July 20, 2009

Car Buying Guide (For lower medium class)

This guide is based on my own experience of purchasing so far 3 cars throughout my life and current intention of selling the 3rd car and buying the fourth car.

1. Understand yourself truly to know which car is suitable.
-Are you a new driver? Yes? Then the best option is to buy a cheap small reliable car. There are a few reasons why, first of all, that is what you can afford for the time being if you want to save your money from depreciation, interest, initial cost, operation and maintenances cost. Depreciation is when you buy a new car and the car value drops 5% to 90%. My first car is a new car worth RM44k and I sold it off after 2 years for RM33k a trade in with a second hand recondition Japan car for RM50k and I didn't get anything back. I was lucky then (at least I thought so at that time) as I did not need to add any money to trade in (it is very common to add money nowadays as the value of second hand is worse now due to the market condition). Interest is where the bank charge you for borrowing their money to buy your ride.
X, Loan amount = RM50k (car price OTR) - RM5k (Downpayment) = RM 45k
Y, Interest = 3.8%
Z, Loan Term = 5 Yrs
How much you pay INTEREST ONLY = RM45k x 3.8% x 5 = RM8,550.00)

So think twice before you decide to increase the values of the three variables X, Y and Z.

To be continue...

1 comment:

Willie said...

Uih? Aku rasa macam molah my business paper agi. Hahaha