Sunday, November 29, 2009

What considerations to take when buying a car in Singapore

We've all heard about how buying a car is not one of the smartest financial moves to make. A car is after all, a depreciating asset. But we can't deny that having a car brings other intangible benefits - convenience, accessibility, freedom etc.

Damien Fong, from Singcapital Pte Ltd., tells potential car buyers what they need to know before signing on the dotted line for a new car purchase, and offers tips on how to source for a suitable car loan.

iFAST: What are the main factors to take into consideration when deciding whether to purchase a car?

DF: Many car owners around in the world, and especially in Singapore, do not have a full understanding of the financial implications of one's car purchase. In Singapore, it is important for a potential car buyer to note that there are some very specific factors that affect the value of a car and the overall cost of ownership. As Singapore is still one of the most expensive places in the world to buy and maintain a car, it is well worth one's time to understand the basic elements that make up the costs of owning a vehicle here.


The 2 main factors that impact the cost of car ownership in Singapore are:

•The vehicle tax regime including import duties, additional registration fees (ARF) and road tax.

•The Vehicle Quota System which limits the vehicle population growth in Singapore to approximately 3% per annum. The tool which is used to limit the number of cars registered in Singapore is the Certificate of Entitlement or COE. Each vehicle registered in Singapore must have an accompanying COE which is "attached" to the vehicle throughout the vehicle's lifespan. For more information on the Vehicle Quota System and COEs, please visit (The Land Transport Authority) and


In addition to incurring the cost of acquiring a vehicle, there are other costs associated with keeping the vehicle on the road. Here are some of those costs:


One of the most common misconceptions on the affordability of a car is the "low monthly installment" syndrome. This happens when prospective buyers are enticed into buying a car on the premise that the monthly installment is low. However, many consumers do not factor in other "costs" and can end up in a horrendous situation from a financial perspective.

Many car buyers also do not take enough time to consider their length of ownership and therefore do not make the best purchase decisions from a financial perspective. Unlike a property, a car is usually a liability as its value depreciates the moment you purchase the car. Therefore, when buying a car, it is important to take time to consider how much it will cost you overall, your intended ownership period and of course, your motoring needs.

iFAST: If an individual were to purchase a car, what would be the maximum percentage of the individual's salary that should be allocated for the monthly installments and other related expenses?

DF: To work out your Income and Expenses when deciding on a car purchase, one will need to work out his/her Debt Servicing Ratio (DSR) which is often used by banks to assess whether a loan application can be approved. DSR is the percentage of the borrower's total monthly financial commitment (including car loan, home loan repayment, and other financial commitments such as unsecured borrowing, etc) against his monthly income and it will determine the loan quantum to be granted. The acceptable DSR varies from bank to bank, but is usually between the region of 40% to 50%.


There are three basic factors to think about when sourcing for a new car loan: interest rate, loan principal and loan period. Knowing these three items will enable you to understand how much loan you are able to obtain. Using these to make your loan calculation will help you establish your budget for making the monthly payments.

It will be good to bear in mind that most lenders will want you to take out as much loan as you can possibly afford, since they will make more money, the larger the loan amount is. Therefore, always check the terms and conditions for the car loan before you commit to a loan. Below are the key items one needs to take note of, when it comes to car loans.

The Loan Principal

Loan principal is a term used in finance that refers to the original amount of the debt or the original amount of money borrowed. Your total interest charges at the end of the loan period depend on the amount of the loan principal and the loan period. The higher the principal amount you borrow, the more money you will ultimately be paying back over the course of the loan.

Interest Rate

The interest rate is usually expressed in percentage terms and is referred to as the amount of money charged outside the loan principal amount.

There are two common car loan interest schemes, i.e. the flat interest rate and the monthly rest schemes. Flat inter¬est charges are also known as "flat add-on rate". The interest rate is fixed throughout the loan period and it uses simple interest calculation. This means the total interest payable for the whole loan period is already added into the principal loan amount at the beginning. Borrowers pay equal monthly installments over the period of the loan. Currently, most car loans in Singapore are based on this scheme.

Monthly rest schemes are repayment schemes with floating interest rates. These rates are usually pegged at a certain percentage below or above a benchmark rate, such as the lender's prime lending rate or board rates. The interest is calculated on a monthly rest basis, meaning that the principal amount is reduced every month as the monthly installment is paid. The monthly instalments are a fixed amount, but the reduction in the principal and the interest payment vary according to changes in the interest rate.

Loan Period

The loan period refers to the life cycle of the loan. The longer the loan, the more expensive the loan will be.

Car loan calculation is an important part of sourcing for the right car loan. You can determine how much your loan is going to cost, by utilising good car loan calculation.

By regulation, car loans have a maximum repayment period of 10 years and a financing limit of 100% of the car purchase price or market value, including COE, whichever is lower. The loan period added to the age of the car cannot exceed 10 years.

Terms and Conditions - Default

For hire purchase loans, if you default on the monthly installments, the lender has the right to repossess the vehicle. Upon the sale of the vehicle, you have to pay for the shortfall between the sales proceeds and the loan outstanding, including the costs arising from the repossession.

Late Fees and Penalties

Different lenders charge different fees for late payment of installments. Make sure you check out all these fees before you commit to the loan.

iFAST Central provides services to more than 50 financial advisory companies, exempt financial advisers and financial institutions, and over 2,500 financial adviser representatives. Damien Fong is Financial Advisor Director at Singcapital Pte Ltd, a financial advisory company.

Wednesday, November 25, 2009

The creation of mankind

"O Mankind, We created you from a single (pair) of a male and a female and made you into nations and tribes, that you may know each other. Verily the most honored of you in the sight of God is he who is the most righteous of you" (Quran 49:13).

There are several principles, which this verse presents:

1. This message is not just for Muslims only because God is addressing all of humanity. While Muslims are one brotherhood, this is part of a larger brotherhood of humanity.

2. God is telling us that He has created us. Therefore He knows the best about us.

3. He says that He created us from one man and one woman meaning then that we are all the same.

4. It also means that all human beings are created through the same process, not in a manner in which some are created with a better mechanism than others.

5. God is the One who made human beings into different groups and people.

6. These differences are not wrong, rather a sign from God ("And among His Signs is the creation of the heavens and the earth, and the difference of your languages and colors. Verily, in that are indeed signs for those who know" [Quran 30:22]).

7. Note that no word equivalent to race is used in this ayah or any other verse of the Quran.

8. Islam, however, limits the purpose of these distinctions to differentiation and knowing each other. This is not meant to be a source of beating each other down with an attitude of ‘my group is better than your group' or false pride as is the case with tribalism, nationalism, colonialism, and racism.

9. The only source of preference or greatness among human beings is not on a national or group level, but it is at the individual level.

10. One individual who is (higher in Taqwa), more conscious of his Creator and is staying away from the bad and doing the good is better, no matter what nation, country or caste he is part of. Individual piety is the only thing that makes a person better and greater than the other one.

11. However, the only criterion of preference, Taqwa, is not measurable by human beings. Indeed God is the One Who knows and is aware of everything so we should leave even this criterion to God to decide instead of human beings judging each other.

These are the deeply embedded ideals of Islam which still bring people to this way of life even though Muslims are not on the best level of Iman today. This is what changed the heart of a racist Malcolm X when he performed Hajj in Makkah. This is the power that brought Muhammad Ali to Islam. This is what still attracts the Untouchables of India towards Islam. This is the theory which convinced noted historian Professor A.J. Toynbee in 1948 to say that: "The extinction of race consciousness as between Muslims is one of the outstanding achievements of Islam, and in the contemporary world there is, as it happens, a crying need for the propagation of this Islamic virtue."

Let's ask ourselves if the Muslim Ummah today, in its individual and collective behavior is striving to adopt and promote these Islamic ideals?


"Whoever guides [another] to a good deed will get a reward similar to the one who performs it." Prophet Mohammad (PBUH)[Sahih Muslim]

Sunday, November 8, 2009

Prophet Mohammad PBUH & Racism

1. Prophet's response to racist comments:

A man once visited the Prophet's mosque in Madinah. There he saw a group of people sitting and discussing their faith together. Among them were Salman (who came from Persia), Suhayb who grew up in the Eastern Roman empire and was regarded as a Greek, and Bilal who was an African. The man then said:

"If the (Madinan) tribes of Aws and Khazraj support Muhammad, they are his people (that is, Arabs like him). But what are these people doing here?"

The Prophet became very angry when this was reported to him. Straightaway, he went to the mosque and summoned people to a Salat. He then addressed them saying:

"O people, know that the Lord and Sustainer is One. Your ancestor is one, your faith is one. The Arabism of anyone of you is not from your mother or father. It is no more than a tongue (language). Whoever speaks Arabic is an Arab." (As quoted in Islam The Natural Way by Abdul Wahid Hamid p. 125)

2. Statement of the universal brotherhood in the last Sermon:

O people, Remember that your Lord is One. An Arab has no superiority over a non-Arab nor a non-Arab has any superiority over an Arab; also a black has no superiority over white, nor a white has any superiority over black, except by piety and good action (Taqwa). Indeed the best among you is the one with the best character (Taqwa). Listen to me. Did I convey this to you properly? People responded, Yes. O messenger of God, The Prophet then said, then each one of you who is there must convey this to everyone not present. (Excerpt from the Prophet's Last Sermon as in Baihiqi)

3. Don't take pride in ancestry:

The Prophet said: Let people stop boasting about their ancestors. One is only a pious believer or a miserable sinner. All men are sons of Adam, and Adam came from dust (Abu Dawud, Tirmidhi).

4. Looking down upon other people will stop you from entering the Jannah:

The Prophet said: Whoever has pride in his heart equal to the weight of an atom shall not enter Paradise. A man inquired about a person who likes to wear beautiful clothes and fine shoes, and he answered: God is beautiful and likes beauty. Then he explained pride means rejecting the truth because of self-esteem and looking down on other people (Muslim).

5. The Prophet condemnation of Arab racial pride:

There are many hadiths, which repeatedly strike on the Arab pride of jahiliyyah. Arabs before Islam used to look down upon others specially blacks. The Prophet repeatedly contrasted the believing Africans versus non-believing Arab nobles.

The Prophet said: You should listen to and obey your ruler even if he was an Ethiopian slave whose head looked like a raisin (Bukhari).


The rise of Muslims to the zenith of civilization in a period of four decades was based on lslam's emphasis on learning. This is obvious when one takes a look at the Qur'an and the traditions of Prophet Muhammad which are filled with references to learning, education, observation, and the use of reason. The very first verse of the Qur'an revealed to the Prophet of Islam on the night of 27th of Ramadan in 611 AD reads:

"Recite: In the name of thy Lord who created man from a clot. Recite: And thy Lord is the Most Generous Who taught by the pen, taught man that which he knew not." (Quran, 96:1-5)

"And they shall say had we but listened or used reason, we would not be among the inmates of the burning fire." (Quran, 67:10)

"Are those who have knowledge and those who have no knowledge alike? Only the men of understanding are mindful. " (Quran, 39:9)

The Qur'an encourages people towards scientific research:.

"And whoso brings the truth and believes therein such are the dutiful." (Quran, 39:33)

Every Muslim man's and every Muslim woman's prayer should be:

"My Lord! Enrich me with knowledge.." (Quran, 20:114)

The pursuit of knowledge and the use of reason, based on sense and observation is made obligatory on all believers.

The following traditions of the Prophet supplement the foregoing teachings of the Qur'an in the following way:

Seek knowledge "even though it be in China."

"The acquisition of knowledge is compulsory for every Muslim, whether male or female."

"The ink of the scholar is more sacred than the blood of the martyr."

"Seek knowledge from the cradle to the grave."

"God has revealed to me, 'Whoever walks in the pursuit of knowledge I facilitate for him the way to heaven.'

"The best form of worship is the pursuit of knowledge."

"Scholars should endeavor to spread knowledge and provide education to people who have been deprived of it. For, where knowledge is hidden it disappears."

Some one asked the Prophet : "Who is the biggest scholar?" He replied: "He who is constantly trying to learn from others, for a scholar is ever hungry for more knowledge."

"Seek knowledge and wisdom, or whatever the vessel from which it flows, you will never be the loser."

"Contemplating deeply for one hour (with sincerity) is better than 70 years of (mechanical) worship."

"To listen to the words of the learned and to instill unto others the lessons of science is better than religious exercises."

"Acquire knowledge: it enables its possessor to distinguish right from the wrong, it lights the way to heaven; it is our friend in the desert, our society in solitude, our companion when friendless - it guides us to happiness; it sustains us in misery; it is an ornament among friends and an armor against enemies."

The Islamic Empire for more than 1,000 years remained the most advanced civilization in the world. The main reasons for this was that Islam stressed the importance and respect of learning, forbade destruction, cultivated a respect for authority, discipline, and tolerance for other religions. The teachings of Qur'an and Sunnah inspired many Muslims to their accomplishments in science and medicine.

By the tenth century their zeal and enthusiasms for learning resulted in all essential Greek medical and scientific writings being translated into Arabic in Damascus, Cairo, and Baghdad. Arabic became the international language of learning and diplomacy. The center of scientific knowledge and activity shifted eastward, and Baghdad emerged as the capitol of the scientific world. The Muslims became scientific innovators with originality and productivity.

For example Islamic medicine is one of the most famous and best known facets of Islamic civilization in which the Muslims excelled. The Muslims were the great torchbearers of international scientific research. Some of the best and most eloquent praises of science came from the pens of Muslim scientists who considered their work to be acts of worship. The same motives led to the establishment of Al-Azhar (800 AD) the first university in the world. They hit the "source ball of knowledge" over the fence to Europe. In the words of Campbell, "The European medical system is Arabian not only in origin but also in its structure. The Arabs are the intellectual forbearers of the Europeans."

Learning is a natural pleasure. This pleasure is inborn and instinctive. The pleasure of learning is one of the essential pleasures of the human race. Without learning, survival itself is threatened.

The process of learning starts right after birth. It is true that babies who can barely talk investigate problems with all the zeal and excitement of explorers, make discoveries with the passion and absorption of dedicated scientists. At the end of each successful investigation, one can see on the tiny face an expression of innocent and pure heartfelt pleasure. The process of physical growth stops when a boy or girl reaches puberty, that is with the on set of menarche in the girls and with the change in the voice and growth of moustache and beard in boys. After puberty it is impossible to increase the height both in boys and girls.

On the other hand the mental faculties grow from birth until death. At some point in our lifetime, the physical body becomes sick or ill and gradually dies; even the emotions become duller. But the mind continues to live, and even grows more lively and active, enjoys itself more, works and plays with more expansion and delight. I have seen grandparents obtaining Bachelors, Masters and Ph. D. degrees at the ages of 70, 80 or 90.

There are many examples in the history of Art, Music and Science, of both men and women who significantly contributed and lead mentally productive lives at their ripe old ages. Learning extends our lives into new dimensions. It is cumulative. Instead of diminishing in time, like health and strength, its dividends go on increasing, provided one continues to learn throughout life and integrate the thoughts and make learning harmonious. One should make it a point to learn at least one piece of new information each day.

The pleasure of learning is not confined to learning from textbooks, which are too often tedious. But it does include learning from book magazines (periodicals), newspapers, movies, television, radio and traveling.

When you stand in a big library in front of thousands of books do not think they are lumps of lifeless paper, but minds alive on the shelves. Each has its own voice, which is as inaudible as the radiobroadcast waves falling directly on ears. Just as one switches on the radio to listen, similarly a person needs to open a book to hear the voice far distant in time and space. One can hear the voice speaking, mind to mind, and heart to heart. Reading of books gives you two different delights. One is the pleasure of understanding the unknown and the unexpected. The other pleasure is of deepening one's knowledge of a specified field.

Apart from books, learning means keeping the mind open and active to receive all kinds of experience. As pointed out earlier there is great emphasis on learning and seeking knowledge in Islam. The Prophet Mohammed ordered Muslims to be active in their search for learning, crossing oceans and continents if necessary. " Seek knowledge even in China" he said. Learning also means learning to practice one' s own professional skills - that of a physician, engineer, musician or craftsman.

Crafts and hobbies lead you into fresh fields of enjoyment and give you relaxation and activity without tension. One should know that tension is the prime cause of heart attacks, ulcers, hypertension, and most of the human diseases.

Traveling is an important activity in the pleasures of learning. There are many examples of exceptionally informed people who never read books and newspapers, but acquire knowledge through traveling. One should travel with an open mind, an alert eye and a wish to understand other people and other places.

A saying of Prophet Muhammad is ... With knowledge man rises to the heights of goodness and to a noble position, associated with sovereigns in this world, and attains the perfection of happiness in the next.

It is fitting here to mention the story of Diogenes, the great Greek philosopher who lived during the time of Alexander the Great. Diogenes was a very learned man who shunned both power and wealth. He was known to have wandered around searching for an honest man carrying a lantern during day and night. He gave up everything he possessed, except a coconut shell for drinking water. One day he saw a man drinking water forming a cup with his hand. After seeing this Diogenes threw away his last possession, the coconut shell.

The name of Diogenes spread throughout Greece. Alexander the Great heard about Diogenes and one day decided to see him. Mounted on horseback, Alexander the Great went to Diogenes who was sitting on the ground. Alexander said ' Oh Diogenes, I have heard a great deal about you and your life. I am very much impressed by your life and it is my earnest desire to help you in whatever way I can. Please let me know your desires so that I can fulfill them". To which Diogenes replied "Your Excellency my only request is that you get aside and allow the sun's rays to fall on my body." Alexander the Great was deeply moved by Diogenes's reply and said "If I were not Alexander the Great. I would be Diogenes." Now the point I want to make here is that Diogenes never went to Alexander the Great, but that Alexander the Great came to Diogenes for he was such a learned philosopher.

There are many people in this world who have played themselves to death, or eaten and drunk themselves to death. Nobody ever died because of thinking or learning. People who avoid learning, or abandon it, find no joy in life, find that life is dry. No learner has ever run short of subjects to explore. The pleasures of learning lead to happiness. One can live a long, healthy and rewarding life by attaining and preserving the happiness of learning. Learning is everyone's birthright. Everyone - young or old, rich or poor, male or female, has access to learning. Exercise your birthright. Remember what you have learned cannot be taken away by others.

Article by : Ibrahim B. Syed, Ph. D. is President of Islamic Research Foundation International, Inc.