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Thread: early settlement fees not transparent

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    fadzli88
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    Default early settlement fees not transparent



    Hello bros,

    Need some feedback regarding this issue i got from my bike shop. I wanna clear my installment outstandings, which left 21months @ $324/month. So total is $6804. Then was told there will be early settlement fees included. So the staff check with the finance department and will get back to me. Straight away they tell me its $1300 for the fees. I want them to explain base on wat figures they charge me with this amount. They can only say the finance say to pay this amount. They are not being transparent to me about this. I dun even allowed to speak to the finance. Now i already paid a total of $8104. The invoice they wrote is just early settlement. No break down. Is this justifyable? Any advise??
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    z3rokill
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    Hi bro early settlement is normally a fixed percentage of your loan amount.. i believe it shud be explicitly stated in the contractual aggreement you signed when you took out the bike. This is true for bike production.

     

     
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    U mentioned about the fixed percentage. This is clarifying. The shop dun even mentioned anything. Keep saying the finance says so. But when i told them i wanna speak to the finance, they said the finance dun want to see customers -_-
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    haoKR
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    i dont think you are new to the world of the many black shops in sg ya..are u
    thats how they earn, some charge a flat fee of $350.


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    Am not new. But first time having to settled this way. $1300 reasonable?
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    ellamcoy
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    What if you juz duly fulfill the monthly payment? Does it mean that you can avoid the +$1300 by continuing the current repayment plan?

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    wait4me
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    wow u paid 1300 for early payment settle ??

    these bike shops have whatever term they like to call , early settlement fee .

    if you settle your car loans, u instead pay lesser if u settle early but not bike
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    I early settled with them years ago and till now, not given the red key to the bike. Definitely not the shop to do business with.
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    The reason they charge you early settlement fee is because the longer u take the loan, the higher the chance of you not being able to pay it back because of financial difficulty etc then they can repossess and sell it again and make money. So when u pay back early they have no chance of you being not able to pay back on time see? With that said though $1.3k is a lot. Can buy another bike with that money.

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    Quote Originally Posted by zalk View Post
    The reason they charge you early settlement fee is because the longer u take the loan, the higher the chance of you not being able to pay it back because of financial difficulty etc then they can repossess and sell it again and make money. So when u pay back early they have no chance of you being not able to pay back on time see? With that said though $1.3k is a lot. Can buy another bike with that money.
    QFT

    Usually other sort of loans, by settling early, the financial institute will have more liquid funds to utilise elsewhere hence sometimes you end up paying lesser than if you carried on with your repayment schedule.

    However for bikes, it seems like it sort of represents the opportunity cost lost when you repay early. The opportunity of repo-ing your bike should you maintain the same repayment schedule and missing out or falling behind on your repayments. The otherwise "lost" chance of charging late fee, towing (for repo) fee, storage fee.
    Smile! Tomorrow will be worse.

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    theblackmamba
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    1300 can buy what bike?

     

     
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    Quote Originally Posted by fadzli88 View Post
    U mentioned about the fixed percentage. This is clarifying. The shop dun even mentioned anything. Keep saying the finance says so. But when i told them i wanna speak to the finance, they said the finance dun want to see customers -_-
    Hi bro, anyway you can get hold of the contract that you signed? A copy shud be with you right? If its not stated anywhere in the contract regarding early settlement fees, you might have a case.

    Small claims tribunal is an option at the subordinate court. But my feeling is, they definitely have it stated in their contract to avoid lawsuit, just that we normally dont realize the clause until we need them.

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    can buy bike-cycle .

    any bros thanx for all the feedbacks. was quite upset about this issue. some of my friends mentioned $700 for early settlement is already alot. $1300 is more ridiculous.
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    Quote Originally Posted by zalk View Post
    The reason they charge you early settlement fee is because the longer u take the loan, the higher the chance of you not being able to pay it back because of financial difficulty etc then they can repossess and sell it again and make money. So when u pay back early they have no chance of you being not able to pay back on time see? With that said though $1.3k is a lot. Can buy another bike with that money.
    Quote Originally Posted by Orleng View Post
    QFT

    Usually other sort of loans, by settling early, the financial institute will have more liquid funds to utilise elsewhere hence sometimes you end up paying lesser than if you carried on with your repayment schedule.

    However for bikes, it seems like it sort of represents the opportunity cost lost when you repay early. The opportunity of repo-ing your bike should you maintain the same repayment schedule and missing out or falling behind on your repayments. The otherwise "lost" chance of charging late fee, towing (for repo) fee, storage fee.
    The 2 chaps above have provided a very good and concise summary on why an early settlement fee exist. Hope this serves as a good info to all new riders.

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    Quote Originally Posted by theblackmamba View Post
    1300 can buy what bike?
    1-2 yr COE left cub kia. It's still a tangible object for your money though, instead of using the money to pay interest.

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    MR BIKER
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    Maybe should calculate properly how much you lose exactly if you pay until instalment is over. it feels like eternity but i feel we lose out more by paying lumpsum the 1300 fees plus (304 x 21months). its a hassle to keep going to the shop every month especially having to see those straight face sellers. If i were you , upon hearing what 1300 for ERP (according to ASPhoon), i would say no thank you. i will deligently pay up until instalment over

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    those damm bloody leasing finance company!!!

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    hahah relax bro!
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    That's why AS Phoon has written clearly that there is no Early payment fee.


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    bloody suckers finance leasing companies!

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    ellamcoy
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    Had gotten a bike from AS Poon previously. The manager mentioned no early settlement fees to another potential buyer.
    Was then wondering what it meant, now I see the frustrating implication.

    Does anyone know which other retailers does not charge early settlement fees? Please share.

    Early thanks!

     

     
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    PaLmEr
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    Wrong Section. Moving thread.

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    Bike shops have been coming up innovative ways to make riders part with their money. This “Early Settlement Fee” is one of them.
    In 2000 there wasn’t such a thing – in fact, when I paid off my bike back then with almost two years of installment left I INSISTED AND RECEIVED AN INTEREST REBATE.

    In 2009 when I bought a bike, this loophole was effectively closed when along with the Hire Purchase Act which I had to sign, the bike shop insert an “Early Settlement Fee” agreement that I had to sign. Most buyers are too eager and probably thinking about their new rides to give much thought to the stack of papers the shops get you to sign. Little do they know that they have signed off most of their consumer rights, and given the bike shops pretty much free rein to penalize the buyer.

    Months later when the want to early settle or sell off the bike independently the bike shops will gleefully rub their hands. Out comes the “Early Settlement Fee” or refinancing when you sell off the bike (more about refinancing further down).

    A lot of people think the shops is financing the bike but that’s not really true – most loans the buyer takes are financed and fulfilled by financial institutions or banks. Bike shops make MORE money by charging you a HIGHER interest than what the bank or financial institution is charging them. Take a look at how cars are financed – both 1st hand and 2nd hand. The interest bike shops charge are ludicrous when you compare.

    Taking how car loans are financed, take a look at how they deal with the early settlement issue – its called “Rule of 78”:
    http://info.maybank2u.com.sg/persona...-loan-car.aspx
    http://www.sgcarmart.com/news/writeup.php?AID=61

    Taking a simple bike loan of:
    $10,000 for 2 years at 8% (well it’s a 2nd hand bike):

    Loan amount = $10,000
    Interest rate = 8% per annum
    Total interest to be paid = (8% x 3 years x $10,000) = $2,400
    Period of finance = 36 months or 3 years
    Monthly instalment = ($10,000 + $2,400) /36 = $344.44
    Number of instalments paid = 10 months
    Total amount already paid for = $344.44 x 10 = $3,444.44
    Interest rebate according to "Rule of 78" = [26(26+1)] / [36(36+1)] x $2,400 = $1,264.87

    Here, 26 represent the number of months remaining of the loan that is unpaid, and 36 is the original number of months of the bank loan.
    The amount of $1,264.87 is the interest rebate on the 26 months' interest from early termination of the loan.

    20% of interest rebate as penalty = 0.2 x $1,264.87 = $252.98
    Loan redemption amount = $10,000 + $2,400 - $3,444.44 - $1,264.87 + $252.98 =$7,943.67
    What you pay total = $3,444.44 + $7,943.67 = $11,388.11


    What the bike shops actually do:
    $10,000 (Loan) + $2,400 (Interest) + $1,000 (Early Settlement) = $13,400

    I’m using $1,000 as guide – for TS it was and eye-watering $1,300.

    If TS paid $1,300 as Early Settlement there is a very good chance he signed that document that allowed the shop to penalize him.

    The problem is that we ALLOW the shops to take advantage of us. We don’t have a riders’ association or union that looks out for us.
    When we start taking more personal and financial responsibility we can pressure the relevant parties, like the Singapore Motor Traders Association to do more for consumers/riders/buyers.

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    Quote Originally Posted by FB666Y View Post
    Bike shops have been coming up innovative ways to make riders part with their money. This “Early Settlement Fee” is one of them.
    In 2000 there wasn’t such a thing – in fact, when I paid off my bike back then with almost two years of installment left I INSISTED AND RECEIVED AN INTEREST REBATE.

    In 2009 when I bought a bike, this loophole was effectively closed when along with the Hire Purchase Act which I had to sign, the bike shop insert an “Early Settlement Fee” agreement that I had to sign. Most buyers are too eager and probably thinking about their new rides to give much thought to the stack of papers the shops get you to sign. Little do they know that they have signed off most of their consumer rights, and given the bike shops pretty much free rein to penalize the buyer.

    Months later when the want to early settle or sell off the bike independently the bike shops will gleefully rub their hands. Out comes the “Early Settlement Fee” or refinancing when you sell off the bike (more about refinancing further down).

    A lot of people think the shops is financing the bike but that’s not really true – most loans the buyer takes are financed and fulfilled by financial institutions or banks. Bike shops make MORE money by charging you a HIGHER interest than what the bank or financial institution is charging them. Take a look at how cars are financed – both 1st hand and 2nd hand. The interest bike shops charge are ludicrous when you compare.

    Taking how car loans are financed, take a look at how they deal with the early settlement issue – its called “Rule of 78”:
    http://info.maybank2u.com.sg/persona...-loan-car.aspx
    http://www.sgcarmart.com/news/writeup.php?AID=61

    Taking a simple bike loan of:
    $10,000 for 2 years at 8% (well it’s a 2nd hand bike):

    Loan amount = $10,000
    Interest rate = 8% per annum
    Total interest to be paid = (8% x 3 years x $10,000) = $2,400
    Period of finance = 36 months or 3 years
    Monthly instalment = ($10,000 + $2,400) /36 = $344.44
    Number of instalments paid = 10 months
    Total amount already paid for = $344.44 x 10 = $3,444.44
    Interest rebate according to "Rule of 78" = [26(26+1)] / [36(36+1)] x $2,400 = $1,264.87

    Here, 26 represent the number of months remaining of the loan that is unpaid, and 36 is the original number of months of the bank loan.
    The amount of $1,264.87 is the interest rebate on the 26 months' interest from early termination of the loan.

    20% of interest rebate as penalty = 0.2 x $1,264.87 = $252.98
    Loan redemption amount = $10,000 + $2,400 - $3,444.44 - $1,264.87 + $252.98 =$7,943.67
    What you pay total = $3,444.44 + $7,943.67 = $11,388.11


    What the bike shops actually do:
    $10,000 (Loan) + $2,400 (Interest) + $1,000 (Early Settlement) = $13,400

    I’m using $1,000 as guide – for TS it was and eye-watering $1,300.

    If TS paid $1,300 as Early Settlement there is a very good chance he signed that document that allowed the shop to penalize him.

    The problem is that we ALLOW the shops to take advantage of us. We don’t have a riders’ association or union that looks out for us.
    When we start taking more personal and financial responsibility we can pressure the relevant parties, like the Singapore Motor Traders Association to do more for consumers/riders/buyers.
    Wow... thankyou for the info.

    So will be [26(26+1)] / [36(36+1)] which mean that [26*27] / [36*37] to get 702 / 1332 then follow by X $2,400 = $1,264.87
    Am I right?
    As not very sure about the "Rule of 78" .
    Last edited by FireGunz; 18-08-2014 at 02:05 AM.

  25. #25
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    Quote Originally Posted by FB666Y View Post
    Bike shops have been coming up innovative ways to make riders part with their money. This “Early Settlement Fee” is one of them.
    In 2000 there wasn’t such a thing – in fact, when I paid off my bike back then with almost two years of installment left I INSISTED AND RECEIVED AN INTEREST REBATE.

    In 2009 when I bought a bike, this loophole was effectively closed when along with the Hire Purchase Act which I had to sign, the bike shop insert an “Early Settlement Fee” agreement that I had to sign. Most buyers are too eager and probably thinking about their new rides to give much thought to the stack of papers the shops get you to sign. Little do they know that they have signed off most of their consumer rights, and given the bike shops pretty much free rein to penalize the buyer.

    Months later when the want to early settle or sell off the bike independently the bike shops will gleefully rub their hands. Out comes the “Early Settlement Fee” or refinancing when you sell off the bike (more about refinancing further down).

    A lot of people think the shops is financing the bike but that’s not really true – most loans the buyer takes are financed and fulfilled by financial institutions or banks. Bike shops make MORE money by charging you a HIGHER interest than what the bank or financial institution is charging them. Take a look at how cars are financed – both 1st hand and 2nd hand. The interest bike shops charge are ludicrous when you compare.

    The problem is that we ALLOW the shops to take advantage of us. We don’t have a riders’ association or union that looks out for us.
    When we start taking more personal and financial responsibility we can pressure the relevant parties, like the Singapore Motor Traders Association to do more for consumers/riders/buyers.
    its the thing now, no one really look at the price tag of the bike now because 95% of the riders COI their bike


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    I wish I can inculcate young riders to save up and enjoy their ride later on because first they are young and the urge is surely there. bikes , babes and such but having been there and done all that, I can understand when most riders just sign the dotted line especailly when you have the shop seller urgin you sign here, there , next page, , this , that until you dont know what you have already signed.

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    In my true sense, I think that paying off a bike with its interest is sufficient.

    Additional charges of "early settlement fee" is outrageous. What kind of loss do they sustain , in order to claim such a fee?

    Very fortunate for me that no COI is involved.

    Deal with a fair seller, not jump at the lowest price guys

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    Quote Originally Posted by Dominictsk View Post
    In my true sense, I think that paying off a bike with its interest is sufficient.

    Additional charges of "early settlement fee" is outrageous. What kind of loss do they sustain , in order to claim such a fee?

    Very fortunate for me that no COI is involved.

    Deal with a fair seller, not jump at the lowest price guys
    That is how they make the sales. Usually with low(er) "machine" prices (or "OTR" for 2nd hand) than other shops without early settlement. Buyer is attracted by low prices upfront. Doesn't factor in early settlement fee, when added, will probably be higher than other shops with slightly higher initial price, but no early settlement.

    Down the road, when you decide to sell off, the early settlement comes out. Typically, they offer to waiver the early settlement fee if you push in your bike at a low price for a trade-in to take out another bike with them. So basically, unless you decide to bite down and hold on to the bike, or risk a COI arrangement till all instalments are cleared, you will wind up paying more than otherwise buying a bike from another shop with no such penalty, but with a slightly higher starting price.
    Smile! Tomorrow will be worse.

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  29. #29
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    Quote Originally Posted by MR BIKER View Post
    I wish I can inculcate young riders to save up and enjoy their ride later on because first they are young and the urge is surely there. bikes , babes and such but having been there and done all that, I can understand when most riders just sign the dotted line especailly when you have the shop seller urgin you sign here, there , next page, , this , that until you dont know what you have already signed.
    young ma, can play jiu play,can take jiu take.
    somemore its 100,200+ per month, they will think 'aiya,so cheap only'. then you will see them selling it 1/2 year later


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  30. #30
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    Quote Originally Posted by Orleng View Post
    That is how they make the sales. Usually with low(er) "machine" prices (or "OTR" for 2nd hand) than other shops without early settlement. Buyer is attracted by low prices upfront. Doesn't factor in early settlement fee, when added, will probably be higher than other shops with slightly higher initial price, but no early settlement.

    Down the road, when you decide to sell off, the early settlement comes out. Typically, they offer to waiver the early settlement fee if you push in your bike at a low price for a trade-in to take out another bike with them. So basically, unless you decide to bite down and hold on to the bike, or risk a COI arrangement till all instalments are cleared, you will wind up paying more than otherwise buying a bike from another shop with no such penalty, but with a slightly higher starting price.
    but thats how they learn, if im the boss, i am more then happy to let COI


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  31. #31
    dreamer_toons
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    Quote Originally Posted by Orleng View Post
    That is how they make the sales. Usually with low(er) "machine" prices (or "OTR" for 2nd hand) than other shops without early settlement. Buyer is attracted by low prices upfront. Doesn't factor in early settlement fee, when added, will probably be higher than other shops with slightly higher initial price, but no early settlement.

    Down the road, when you decide to sell off, the early settlement comes out. Typically, they offer to waiver the early settlement fee if you push in your bike at a low price for a trade-in to take out another bike with them. So basically, unless you decide to bite down and hold on to the bike, or risk a COI arrangement till all instalments are cleared, you will wind up paying more than otherwise buying a bike from another shop with no such penalty, but with a slightly higher starting price.

    This is very true.

    Glad I read this thread before I visited several shops shopping for a new revo. Reminded myself not to get too excited over the new revo but ask questions, especially about the OTR prices and other hidden prices.

    1 of the shops kept insisting that the early settlement fee was only few hundred dollars despite I ask about how the shop calculate this 'few hundred dollars'.

    I left the shop and gave my business to another shop without this fee instead.

     

     
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    wow. $6804 alr include all interest on loan, on top of that have early settlement fees?? good business to offer COI man...

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    tionghan
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    i feel your pain TS.. $1300 is not a small amount consider your outstanding is 6k plus. .. almost 25% more u have to fork out.
    speed and be home 5 mins early or 7 days late.

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    I can feel you man but most shop also have this already but sometimes no choice buy already ma. My friend kena $1800 before from other place but heng his motor last quite long never really fork out any maintenance $.

    IMO if you feel that the motor condition is good its ok.

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    ------------
    Last edited by guangwei; 01-04-2015 at 11:01 PM.

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    I bought from As Phoon, as my fren's always bike and sell there. They do not have this Early settlementFee.


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    Default early settlement fees not transparent

    That's why some of them are driving sports cars!! Pisses me off. Living on other peoples hard earned cash!

    Good thing I found planet motors to do my servicing. Irks me if I have to go back to the same shop to do servicing as well as installment.

    anyway just a thought, not sure about other shops, these shops only allow cash payments when it comes to installment. Anybody want to give an idea why only cash?
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    1300 is wicked, did you read through the contract yiu signed ? Greedy bike shops. Thank god this site exists to do direct sales without going to bike shops.

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    omg.... omg.... omg,,,,

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    This shop is famous for their cutthroat ways, the finance coy im using have no early settlement fees, even have rebate if you settle early lol

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    experiencing the same issue here with my shop. left $282 x 38 months = $10,716.
    was quoted $1,300 for early settlement.
    so if want to settle early, gotta full cash $10,716 + $1,300 = $12,016.

    i have yet to check the contract but it means either i mark up my selling price, or i ride for 3 more years.
    kena knock by the shop! in future, do be careful when taking loans!

     

     
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    what a ripoff these ah beng/ah seng bike shops.......lol

    You mark up your selling price, smart buyer will also know how to calculate how much its worth, and why should they be paying for the interest on your loan?

    better u ride for 3 more yrs

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    I am paying 208 $ a month, 36 months installment, paid 1500$ as down payment and bought FZ16 on 18th April 2013. I am welcome to pay early settlement anytime. Even now n then i go to AS Phoon for minor repair or maintenance issues, very friendly and helpful mechanics.

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    guangwei
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    lol my post was deleted
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    Yep..ASPhoon doesn't have early settlement fees.. Bought my Spark there last year.. not bad service i guess
    hoping to buy a S4 from them since passed 2A recently heh

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    Yes, i got my class 2A too. tempted to get S4 or CB400X, but still comfortable with my FZ16. If i decided to get, will get it from AS Phoon.

  47. #47
    736cc
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    i think best is for biker to read before sign any document. buying bikes is not like buying HP or TV.
    That why when i sell my bike, i always advise buyer to go bank if they need to loan and that is the best way out also less problem for me.
    Last edited by 736cc; 05-06-2015 at 10:03 AM.
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  48. #48
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    Bank will give loan? But at higher percentage right?
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    Quote Originally Posted by ticks View Post
    Bank will give loan? But at higher percentage right?
    Have to inquire them on vehicle loans, direct with finance coy oso good since you don't deal with the middle man eating up money aka 'Admin fees', its just a lil more troublesome.

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    I find it terribly difficult to deal with bikeshops even when paying full cash. All sorts of additional fees like document fees, admin fees, kopi fees, etc. I'd rather deal with a private seller who's more flexible in negotiations and do the transfer at LTA.
    Caveat though: only applies to resale bikes and one must be able to spot a good conditioned bike. Lemon laws are typically harder to enforce for private transactions

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