The very idea of owning a car, for sure, is exciting. However, there are key area of expenses comes when buying. Other than the downpayment, you need to consider the maintenance costs, parking fees, and other related expenses a car comes with.
Here is a list of expenses you have to be prepared for:
Once you decide on the car you want to buy, the next step to own the car is to gather all your savings and make a downpayment. The downpayment assures the seller that you are getting into the commitment of buying the car.
Generally, you are required to pay about 10% of the car’s value as a downpayment for a new car. If you are buying a used car, you are required to make a downpayment of a minimum of 20% of the car’s value. If you are lucky enough, you may find a campaign where you can book the car with a down payment as low as RM500. However, such a case would make you go for a higher car loan amount; meaning higher monthly instalments.
It is recommended for you to save some money beforehand for the sake of down payment and then, look for a car when you have enough backup.
2. Car Loan Instalments
Just paying your down payment won’t do. You have to arrange for a financing facility to get access to your car. So, you have to approach banks and check for the availability of the finances required to buy the car. It is good to compare the interest rates offered by different banks, so you can bring down the cost of repayment to a certain extent.
An effective way to get a loan at a lower interest rate is to have a good credit history. The banks decide on interest rate based on your credit score as well. So, be prompt with your credit card payments and other credit facilities to reduce the cost of owning your car.
Who doesn’t want to accessorise their car? You might want to instal a new music system or a fancy GPS/mobile phone holder. Based on your lifestyle, you may want to add one or more of these accessories to make your car more comfortable and attractive.
4. Road Tax
Driving a car on Malaysian roads requires you to pay road tax. The road tax amount is determined based on your car’s engine capacity, region, and the purpose of the car usage—individual use or business use.
The tax payable differs for Peninsular Malaysia, East Malaysia, and West Malaysia. For a 1500cc car, you have to pay RM90 per year in Peninsular Malaysia and RM56 per year in East Malaysia. When it comes to a 2000cc car, the tax may cost up to RM380 per year.
A car must have an insurance coverage for it to be legally used in Malaysia. There are many insurance companies out there offering car insurance at competitive rates. Do your research and go for a comprehensive insurance plan that protects you and your car in case of unfortunate events. Insurance also covers the damages caused to your car as well as third-party in case of fire, accident, and theft. If you drive really well without the need for a single claim, you will be given a no claim bonus.
Another pointer to keep in mind about insurance is that the coverage amount and the premiums reduce year-after-year. This is due to the depreciating value of your car over time. So, you cannot calculate the same insurance cost over the period of 5 years to predict the total cost of ownership.
6. Petrol Expenses
Petrol expense is one thing you cannot cut down on. The distance you travel everyday matters to calculate the petrol expenses for your case. If we consider the petrol price to be RM2.65 per litre and 5.5 litres per 100km drive, you will be spending RM14.575 per 100km drive.
With time, the wear and tear cost of your car increases. The more you use the car, the more repairs pop up. You may have to replace the tyre, battery, brake pads, and other parts would require a replacement.
8. Depreciating Car Value
Your car’s resale value is a part of the cost of owning a car. This is because you need to know how much refund you can get when you sell your car as compared to how much you have spent to own the car. It is said that 15% of the car’s value reduces every year. Also, the country’s economy plays a role in deciding the extent of depreciation.
9. Parking Fee
It’s not just driving a car, parking your car also comes with a cost. Especially, when your work does not provide you with free parking, you must be ready to fork out some money for this purpose.
10. Toll Fee
If you pass by a highway for work, then you must consider the toll fee as an additional expense. Roughly, you can consider up to RM20 per month for toll fee.
11. License Renewal
For a comfortable car driving lifestyle, you need to have a valid driver’s license. You need to keep all your car-related documents and driver’s license with you always. This can help you escape the probable check of a traffic police.
If your license is out-of-date, you may have to spend RM30 per year to renew it. Over a period of 5 years, you will end up spending RM150.
Owning a car doesn’t just include a car loan and down payment. A lot more things come into the limelight only after you start using the car, such as maintenance, license renewal, and parking and toll fees. It is good to be prepared for the future expenses beforehand. It’s always recommended to calculate your car loan repayments so that you can manage your finances in a better way.