Financial Management :
Shaikha is your sister. She has done so well in FIN 2003 and obtained an A+ grade. She wants to celebrate her success by buying a nice car. Shaikha has set her eyes on the latest model of various cars like Bugatti la Voiture Noire, BMW X7, BMW X6, GLE Mercedes-Benz, Porsche 91, Lexus lc 500, Range Rover Velar, Bentley Bentayga and Mercedes-Benz G-Class. However, she does not have enough money for the car and will have to borrow additional funds from the bank for her chosen car. However, Shaikha has 20% deposit for car price in her with Emirates NBD High Saver Savings Account .
Please use the souqalmal https://www.souqalmal.com/ae website and pick any bank and banking loan that you feel best suits Shaikha’s interests. Be mindful, there are different loan products for expatriates and for Emirates and general personal loans, auto loans, conventional loans and Sharia-compliant loans. Some are by their nature cheaper than others. Check the interest rates, early settlement penalties, salary transfer requirements, loan arrangement fees, minimum qualifying salary. You need to pick a car for shaikha to buy, check the price of a brand new car and start working on the following questions.
In a paragraph, justify why you have chosen the loan that you have chosen. – refer to the below car loan guide
Required
How much will Shaikha need to borrow in order to buy the car?
Amortize the loan if annual payments are made for a period of 5-years.
Change the tenor period to 60 months (5 –Years) and generate the monthly spreadsheet. Clue: Divide the annual repayment amount above in the answer to question (b) by 12 to obtain the monthly payments and generate the spreadsheet.
Do you think Shaikha should borrow on a fixed interest rate or variable (floating) interest rate across the entire loan repayment period? Why or why not?
Why is it advantageous (disadvantageous) at times to borrow on a fixed interest rate? Why is it advantageous (disadvantageous) at times to borrow on a variable (floating) interest rate?
Assuming that Shaikha’s credit rating is A. What can Shaikha do to ensure that she obtains a loan from (car loan financing bank name) at a much lower interest rate than provided in the market?