4 real tips to buy the right car based on your income

Tip 1: Monthly salary x 12 months = The car you can afford to buy

This simple formulation can guide you on how much you should spend on a car and not worry too much. For starters, let’s take the average fresh grad salary in most industries which would be in the vicinity of RM2,500-RM3,500.

The car you can afford to buy should be around  RM30,000 (RM2,500 x 12). A brand new car within this range would be a Perodua Axia 1.0 E Manual (RM24,090), Perodua Axia 1.0G (RM33,490).

If you earn RM5,000 per month, then the cars that are within RM50,000 are Myvi 1.3L G (RM48,500), Proton Persona 1.6L Standard CVT (RM45,800), or a Kia Picanto 2018 (RM47,079).

However, if you land yourself a solid well-maintained vehicle that has been checked through (like we always do at muv), your options really do open up in terms of make and model.

 

Tip 2: Monthly car payment should not exceed 15% monthly salary 

Firstly, the repayment period should not exceed 5 years.

The average price of a Mercedes Benz A250 is around RM240,000. Take for example a person who earns a monthly salary of RM10,000. The average 5-year repayment period with a 4% interest for the car will be around RM4,320. This is 43.2% of monthly salary and is therefore not viable.

If you earn RM10,000 per month you should spend RM1,500(15%) on monthly repayment for a new car. The suitable range of cars you should be looking at are a 2021 Toyota Vios 1.5E (RM1,487/month), 2020 Honda City 1.5L S(RM1,396/month), 2020 Nissan Almera 1.0L VLP(RM1543/month).

However, general tips above have its disadvantages and we hope you do not take them literally without doing thorough research first.

 

Tip 3: Don’t Forget Car Ownership Costs!

While you may be thrilled to pay a few hundred ringgit for your car installment, don’t forget about ownership costs. You have to pay for road tax, car insurance, service and maintenance, petrol, tolls as well as parking.

In addition, you may also have to fork out extra money on unexpected expenses such as repairs for accidents, battery and alternator replacements, aircon fixes, new tyres as well as summons. 

Every month, you have to pay for your car loan repayment, car expenses and at the same time prepare additional expenses for emergencies and unexpected outcomes.

Here’s an example of a monthly ownership cost breakdown of a Perodua Myvi 1.3L Automatic.

Insurance(RM1,367/yr), Road Tax (RM70/yr),Petrol (RM280/mo),Maintenance (RM391/yr), Toll (RM100), Parking(RM100).This total amounts to RM2,308 excluding costs for repairs.

 

Tip 4: Consider buying a pre-owned car

There are many misconceptions of buying a pre-owned car,but buying the right one from the right place might be one of the best decisions you can make. If you want to save cost, buying a pre-owned car will certainly be cheaper than buying brand-new. On top of that, you already save out on depreciation. 

Consider this, buying a brand new 2018 Proton Saga 1.3 CVT is priced at RM36,343, while buying the same second-hand model with only 70K mileage costs RM 30,800. This means with a 10% down payment and 3.8% interest for a period of 5 years, you will be paying RM554 cheaper in downpayment and RM100 in monthly payment for the second-hand model.

While you might be considering whether to buy a car with high mileage, with routine maintenance a car can push up to well over 200K miles these days. Cars tend to get better each year with new technology to remain competitive in the market.

Therefore, if you are getting a newer car model with a high mileage, you shouldn’t worry because regardless, it typically has a more up-to-date technology and safety measures. In fact, cars with high mileage points to better standards and technology in the automotive industry, since people are more confident to drive their cars for longer.

So, don’t so susah. Hit us up at muv to check out your best possible options in your ride!

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