Ownership of a car involves more than just monthly payments. You will also need to consider other factors such as the cost of gasoline, insurance premiums, road tax, and more. The article explores the cost of owning a car in Malaysia.
What Factors Affect The Total Cost Of a Car?
If you want to know how much an affordable car is, you can use the following formula: a cheap car costs the same as or less than your gross monthly income x 12 months.
For example, let’s assume a fresh graduate’s average starting salary is RM2500 (in most industries); their annual gross income is RM30,000. According to the annual gross income guideline, a feasible car for fresh grads would be any vehicle below RM30,00 – anything above that is way beyond their means. Aside from the sticker price and financing costs, it would help if you also considered other factors. Here are some estimates of the different costs related to buying a car based on the crunch numbers. Let us break it down for you:
Finance Charges
Purchasing a car with cash isn’t impossible, but most people choose to finance their car by taking out a loan. You could reduce the total amount due by making a larger down payment because you will have less money to borrow and interest to pay. As well as this, your loan amount will depend on how long you take out the loan. The longer the loan terms, the lower the monthly payment, but you’ll also pay more in interest.
The Price Of Gasoline
It is advisable to evaluate the fuel consumption before buying it, as it is the second-highest cost of car ownership. In particular, if you drive a lot for your job, it would be helpful to calculate the liter-per-kilometer rate of the car you plan to purchase.
Cost Of Depreciation
Vehicles aren’t the best investments – they lose up to 10% of their value the moment they drive off the lot and more than 20% after one year. Regardless, they are still needed to get around and commute. Do several things to maintain the resale value of your car, even if depreciation will cut through the deal. Consider, for example, buying a car in traditional colors like white or black and maintaining the interior and exterior.
Car Insurance And Road Tax
According to our research, the road tax cost in Peninsular Malaysia is very affordable. 1500cc or 1.5-liter cars only cost RM90 per year. In East Malaysia, it’s even cheaper at RM56. If you choose a good or better fuel economy car, Saving money will be possible. A vehicle with a 3000cc engine could cost as much as RM2,130 in road tax. Several factors affect your insurance costs, such as the type of insurance, the value of your car, your No-Claim Discount (NCD), your risk profile, and the type of vehicle.
Car Maintenance and Repair
Cars inevitably need maintenance, but the amount and type of care vary according to the number of times they have been driven, their distance, and the wear and tear they have received. It’s impossible to specify a fixed price because the cost depends on the car’s age, model, make, and mileage. Still, our rough estimate based on personal experience and research is that a vehicle driven between 50,000km and 80,000km will cost at least RM1,500. These other parts will need to be replaced, including batteries, tires, timing belts, and brake pads.
Parking And Tolls
Even though we hate paying parking fees and tolls, you will have to include them when calculating the total cost of your car. If you spend RM10 on parking and RM6 on tolls daily, you will spend about RM352 per month just on tolls and parking. You will pay less for parking and tolls in the suburbs, rural areas, and the city.
Final Thought
Note that the advertised price of a vehicle is only one factor in determining the total cost of that vehicle. Your monthly fees can also be affected by car insurance, petrol, parking and tolls, and maintenance. Do a little research to understand better the potential costs – both upfront and ongoing – associated with a car. But most importantly, stick to your budget!
