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Here’s how this Malaysian man with a RM3,500 salary saved RM50,000 on buying his first car.
One of the biggest financial decisions Malaysians will ever make (aside from buying a house), is buying a car. Yet, one of the leading causes of bankruptcy amongst Malaysians is car loans. That’s because people buy cars that are out of their budget.
I almost made the same mistake myself. But after calculating the hidden costs of car ownership, I avoided that pitfall and saved around RM50,000 on buying my first car.
At first, I wanted to get a 2022 Proton Saga.
Last year, my very old Proton Saga was getting too uncomfortable for me, so I decided it was time for an upgrade. Some might ask, why not take a Grab instead? Well, for me relying on Grab is too expensive. If I took Grab for another 5 years, it would cost around RM72,000 just travelling to work 5 days a week.
At the time, most people I knew said, “Just buy new, you can take a 9-year loan and pay it back easily”.
According to Ringgit Plus, one of the ways you can get a rough estimate for a car within your budget is to buy what costs 12 months of your salary. Being a young working adult in KL, my current salary is RM3,500, so 12 months of that is RM 42,000.
I decided to check out the new Proton Saga Premium AT 2022. Upfront, the car cost RM41,800. The monthly repayment was around RM480. At face value, my RM3500 salary meant I could afford this car, right?
But I was shocked when I started to add RM450 for petrol, maintenance, insurance, and road tax. Here’s the cost breakdown:
Notes: I drive 300 km a week, so a full tank would cost me RM70 and would last around 350-400km. I calculated maintenance costs based on this guide, and road tax and insurance based on this online tool. Toll costs are based on my usual driving.
For the next 9 years, that would be an extra RM48,600 in expenses, which is roughly the cost of the car itself.
After factoring in the down payment and interest, the upfront cost of owning the car would come up to about RM56,000. And once I included RM48,600 in expenses, I realised the car would cost more than RM100,000!
So I looked into 2nd hand cars.
I decided to look into 2nd hand cards for a more affordable option. I’d heard a lot of good things about Carsome (and a lot of not-so-good things about other second hand car dealers), so I decided to search up their car catalog online.
That left me with plenty of options (All below RM29,000):
- Ford Fiesta – RM23,600 – RM28,000
- Kia Picanto – RM20,000 – RM29,000
- Mitsubishi Attrage – RM20,400
- Peugeot 208 – RM22,000 – RM30,000
- Volkswagen Polo – RM19,000 – RM25,800
As well as our local flavors of:
- Proton Saga – RM15,000 – RM29,000
- Iriz – RM19,000 – RM24,000
- Persona – RM19,000 – RM29,000
- Preve – RM21,000 – RM29,000
- Perodua Myvi – RM24,000 – RM28,000
- Axia – RM20,000 – RM29,000
Foreign brands v.s. Malaysian brands
After some research, I discovered that the costs to repair and maintain cars like a Ford, Kia, Mitsubishi, Peugeot and Volkswagen are much higher compared to Malaysian brands of cars. I mean, it could sometimes be double or even triple the cost!
While the Carsome warranty covers the car for 1 year, I wanted to make sure I could maintain the car for the next several years. After all, I’m still quite new to the working world and I want to save as much money as I can.
After much consideration, I narrowed down my choices to between a 2015-2016 Perodua Myvi X or a 2015 -2016 Perodua Axia SE.
In the end, I opted for the Myvi X, as I enjoyed how it felt when I drove the car more than the Axia. It felt more comfortable and the engine felt more smooth.
In my opinion, when it comes to secondhand reliability at this price range, Perodua is definitely your best bet. However, if you are looking for the cheapest, most fuel efficient and compact car, then the 2015 Axia SE would be your choice.
How much I saved on money by buying a secondhand car
What many people don’t consider when calculating their budget for a new car is the interest rate.
On a RM 36,000 loan, the real cost at 4% annual interest would be RM 45,000.
Whereas on a RM29,000 loan, the real cost at 4% annual interest would be RM36,000.
By buying a car for RM25,000, my monthly repayments were just under RM390 over 6 years and in total, I only spent RM30,340. I even managed to reduce my total cost of owning including petrol, maintenance, insurance or road tax. Here’s the cost breakdown:
That’s a total of RM25,920 over 9 years, making the total cost of ownership over 9 years RM56,260, half what it would have cost with a new car.
And there you have it! From having to spend what would have been a total of RM104,600 on a car, I only spent RM 56,260, saving about RM 50,000.
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Also read: How Much Should You Save Before Buying A Car In Malaysia?
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