My Cekadak....

Buying your first car?

Which car to buy?

Buy a new one? Buy an expensive imported car?

The MOST important criteria when choosing a car to buy is AFFORDABILITY. How much u can spend on a car per month. It is not just about paying installments. Installments are usually about 50-60% of the total cost of 'having' a car.

You buy a car. Then, to make it move, you need fuel. If you go places, you need to consider toll rates and parking fees. NO, that's not all. You must know the cost for regular service and full service. No no no. Not yet. After every 20,000km, you need to change shocks absorber and after 50,000 km you need to change the tyres. At 70,000-120,000 km you need to change timing belt or chain. BUT no one is that lucky to have that beautiful course of events. You might need to change tyres before 50,000km. You definitely need to change bearings, brake pads etc etc.

So how do we even start to budget, estimate and choose a car we can afford.


I know of 3 rules.

First one says, your monthly income should be 10% the total car cost. Lets say a car is priced at RM100,00. You need a monthly income of RM10,000!!!


Second rule is the price of the car you can afford is around the total income you get per year. Lets say, you have a salary of RM5,000.00 per month. You can only afford to buy a car with the price of RM60,000.00


Using the third rule, you estimate the monthly installment you can afford divide into two. Lets say your salary is around RM4,000.00 minus house, this and that, u can afford to spend RM500 per month for a car. So you can ONLY afford to buy a car with an installment of RM250 permonth. the other half is for other expenses to maintain the car.



Lets say your salary is a 'BIG' RM2,500 per month.

You work in Klang Valley and you dont have a house. so you rent. You rent a small apartment with 5 friends in PJ area at a monthly cost of RM900.00. fine. so each pay around RM150 plus RM20 for utilities.

Rent = RM170
Makan = Breakfast RM5, Lunch RM8, Dinner RM8
RM21*30=RM630
other expenses (soap, laundy detergent etc etc) =RM300
Thats not much. Total is around RM1100.00 per month. I still have RM1400 to pay for installment. So you might think.

RM1100

Pay back PTPTN RM200
Buying new clothes RM50(average per month)
Topup handphone RM30

Savings

Marriage Fund - Monthly RM50
House Fund - Monthly RM50
Emergency Fund - RM50


So now the total is RM1100 + +RM200 + RM50 + RM30 + RM150 = RM1530


Your rented apartment is around 24km to your office. The car u want to buy has a fuel consumption of 12km/l. On your way to work, you need to pay RM3 for toll. so two ways RM6 per day. At your work place, you can find a cheap parking area that charges RM5 per entry (lucky you).

Per day
Fuel - RM8 (4litres of petrol at RM2.)
Tol - RM6
Parking Fee RM5

Work days per month 20 days.

Total = RM19*20=RM380

GRAND TOTAL = RM 1910.00

Balance = RM2500-1910=RM590



According to the bank, you can afford a car installment of 40% of your total income. that means RM1,000 per month. A car priced at RM75,000 with 3% interest rate for a period of 7 years.


According to rule number one, you can afford a car priced at RM25,000.00

According to rule number two, you can afford a car priced at RM30,000.00

According to rule number three, you can afford (an installment of RM2,500-RM380 -RM1530=RM590) a car priced at ~RM16,300.00



So now u choose, u want to hutang banyak tak mampu bayar, or just a nice affordable car priced between RM16k-RM30k.

That's My Cekadak...