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Somebody once told me: Once you’ve driven a more powerful car, you won’t turn back. I guess thats really quite true.

I’ve gone from my first car — a Nissan March (Micra in other countries) 1.0L to a new 1.5L Nissan and then to my current 2.0L BMW. I also used to drive my dad’s 2.4L Volvo when I first got my driving license. Power was never enough.

The feeling of a vehicle with power on the tap is hard to describe. Many who have not driven a more powerful car may not understand and relate power with the need for speed. Of course I’m not talking about a Ferrari or a Bugatti but a normal road vehicle with sufficient power pulls you away safely in situations when you need it. In general, my personal figure is at least 100hp/tonne or more.

I was in Melbourne a few years earlier where I rented a Holden SV6 3.6L V6 to drive up the Great Ocean Road. There were four of us and a boot full of luggages easily adding up to about 400 kilos but the car was still simply amazing to drive. It goes around the mountain roads effortlessly and merges with freeway traffic with ease.

I specifically remember an exit from a farm road to the main freeway where I had to make a right turn (RHD in AU — which means I had to go across one direction of traffic before merging with the other). There was no way I could have waited for the right time to get on the freeway if I had been driving a 1.6L Toyota as there was simply too much traffic going at 100kph on the freeway. I waited for several minutes and found an opportunity where there was a gap in the traffic caused by a slow moving truck. I simply got on the gas and the car went right off and made the turn to merge with the traffic.

I’ve had the opportunity to drive serveral new cars recently, namely the Audi A4 1.8T, VW Scirocco 1.4T, VW Polo 1.2T, Mini Cooper S 1.6T and the BMW 320i (F30) 2.0T. These are all amazing cars with turbocharged engines and they have loads of torque almost immediately off idle and are such a joy to drive even in our city traffic. In my opinion, there’s no reason not to consider these modern TC engines over the NA ones except for long-term reliability.

Given the power improvements AND fuel economy, these turbo engines will be the future until a more efficient energy source after fossil fuel is found. At this point we have squeezed almost every bit of energy from gasoline and diesel. Hybrid or pure EV cars aren’t very practical yet IMHO. The need to wait a considerable amount of time to charge a battery makes it pointless. Some may argue: that’s nature and nature takes time to regenate (just like land for growing crops), but I am not at all convinced that electrical power generation is efficient given that most parts of the world still rely on some form of fossil fuel for electrical energy and the carbon footprint of setting up the entire electrical distribution infrastructure isn’t likely “CO2 friendly” either.

Speaking of long-term reliability, modern NA engines are made of lightweight aluminium or magnesium alloys and they tend to give way under stress and heat. Weight plays a critical part in fuel economy since basic physics defines Force = Mass x Acceleration. There’s only so much force a gallon of fuel can provide and apart from reducing any frictional losses, the next step is to reduce the weight (mass) of a car. The engine is sometimes the heaviest thing in a car after the passengers (LOL) so auto manufactuers do put considable effort into reducing weight.

The good news is that some of these modern TC engine blocks (especially VW/Audi) are still made from traditional cast iron and that might help them last longer. I am not entirely sure at this point but it seems that the BMW N20 2.0 TC engine found in 20i and 28i models of 2012 BMW vehicles (possibly also Mini Cooper S “Prince” engine) seem to be made of aluminium alloy. If that’s the case then that may be bad news given the history of the aluminium N46 engines developing gasket leaks past 60,000 kms.

Nevertheless, most people don’t really keep their car past 5 years so auto manufacturers don’t emphasize on long term reliability like they used to in the good old 80s. Long term reliability is quite different from short term reliability. A simple example would be a transmission that could withstand loads of torque (short term) but rusts and leaks after some time (long term).

Sometimes I wonder if all the talk about green technology gets defeated by consumerism.

That said, one of my dream car is an old 1987+ BMW E30 320i. If I had time and money, I would almost certainly buy one and have it nicely done up. Unfortunately the car would be frowned upon by my government and I will be slapped with a 50% increase in annual road tax. Given the current COE prices, looks like I may never get to buy one unless maybe… I move out!

I’m leaving for Sydney later tonight and will be flying on the Airbus A380. I know we’ve heard about wing cracks on the A380 and wifey was just getting a little paranoid that we’re going to fly in a potentially cracking aircraft tonight.

So wife’s paranoia* got me reading up on the cracks.

* I’ll have to convince her it’s safe to fly or she’ll squeeze my arms so hard on take-off that blood just stops flowing.

Anyway just to quickly summarize, the cracks were small hair-line cracks in the feet of ribs in the wings. This was a result of using newer, lightweight materials to save weight and improve fuel economy.

If you make an aircraft bigger, it gets heavier so you’ll need to make the wings bigger and the engine more powerful. It’s only natural that fuel economy takes a hit.

The automotive industry works similarly – the easier way was to make things more aerodynamic and lighter so that fuel economy improves, but with newer safety standards this is starting to become a challenge. Making an engine do more work with less fuel was the difficult part.

The aircraft turbofan is already very efficient (at cruising speeds) but automotive fuel-saving technologies still has some ways to go. Nevertheless, the automotive industry has seen some pretty awesome new technologies in the past decade, which explains why I am such a fan of them.

But I’m not going to talk about cars today. This brings me to another point: What drives technology?

Technology is an integral part of our evolution and my belief is that real world needs are the main drivers of good technology. Unfortunately for the folks who would like to believe everything new is good, I do not believe its true. Good technology is not just any new technology, but technology that works to solve a real world problem – hence my love for automotive technology. In fact, old technology can sometimes be better than new technology.

I think that aviation and automotive industries are two of the major drivers of technology; if not for space flight and aviation, we wouldn’t have GPS, accelerometers and gyroscopes in the iPhone today.

In the recent years the automotive industry has gained a lot of traction. We’ve seen new engine technologies that improve both power and fuel efficiency, reduced emissions and new gadgets that improve safety. These are technologies put to real-world tests in everyday use, and these technologies are what I believe where the real money should be.

Not social networking. Not group buying. Not building some iPhone app.

Of course, these are just my personal opinions.

In today’s fast-paced environment we are distracted by the Internet. Our thoughts are becoming more and more shallow and short-sighted. Most new technologies are built around dreams and desires rather than real needs.

I’m not downplaying the importance of dreams but I my worry is that many are headed towards building dream/desire and we’ll soon be starved of real talents to serve our needs – and I think it’s already happening right now in our society.

If you’re thinking of building the next big thing, give a few minutes to think about what I just wrote here.

Just found out that the (not so) new 32″ Panasonic LCD TV (Japanese technology!) in our bedroom plays MP4 videos from a USB flash drive flawlessly! I wasn’t able to play AVI videos with all sorts of weird video codecs in them – usually DivX.

I find the new LED TVs too bright and contrasty. Colors didn’t appear natural and I got this “old technology” LCD TV for $399 a few months back. It’s awesome and in fact very ideal for bedroom use as the lights in a bedroom are usually dimmer. Please grab them before Apple starts making TVs with iTunes built in that costs $1,488 or something like that.

I came across a loan scheme called the “balloon scheme” recently. Some people say this loan scheme existed a long time ago, but I have not heard of it until recently so it’s new to me.

My first thought – wow, these financial tools will evolve in 101 ways just to get people to take a loan.

* Before I go on, please do take some time to understand the Singapore vehicle taxation structure. Without that knowledge, there’s no point trying to understand the financial implications that result.

Just to quickly summarize what it does:

The balloon scheme is a loan scheme whereby a higher interest rate is applied to the primary loan amount and then the minimum PARF rebate is deducted before dividing the loan into monthly installments.

The end result is lower monthly installment and makes it seem extremely favorable especially if you are buying an old car.

Many car buyers only look at the monthly installments because that’s the easiest to understand. And that’s when a lot of people make mistakes with their financial commitments and turn away from old cars because the installments remain pretty much the same. Why?

As a quick example, let’s compare:

$108K, 2 years old VW Scirocco:
Principal + Interest: $108K + ($108K x 1.88% x 8 yrs) = $124,243
Monthly repayment: $124,243 / 8 yrs / 12 mths = $1,294/mth

$140K, brand new car:
Principal + Interest: $140K + ($140K x 1.88% x 10 yrs) = $166,320
Monthly repayment: $166,320 / 10 yrs / 12 mths = $1,386/mth

So what the heck – the new car is only about a hundred bucks more a month, why not get a new car with warranty, yada yada yada?

Here’s why the old car is more financially sound:

• You are paying less interests on the old car due to a smaller principal sum and shorter tenure
• You are taking on less depreciation because the minimum PARF rebate remains constant irregardless of car age
• You will breakeven on your loan earlier

Caveat: Because of the current COE prices, new cars are very expensive. Once COE prices stabilizes in the next 2-3 years, old cars should have higher monthly installments than new cars given a full loan is applied on both cases.

So, what’s a balloon loan scheme? Let’s compare using the same $108K, 2 year old VW Scirocco:

Normal loan scheme, 1.88%:
Principal + Interest: $108K + ($108K x 1.88% x 8 yrs) = $124,243
Monthly repayment: $124,243 / 8 yrs / 12 mths = $1,294/mth

“Balloon” loan scheme, 2.68%:
Principal + Interest: $108K + ($108K x 2.68% x 8 yrs) = $131,155
Less minimum PARF: $131,155 – ($23,882 x 50%) = $119,214
Monthly repayment: $119,214 / 8 yrs / 12 mths = $1,242/mth

Now, this looks like a small difference but with an older car the difference is significant. Here’s another example with a coming 6 years old Nissan Latio, a typical uncle’s bread and butter car:

Normal loan scheme, 1.88%:
Principal + Interest: $37K + ($37K x 1.88% x 4 yrs) = $39,782
Monthly repayment: $39,782 / 4 yrs / 12 mths = $829/mth

“Balloon” loan scheme, 2.68%:
Principal + Interest: $37K + ($37K x 2.68% x 4 yrs) = $40,966
Less minimum PARF: $40,966 – ($15,027 x 50%) = $33,453
Monthly repayment: $33,453 / 4 yrs / 12 mths = $697/mth

That’s a $112 (15%) reduction in installments! Yeah, let’s go and buy this ballooned Latio right NOW!

But wait…

In an earlier post, I mentioned that down paying the PARF value is a must. By down paying the minimum PARF, you effectively do two things:

1. You lower your monthly installments and loan interests
2. You lower your risks by taking a loan on the depreciation only

The “balloon scheme” may sound like the same thing, but it is NOT. The final catch here is that you’ll need to pay the minimum PARF amount at the end of the loan. If you drove it till the end of 10 years, that’s not a problem — you’ll get your minimum PARF from the government. But if you need to dispose the car in a bad financial situation and don’t have that extra cash then you are in trouble because you have a higher principal sum AND interest.

For those who need a comparison, here’s a table of the differences.

So if you are considering taking a “balloon scheme” loan, I would strongly advise against it. If you are unable to downpay the minimum PARF, chances are you are not financially sound for a vehicle right now.

Sorry to burst your balloon! Truth hurts but it’s for your own good.

P.S. I wonder why they called it the “balloon” scheme. If I were to be designing financial plans I would have called it something like pay less scheme or lao hong scheme to make it more tempting…

I am absolutely pissed. If I’m an ass I can basically go and reverse any PayPal purchases I’ve made and I’ll get away scott-free thanks to their “consumer protection” policy.

I’ve had customers who received their orders, signed on the SingPost consignment note and then later did a charge back on their cards. Not only did PayPal honor the payment reversal, they still charged us the payment processing fee.

This means if the transaction was $1,000, I not only lose $1,000, I’ll still have to pay PayPal ~$40 (~4%) for payment processing. What kind of logic is this?