Can't Buy A Car With Salary of RM1,500, Is This For Real?!

Can’t Buy A Car With Salary of RM1,500, Is This For Real?!

Buying a car requires just not a hefty amount of money but also a proper plan, especially during this period where the world is battling with the Covid-19 pandemic that requires immediate attention.

Today, owning a car is not considered as wants but has become a need to many, especially those who have to travel far and those who have to face limited transportation. But, is everyone eligible to buy a car? How about individuals with salary of RM1,500? or low salary?

Do not fret, we can still make it a reality by following these tips and complete guide we provide for you to consider before buying a car.

Things You Must Know Before Buying A Car

1. Understand the costs of owning a car

cost of owning a car
Image Source: Freepik

Many do not realize that when you buy a car, you are bound to not just pay for the monthly car installment, but there are other side costs that should be put to attention such as;

Petrol

Price of petrol is dependent on the current market, sometimes it is cheap but at times a bit on the pricy side.

Road tax, insurance coverage or takaful

Road tax, insurance coverage or takaful would need renewal every year.

The higher the value of the car, the higher the insurance or takaful coverage fee to be paid.

Repair cost

Cars have many moving components, hence regular maintenance are needed to ensure it is functioning well.

It also depends on the frequentness of using the car and it is advised to do maintenance every 6 months or 2 times a year.

Toll and parking fees

Toll fees and parking depends on where you live and work at.

2. Know the ways to buy a car

ways to buy a car
Image Source: Freepik

Before buying a car, it is important for you to know the best ways to buy one, here are 3 ways you can use before deciding on your purchase;

Payment by cash

By making payments using cash, the process of buying a car will be faster compared to payments using installments as it does not involves the bank or any third party.

Vehicle hire purchase loan

A Car loan is one of the loan available for borrowers to use in order to buy a car.

The borrower needs to pay back the loan including the interest to the financier which is the bank by installments by a set period of time.

If fail to make the payments, your vehicle may be repossessed by the financial institution or bank.

Personal loan

Known as a loan without collateral as the financier does not require any form of collateral in order to for the loan to be made.

If you are using personal loan to buy a car, you are the owner of the car itself. It is approved based on the borrower’s credit worthiness where the financier will refer to the credit history of the borrower such as CCRIS or CTOS, the potential earnings and capabilities to pay back the loan.

Whether it is a new car or a used car, you can apply for a personal loan without any worries.

If you still have reservations or do not fully understand, you click here to know the best way to buy a car.

3. Buy a used car (second hand)

ways to buy used car
Image Source: Carlist

Those who could not afford to purchase a brand new car, fret not, a used car can also become a profitable long-time investment with the right ways.

That being said, do remember it can also become a loss and burden if not planned well.

1. Set a budget

Set a budget that is suitable to your financial status and capabilities before buying any kind of used car.

As an example, you want to buy a car at a price of below RM100,000, set the monthly installment to RM500 and tenure of 5 years according to your own monthly commitment.

2. Identify age of the car

Identifying the age of the used car is also important. Find a car with a suitable age according to your finances and choices.

To avoid looking at many options, narrow down the choice scope by reviewing back the budget so you would not overspend and burden yourself.

3. Know the history of the car

History of a car is one of the most important aspects you must know before making a decision on buying any used car.

Make sure you investigate and find out more regarding the car whether it has been flooded, changed owners multiple times, involved in a big accident or has a high mileage limit.

A beautiful exterior does not represent the whole car, do not regret later!

4. Measure the mileage limit

If you want to buy a used car, ensure that the car chosen has a mileage limit that is low or medium.

The higher the mileage limit, the lower the selling price of a used car. That being said, it is still subject to the budget and age of the car model to be purchased.

5. Do an online survey

Now, there are many information regarding used car that you can find online without having to go to any premises.

There are various online platform that enables you to filter according to your needs and suitability.

You just need to input the set budget and the system will display the selected used car models that are within your budget range.

Avoid being mesmerized or tempted by the words of the used car premises. The skills and persuasiveness might make you trapped and start buying without heeding to your budget.

6. Examine the service schedule

Find loyal car owners who use the services of their respective brand service centers and service their car consistently according to the schedule.

The service centers will record the history of the services used on its own system. You can also ask for the maintenance record or spare parts receipts from the owner as proof if the owner does servicing at a normal workshop.

This is important in order to know what kind of parts are changed or if there any other damages to the car.

7. Examine the exterior and interior of the car along with other basic equipment

You have to examine and ensue if there are any damages. If there are damages present at any parts of the car and the car owner does not want to pay for the costs to repair it, try to negotiate to get a discount so it does not cost a fortune to repair.

Also ensure that other equipment such as wiper, lights, socket, signal, air conditioner, car horn, radio, door, side mirror, bonnet, oil tank trigger, spare tire, meter panel and other are functional and in good shape.

8. Examine the engine and do a test drive

The engine is the most important component for a car. If you have less knowledge on this, ask for help from a friend that is more knowledgeable or refer to a mechanic.

A mechanic can help to ensure whether the engine is functioning well and detect if there are any signs of oil leak, the radiator condition, no rotten or broken extension cables, no missing components as well as the engine oil.

You also have the right to test drive the car that you want to purchase to know the satisfaction and confidence.

You can test out the braking ability, steering wheel, drivability at various terrains and the speed to change gears.

Click here if you need more details on information before making the decision to purchase a used car.

4. Calculate based on your salary before buying a car

Image Source: Honda Malaysia

It is common knowledge that buying a car requires a large expense. If buying outside of your means, you will be tied down with a relatively long liability of at least 5 years and this will burden you in the coming days.

Hence, what are the best ways to ensure that the burden of buying car can be overcome?

Monthly salary x 12 months = the price of the car you can afford

Monthly SalaryYearly SalaryCar
RM1,000RM12,000Kelisa, Kenari (2nd hand)
RM1,500RM18,000Viva (2nd hand)
RM2,000RM24,000Axia (M) Standard E
RM2,500RM30,000Axia (M) Standard G
RM3,000RM36,000Axia (A) Standard G
RM3,500RM42,000MYVI 1.3 (A) Standard G
RM4,000RM48,000MYVI 1.3 (A) Premium X
RM4,500RM54,000MYVI 1.5 (A) SE
RM5,000RM60,000ALZA 1.5 (A) SE
RM5,500RM66,000Suzuki Swift
RM6,000RM72,000Honda Jazz/City OP

Based on the table above, if your salary is around RM6,000 a month, you can afford a car that is priced around RM72,000 such as Honda Jazz or City. 

Example of monthly installment for monthly salary of RM6,000

Monthly installment = RM850 to financial institutions at interest rate of 3% for 9 years of loan tenure

Estimated petrol cost = RM500/month

Toll fees = RM100/month

Maintenance cost = RM250 every 6 months

Insurance and road tax = RM3,000 a year (No claim discount – NCD)

These are the estimation of expenses for a one car and hopefully readers will carefully do an extensive research first before using this calculation. 

Monthly installment not more than 15% from monthly salary with financing not more than a period of 5 years

Those with monthly salary of RM6,000, 15% from the salary is RM900 per month.

This means that individual will be able to buy a car with maximum value of RM45,000 which is Myvi Standard 1.3 and not a Honda Jazz (based on the calculation above)

This also means that the cost of maintaining the car will be also be lesser. If this individual takes a loan of 9 years, the monthly installment will be RM530 and 10% lesser than the net salary.

This is a more conservative way, but, there are some downsides, these two ways will not take account to the minimum amount of an individual’s salary before being able to afford a car as well as the expenses that will incur to be the owner of the car.

5. Learn car care tips

Image Source: Freepik

It is important for us to learn the basics of car care because it can help to save your pocket. This is to avoid yourself being cheated by mechanics or a workshop if there are any damages on your vehicle.

Engine oil

Oil functions to ensure that the engine will be quiet and not face any problems when driving.

You also would need to know which type of oil is most suitable. This is because there are several types of engine oils;

  • Semi synthetic engine oil, can be used up until 5,000km or for 3 months
  • Full synthetic engine oil, can be used up until 10,000km or for 6 months

Tire air pressure

It is a must to examine the tire air pressure whether it is sufficient or not. Insufficient air pressure in a tire can cause it to damage and be broken.

Check if your tires are still functioning well.

Spark plug

Just like engine oil, the spark plug also has its usage limits. Spark plugs are usually used from 30,000 to 40,000 km.

If more than 40,000 km, it is advised to change to a new spark plug because the electrodes will thin out and cause to become weak and makes your car loose power.

Battery

There two types of batteries, wet cells and dry cells. The method of taking care of both types are also different, wet cells requires distilled water when it lessens and the life expectancy of car battery is estimated to be 2 years or according to the usage.

If the battery is having problems or became weak, the car will be hard to start up and you would need to change to a new battery or recharge it.

Radiator coolant

Radiator coolants differs from normal pipe water whereby the air coolant will slow down the temperature of the engine and not boil. It is recommended to change the air coolant every 60,000 km.

Overall, it is important to measure our abilities before buying a car, by taking into account all the expenses and commitments such as housing, food, family, savings, investment and other needs.

After taking account all of the commitments, the remaining balance can be used to buy a car including the monthly installments and maintenance fees.

Know your own capabilities, it is best if the car is in good condition and shape, make sure to think thoroughly whether it is a want or need. If there is no pressing needs to buy a new car, avoid burdening yourself.

This article is prepared by Direct Lending. A digital platform that helps you to find, make comparisons and apply for the cheapest and most suitable personal loan for you. Our smart eligibility checking system is able to suggest the best personal loan from Bank and Cooperatives for you.

Our service is 100% free, no upfront fees or processing charges. 

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