Have you ever felt trapped by car loans? You’re not alone. Recently, I came across a news snippet about Azli Senario, who regretted buying a brand-new car—he spent 11 years paying off his loan! And honestly, this isn’t just Azli’s story; it reflects the reality for so many Malaysians.
Cars in Malaysia are not cheap. Let me give you some perspective: back when I worked as a doctor in the UK, you could buy a car for under £10,000. My monthly salary was around £2,000–3,000, and I could buy a brand-new Kia Rio in just two months’ salary. Compare that to Malaysia, and it’s a whole different ball game.
So, how do you avoid regretting your car purchase? Here’s a simple guide to buying the right car without destroying your finances.
1️⃣ Know the Difference Between Needs vs Wants
Before buying a car, ask yourself: Do I really need this car, or do I just want it?
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Urban living: If you live in the city and your office is just 10 minutes away by train, owning a car might actually be a waste of money. Think about tolls, fuel, parking, and maintenance—it all adds up!
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Suburban or rural living: If you need a car to commute, then yes, a car is a necessity.
Once you know whether it’s a need or want, you can decide the type of car you actually need. Are you looking at a compact car, an EV, an MPV, or a big SUV?
2️⃣ Stick to the “1-Year Salary Rule”
Here’s a golden rule: never buy a car that costs more than one year of your salary.
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Example: If you’re a fresh graduate earning RM2,000/month, your ideal car budget is RM24,000 or less.
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Can’t find a new car under RM24,000? Don’t worry. Second-hand cars are a great option. My first car in Malaysia (2010 model) cost RM25,000, and it was perfect.
Want an EV for RM120,000? Then your monthly income needs to be around RM10,000 to comfortably afford it. Stick to this rule, and you’ll avoid years of financial stress.
3️⃣ Use the 25-15 Formula & Don’t Fear Second-Hand Cars
When buying a car, remember the 25-15 formula:
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20% down payment
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5-year loan maximum
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Monthly installment < 15% of your net salary
Example: For a RM100,000 car:
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Down payment = RM20,000
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Loan = RM80,000 over 5 years
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Monthly payment ≤ 15% of your net salary
And don’t shy away from second-hand cars—they’re often great value.
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Used cars: Bought locally from previous owners
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Recon cars: Imported from overseas (like Japan, where cars must be replaced after a few years). Low mileage, almost like new!
Pro tip: For auctions or recon cars, bring a mechanic to check the engine and condition before buying. It can save you thousands in repairs later.
Final Tips
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Always buy a car within your budget. Don’t be tempted to show off. Remember, maintenance, fuel, tolls, and parking are extra costs.
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Consider second-hand cars first. I bought all my cars second-hand until I turned 33, and it saved me tons of money!
Buying a car wisely ensures you stay financially secure for bigger life goals—like buying a home, starting a family, or investing for the future.
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