Basically, both are the Mortgage Life Insurances which pay off the outstanding loan balance in the event that the borrower dies or suffers from total and permanent disability before the loan is fully settled.
MRTA known as Mortgage Reducing Term Assurance whereas MLTA is Mortgage Level Term Assurance. Normally, it can be purchased from any banks. MRTA is an insurance policy and has become a common and acceptable policy that adds to your mortgage loan. The premium is paid upfront in one lump sum.
The borrower can choose the amount and tenure of the coverage. The amount of premium will be determined by his age mostly. To the borrower this is relatively a hassle free, affordable and necessary policy.
However, MRTA has a reducing premium over time, as you pay your loan, the amount you owe the bank would reduce and the amount you need to be insured for would also be reduced. So, for me it is an expense item as you don’t get a single cent out of it in the end.
MLTA is slightly different from MRTA as it offers an alternative for a borrower who is looking for a life insurance which offers protection, savings and returns.
The premium is paid on a monthly, quarterly, half yearly or yearly basis and the policy holder can choose to have a wider coverage other than death and total and permanent disability.
Below is the comparison between MLTA vs MRTA:
I believe still many people do not know how the housing loan and car loan interest are calculated differently.
Car loan is not like housing loan. Car loan interest is calculated based on the total amount of loan that you have and the interest is fixed. So, car loan is flat and if you settle the loan payment early, you still have to pay the interest for the rest of the agreed loan tenure.
My Personal Advice:
Do not take car loan for longer period. If you can’t afford the monthly payment due to the short tenure, then try to work backwards and set a target of shorter loan period, and save up a sum of money so that you can put a bigger downpayment. In the end, you’ll save a lot of money in the long run.
Imagine: if you loan 40k, 40k x 3.75 %(9 years loan interest) = RM1500. So, your final interest would be RM13,500.
Let say if you put in a bigger downpayment 20k, 20k x 3.5%(5 years loan interest) = RM700. So your final loan interest would be RM3500 only.
That’s saving of RM13k++, not to mention paying a car loan for 9 years is just so ridiculous…I can see most of the people will start cursing after 3-5 years time that they still have to pay the bank another 4 years when their car value is less than half the original value.
Car is a liability not an asset. But if you invest in properties, the price might goes up 10 years later.
For me, with less commitment on a car, then your money can be put elsewhere in other investment vehicles to make the money grows. This is the reason why I don’t think of buying a fancy car at this moment.
How About Housing Loan?
I think I should feel proud at this moment because I always keep on paying back the PTPTN loan. Compare to many other borrowers, most of them will defy the loans even they have money to payback. And, in the end, they may receive the warning letter then only start to pay.
Why PTPTN Still Charge Me 3% Interest Rate But Not 1% ?
I had been taking PTPTN loan for my Diploma, which is a total of RM10, 000. Based on the first agreement that I signed, the interest rate was around 3%. However, our Prime Minister announced that the interest rate of PTPTN would be reduced to 1% since 1st of January 2008, and clarified that this will apply to ALL students.
Private Student Loans can help you to cover your cost of college education when savings, scholarships and parent aid aren’t enough. However, sometimes we need to know the student loans information in order to help you understand your responsibilities and avoid financial burden.
Nowadays, having a college education is not as cheap as last time. There might have students who are paying fees for their study under loads of debts. Once you graduate, they might find it difficult to payback the payments.
Mostly I will choose to payback more than the original installment amount because if the borrower settles the PTPTN loan earlier, then the PTPTN loan interest charge will be reduced based on the remaining monthly balance.
Assume monthly PTPTN payment is MYR 100 and each time transaction cost is MYR 2, therefore the transaction cost is 2% (MYR 2/MYR 100). If pay half yearly on the same amount which is paying MYR 600 and transaction cost is MYR 2, therefore the transaction cost is only 0.33% (MYR 2/MYR 600). Most important is, think about the convenience…
Method of PTPTN Loan Repayment
i) Through FPX (Financial Process Exchange), you need to have an account with any bank with FPX and be registered as an Internet banking service.
ii) Through bank draft/money order, it must be crossed and made payable to PERBADANAN TABUNG PENDIDIKAN TINGGI NASIONAL. Post your payment by using an envelope to:
National Higher Education Fund Corporation
Lot G2, Ground Floor, Wisma Chase Perdana
Off Jalan Semantan, Damansara Heights
50490 Kuala Lumpur
(Attn: Receiving Unit)
*Make sure your identity card no and full name are written on the reverse side of the bank draft/money order.
iii) Through Internet banking, you must have an Internet banking account in these banks if you really want to make online payment:
iv) Through cash payment:
– PTPTN Services Counter
– Bank Islam
– Bank Simpanan Nasional
– POS Malaysia Berhad
Loan Repayment Through Salary Deduction Continue reading