HouzKey loan to service in 2025. I’m puzzled if I should consider taking the 20% discount and fully settle my PTPTN loan.
In terms of cashflow, it is not alot at RM110 per month hence the impact on DSR ratio would not be significant.
Once again, thank you for your time reading this and I really hope to hear from you on this. I do understand you are a busy person and probably have many other questions from people around the world.
KCLau Staff answered 3 years ago
Since the effective return you will get is only 5.82%, you can look at it this way:
– are you satisfied with an investment giving you 5.82% guaranteed?
– if you don’t want this return, what will you do with your 5-6k cash from bonus?
– the big consideration: isn’t it better to have the cash remained as an emergency fund? You can put it in some cash management platform earning ~3%. Then you effectively just give up about 2.82% return and have more peace of mind?