When it comes to buying a new vehicle, you need to keep a few things in mind to ensure that you are making the best use of your money. You can use the following money saving tips before you finance your new purchase.
Set a Budget
Having a fixed or pre-planned budget helps you create a spending plan for the money you earn. If you have other financial commitments like a mortgage loan, you can lower your budget a little. In Malaysia, you have a range of cars available starting from as low as RM22,900. With a wide range of options available, budgeting can be easy.
Compare Car Prices
You need to do a proper research to find the best car prices. You will find many reliable sources with up-to-date information on various car brands and upcoming car launches in Malaysia. Try to make use of these references to find a car within your budget.
Consider Miscellaneous Charges
When you buy a new vehicle, you also need to consider the additional charges you need to pay. These may include shipping fees, insurance premium payments, road tax, local tax and excise, and other miscellaneous fees. Also, if you need accessories like a music system or alloy wheels, you need to set aside funds to accessorize your new car.
While planning your budget, you need to make a rough estimate of these costs as well. If the costs come way above your budget, you can save money by opting for inexpensive cars that don’t require additional charges.
Buying a New or a Second-Hand Car
Both new and used cars have their own advantages. New cars are available in excellent condition as they have not been used before. They are manufactured with the latest technologies and will be equipped with better safety features. You also get better car insurance rates for new cars. You can make use of the new car’s warranty period and get it serviced during the period.
If you are on a tight budget or are a low-income earner, second-hand cars will be a better choice. You can get high-end models at the same price you would get for a regular car. Second-hand cars come with a lower depreciation rate and won’t have any additional charges. Prioritise your needs to decide which one works best for you.
Look for Financing Options
One of the easiest ways to finance a car purchase is by taking a loan. In Malaysia, there are two types of car loans available - conventional and Islamic car loans. You also have loans for new cars, second-hand cars, and reconditioned cars.
Compare the options available and choose the one that suits you the best. You can look at the interest rates, loan tenure, and finance margin offered by different banks in Malaysia to make a comparison. Interest rates for new car loans start approximately from 2.50% p.a. onwards.
Some also opt for personal loans to buy a car. When you apply for a personal loan, you not only get a higher margin of finance but can even apply for extra funds for other financial requirements. However, you must keep in mind that personal loans come with a higher interest rate (from approximately 5% p.a. onwards) and longer tenures than car loans.
If you have bad credit and want to apply for a loan, you might find it difficult to get loan approval easily. You can apply for a car loan by asking a friend or a family member to be the co-signer.
Consider Leasing a Car
If you don't have enough money to buy a car, you can also consider car leasing. The monthly payments for leasing are much lower when compared to monthly loan instalments. Also, it is a good option for those with an unhealthy credit score. Moreover, if you need a car only for a short period, you can save a lot of money by leasing a car instead of buying a new one.
Calculate the Monthly Instalment and Down Payment
Once you have decided the loan type, you will get an idea of how much monthly instalments you will have to pay. You can find this out by using a car loan calculator. Also, you need to calculate how much down payment you need to pay for the purchase. If you are able to arrange a higher down payment, you will have to pay a lower monthly instalment and a lower interest. This helps you save a lot of money.
Opt for Shorter Loan Tenures
People generally opt for loans with longer tenures so that their monthly instalments are lesser. Most banks offer loans with shorter tenure at a lower interest rate. Though the monthly instalment is on the higher side, you will save up on the interest you would have paid if you had opted for a long tenure loan.
Whether you need a car to make your commute easier or because you’ve always wanted to, you can make use of the above tips to save money. It is advisable to read everything about the warranty cover and the insurance before making a purchase. If you are a low or a middle-income earner, you need to evaluate your priorities to make the right decision. You can opt for cheaper alternatives like leasing and buying second-hand cars until you save enough money to buy your dream car in future.