Car Buying Guide (For lower medium class)

This guide is based on my own experience of purchasing so far 3 cars and our 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 costs. 

Depreciation is when you buy a new car and the car value drops 5% to 90%. Our first car is a new car worth RM44k and we sold it off after 2 years at RM33k, with a trade-in for a second-hand recondition Japan car that cost RM50k.  We were lucky then (at least I thought so at that time) as we did not need to top up any money for the trade-in (it is very common to top up money as the value of a second hand is bad due to the market condition). 

Interest is where the bank charges you for borrowing their money to buy your ride.

(Example:

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 continued... 

See part 2 here http://ez-photo.blogspot.com/2009/08/car-buying-guide-for-lower-medium-class.html