Introduction 1
- Lecture1.1
  
  Summary
Things to know 6
- Lecture2.1
  
  Step 1: What other transport options do you have?
- Lecture2.2
  
  Step 2: How do you choose between a secondhand car and a new car?
- Lecture2.3
  
  Step 3: What are your upfront costs?
- Lecture2.4
  
  Step 4: What are your recurring costs?
- Lecture2.5
  
  Step 5: How much can you afford?
- Lecture2.6
  
  Quiz: Buying a vehicle

Step 4: What are your recurring costs?

Use our calculator to help you calculate your monthly loan repayments!

Once you’ve worked out what you’ll have to pay upfront, next you’ll have to figure out your monthly costs.

Monthly loan repayments

To calculate the monthly repayment amount for your loan, you need to know:

a) The price of the vehicle

b) The interest rate of the vehicle loan

Vehicle loan interest rates may sound low but they’re not actually that low since they’re calculated with flat interest rates. The interest you’re actually paying, or the effective interest rate, is almost double your flat rate! Always ask for the effective interest rate so you know how much you’re really being charged. (Currently, the flat interest rates offered by banks range widely from 2.5-10%.)

For some banks, you can choose a vehicle loan with variable interest rate. This method calculates your loan repayments on a reducing balance method. In this case, the interest rate being charged to you will vary throughout the tenure of your loan. Again, always check the Effective Interest Rate.

c) The down payment you can afford to make

d) How long you’ll want to take the loan for

SCAM ALERT!

There are many online financial lenders (some may also have physical offices) that will be happy to loan you money. But beware, their interest rates are significantly higher than that of the banks. Let’s take the lender below for example:

Step 4: What are your recurring costs? 1 - Multiply -

The motorbike they’re selling costs RM7,500. Their offer is: Down payment: RM 550, monthly payment: RM 281 per month for five years. It looks good, right? And it sounds affordable…

But is it really that cheap? How much will you actually pay? The calculation goes like this: RM550 + (RM 281*12*5)= RM17,410.

That is over 200% of the actual price of the motorbike (you can buy another new motorbike with the money you will spend paying the interest). Or around 43% per year in interest!

Even their Plan B isn’t that cheap. It comes up to RM11,419 which is 150% more than the price of the motorbike.

Step 4: What are your recurring costs? 3 - Multiply -

So, always make sure you know how much you’re really paying for your vehicle (use our calculator) and don’t get taken for a ride. If you can’t afford the vehicle of your choice right now, it might be a good idea to wait a bit rather than get yourself into a lot of debt.

Other costs:

Road tax

Make sure to also budget enough for your vehicle’s road tax every year!

For personally registered cars in Peninsular Malaysia, the following road tax rates apply.

Engine capacity (cc)	Base rate	Progressive rate (per cc)	Road tax amount
1,000 and below	RM20.00	–	RM20.00
1,001 to 1,200	RM55.00	–	RM55.00
1,201 to 1,400	RM70.00	–	RM70.00
1,401 to 1,600	RM90.00	–	RM90.00
1,601 to 1,800	RM200.00	RM0.40	RM200.40 to RM280.00
1,801 to 2,000	RM280.00	RM0.50	RM280.50 to RM380.00
2,001 to 2,500	RM380.00	RM1.00	RM381.00 to RM880.00
2,501 to 3,000	RM880.00	RM2.50	RM882.50 to RM2,130.00
3,001 and above	RM2,130.00	RM4.50	RM2,134.50 and above

Source: JPJ documents

So, if you were to get a car with a 1,600 cc engine, you’d have to budget an extra RM90 every year for the road tax.

Petrol costs, parking fees and toll charges

Your vehicle’s fuel consumption is an important factor when buying a vehicle, so look for one with a lower consumption of petrol-per-kilometre to minimize your petrol costs. Parking fees and toll charges are also items that you’ll need to budget for.

Maintenance costs

Maintenance costs will depend on the vehicle itself. Important factors to consider when trying to reduce your maintenance costs would be the make and model of your vehicle, whether it’s new or secondhand, and how much you use it.