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:
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.
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:
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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.
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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.
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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.
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Annual insurance premiums
Don’t forget to also budget for your insurance each year. Check out our article on car insurance for more information.
