The Dummies Guide To

Getting Your First Car

01

Follow Us On:

Table of contents02 Getting Your First Car

03 Step 1: Figuring Out The Cost

04 Monthly Cost

04 Always Pay Your Loan

05 Your Monthly Repayments And Interest

06 Drive More, Re-Fuel More

08 Remember Where You Park, Only Hotlines Are Toll-Free

09 Annual Cost

09 Don't Forget To Pay Your Road Tax

11 Get Insured!

12 Cars Need Attention And Service Too

13 Depreciation

14 Step 2: Finding The Right Car

15 Should I Buy New Or Used?

15 All Things New

16 Your Guide To Good Vintage

18 Local Or Foreign?

18 Local Boleh!

18 The Foreign Competition

20 Step 3: Making The Purchase

20 Financing Your Car

20 Estimating Your Down Payment

21 The Fine Print

22 How To Apply

24 Buying A Used Car Checklist

25 Driving Off!

02

Getting Your First CarSo you need a car. But you aren’t one of the lucky ones who know somebody who has an unused car lying around somewhere which you can borrow for, like, forever! ‘My very first car’ has a nice ring to it, but you don’t know where to begin.

What car should I get? How much do cars cost these days? How do I get a car loan? How much will I have to cash out for the down payment, monthly repayments and interest, car repairs, servicing, road tax, car insurance, petrol and more?

Probably a lot of money. Yes, buying your first car might be the second largest financial commitment in your life – scary shivers, independence-phobia, I’ll-just-ride-a-bicycle-forever. Getting it, however, should not be a daunting process. If any of this sounds too complicated right now, don’t you worry about it just yet. That’s what this guide is for, to keep things simple and to clue you in on a few hints, tips and tricks.

Before we get started, let’s clear the air a little. There is no such a thing as only one way to buy your first car. Here at RinggitPlus we believe the basics of making a well-informed and planned out financial decision always apply. For this guide we went back to the drawing board and came out with ‘3 Dummy Steps To Getting Your First Car’.

Figuring Out The Cost

step 1

Finding The Right Car

step 2

Making The Purchase

step 3

RM ??? RMRMRM

03

Costs To Think About When Budgeting For Your Car

Step 1: Figuring Out The CostA good place to start when thinking about buying your first car is to figure out ‘How much can you actually afford’. You’ve probably done some basic math in your head. Hopefully you’ve also realised that

there’s a lot more involved in budgeting for your first car than shopping around for price tags, and figuring

out if you can fork out enough cash to pay.

Can you actually afford to own a car? Buying a car is called a financial commitment for a reason. For most,

getting a first car would also mean getting a loan from the bank. So unless you have a steady full-time job

or a huge stash of savings hidden somewhere, the answer is probably ‘No’ if you’re thinking about buying

your first car.

First things first, let’s start with a budget. There are two types of costs that you should take into account when deciding how much you can afford: ‘Monthly Cost’ and ‘Annual Cost’. You’ll also want to consider the decrease in the value of your car over time, otherwise known as depreciation.

RMR

RM

Monthly Cost Annual Cost Other Cost

• Loan repayments • Road tax • Depreciation• Fuel • Car insurance• Parking and tolls • Car repairs and servicing

04

Did you know?There are many different car loans out there such as the Graduate Scheme Loan which offers 100% financing and a 9-years repayment period, with no need for a guarantor or collateral! This certainly sounds like a good deal, but is there a catch?

Because banks are rolling out a loan to borrowers with little or no credit history, they will charge 0.10%-0.20% more interest than average. And remember, since you are borrowing the full price of the car, you will be charged even more interest than you would if you paid a down payment!

Monthly Cost

Always Pay Your LoanIf you plan to get a loan, your repayments are going to become a permanent fixture in your monthly budget for a while. While a longer loan tenure might ease the burden, you’ll end up paying a lot more interest by the time you’ve finished paying everything off.

Your car loan falls under hire purchase financing which follows a flat interest rate. The interest payments will stay fixed – regardless of the amount of principal payment you’ve paid back to the bank.

Because these interest payments for car loans can get costly for the borrower, Bank Negara has set a limit on vehicle financing at no longer than 9 years1.

1 Item 6.18, Guidelines on Responsible Financing, Bank Negara Malaysia.

Car LoanCar Loan

Car InsuranceCar Insurance

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

PAY YOUR LOAN!

Car LoanCar Loan

Car InsuranceCar Insurance

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

PAY YOUR LOAN!

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Even though your repayments for an 8-year loan are RM533.34 every month, compared to RM950 for a 4-year loan, you pay double the amount of interest payments by the end of 8 years. That’s a total of RM11,200! Remember, you took a loan for just RM40,000.

To get more savings on your money it is always best to get a shorter loan tenure when possible. A shorter car loan might mean a tighter budget in the short run, but you’ll get more long term savings! This will also free you up for other commitments like a mortgage.

Your Monthly Repayments and InterestHow much will your first car cost? Let’s start with an example of a car loan of RM40,000 at 3.5% flat interest

per annum (p.a.) for 4 years:

Now, let’s say you extend your car loan to an 8 years term at the same interest rate of 3.5% flat interest p.a.:

Total Interest Payment for

4 years:

RM40,000 × 0.035 × 4 years

= RM5,600

Total Interest Payment for

8 years:

RM40,000 × 0.035 × 8 years

= RM11,200

Monthly Interest Payment:

RM5,600 ÷ (12 months × 4 years)

= RM116.67

Monthly Interest Payment:

RM11,200 ÷ (12 months × 8 years)

= RM116.67

Principal Payment:

RM40,000 ÷ (12 months × 4 years)

= RM833.33

Principal Payment:

RM40,000 ÷ (12 months × 8 years)

= RM416.67

Monthly Repayments: RM116.67 + RM833.33 = RM950 per month

Monthly Repayments: RM116.67 + RM416.67 = RM533.34 per month

GST Tip #1Interest rates are never a good thing especially when you’re the one paying. Thankfully you don’t have to worry about paying GST on your monthly loan repayments!

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1. Calculate The Average Distance You TravelTo do this, you can either use the trusty ‘old school’ odometer built into your car or an app like Google maps. Let’s say the distance to your workplace is 17.5 kilometres (km). On weekends you prefer to stay home, so you estimate that you won’t travel more than 50km.

You’ll want to multiply the distance to your workplace by 2 to get the distance you travel to and back from the office and home. Assuming that you work 5 days a week, you’ll then multiply that number again by 5 to calculate your travel on weekdays. Then add your travel on the weekend to get the total number of km travelled each week.

2. Factor In The Fuel Economy Of Your CarIt’s always handy to know the fuel economy of your car. A MyVi 1.3L gives you an average of 17km for each litre of petrol, if you aren’t too heavy on the gas pedal.

Since we know the total number of kilometres that we travel each week, multiply that number by 4 to get the total distance travelled per month. We then divide that number by the fuel economy to calculate your petrol consumption each month in litres (l).

Drive More, Re-Fuel MoreOwning a car means getting around with ease. But those kilometres can rack up quickly, as will your monthly spending on petrol. Here are some pointers on how to draw out a rough sketch of your petrol spending when budgeting for your car. We’ll be using a MyVi 1.3L as an example:

Total number of kilometres each week= Travel on weekdays + weekend

= [(17.5km × 2 way) × 5 days] + 50km

= 175km + 50km

= 225km

Petrol consumption per month

= Distance travelled per month ÷ fuel economy

= (225km × 4 weeks) ÷ 17 l

= 52.9 litres

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Did you know?

Just because RON97 is more expensive, that doesn’t mean you’ll always get better fuel economy. Some car engines are built specifically for lower grade RON95 petrol, like your Perodua MyVi!

How can you save on petrol? One trick is to remove heavy objects that are not being used from your car, especially when you are traveling long distances. Your car engine burns fuel to move itself and its contents around. So the lighter your car, the less fuel it burns!

You can also travel lighter by pumping your car with less fuel, rather than filling a full tank each time! Each litre of petrol weighs about 0.75 kg. So if you fill your 40-litre MyVi tank to half its max capacity it’ll weigh 15 kilograms less!

Once you estimate your petrol spending each month, you can add this cost to your monthly car budget. Along with your monthly loan repayments and expenditure on tolls and parking, you now have an estimate for your car budget each month. Voila!

3. Sketch A Budget Based On The Price Of Petrol

How much should you budget for petrol each month? Multiply your consumption of petrol with the price to get your petrol cost per month. Fill your MyVi with RON95, this will cost you RM1.75* per litre.

* Calculation is based on RON95 prices in February 2016.

Petrol cost per month

= Cost per litre × litres per month

= RM1.75 × 52.9 litres

= RM92.58

RM RM

RM

BUDGET

GST TiP #2Petrol prices may go up and down. But as long as you fill your tank with RON95 or diesel, you won’t have to pay any GST on petrol. RON 97 on the other hand is inclusive of 6% GST.

08

STOP

Remember Where You Park, Only Hotlines Are Toll-Free

If you have to commute long distances to work, you may have to pay for tolls to and from. Your office might not come with a parking spot, so you’ll also want to include costs for that. Let’s not forget the costs for parking in a shopping mall, or a parking bay if you live in a flat or condominium.

There are ways to work around these costs, however, such as avoiding routes with tolls. If traffic is heavy during these hours you can plan your commutes around rush hour traffic. Depending on where you work, you may want to consider getting a season parking pass if that will save you some Ringgit and the hassle of finding a parking spot each day. Another way to save, which is also environmentally friendly, is to consider carpooling to split-up some of the costs for parking, tolls and petrol!

Yes, the little things add up (or add down). You’ll want to factor parking and tolls into your car budget, especially if these costs are going to be a permanent fixture in your monthly bills. Hopefully you won’t need any help with the math here. Just remember that only hotlines are toll-free, and where you park matters!

Annual CostDon’t Forget To Pay Your Road TaxIf only getting on the road was as easy as grabbing your car keys, starting the ignition and pulling out of your front gate. To drive on the road legally car owners are required to pay taxes on their vehicle. This is called your road tax.

What you drive, where you drive, and who owns the car matters when it comes to paying your road tax.

For an estimate of road taxes for a privately owned car in Malaysia based on engine size check out the

infographic below:

Road tax rates for your car are determined by a few factors:

• Type of vehicle

• Type of ownership

• Engine size (CC)

• Region

PENINSULAR MALAYSIA

Engine Size (cc.) Road Tax (RM)

1000 and below RM20 1001 to 1200 RM55 1201 to 1400 RM70 1401 to 1600 RM90

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Road tax for cars above 1000cc in Pulau Pangkor and Langkawi are half of the Peninsular Malaysia rate.

Above 1600cc

RM

Engine CC

880

25001601

200

10

Sabah & sarawak

Based on the tables and graphs, a proud owner of Malaysia’s favourite budget car the Perodua MyVi with a 1298cc engine will pay RM70 per year in Kuala Lumpur. While another proud owner of a Perodua MyVi with a 1495cc engine will pay RM72 per year in Kota Kinabalu.

Engine Size (cc.) Road Tax (RM)

1000 and below RM20 1001 to 1200 RM44 1201 to 1400 RM56 1401 to 1600 RM72

Road tax for cars above 1000cc in Federal Territory Labuan are half of the Sabah & Sarawak rate.

Above 1600cc

Engine CC

RM

524

25001601

160

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Car insurance provide coverage for damage and loss of property, but not your well-being. Get a Personal Accident Insurance policy at RinggitPlus. Ensure you’ll get the medical attention you deserve in case of an accident. Compare different Personal Accident Insurance plans out there!

In order to renew your road tax, you’ll need to get Third Party car insurance for minimum coverage. Third Party car insurance, the most basic of the three, provides coverage for injuries to other people and their property in the event of an accident.

Get Insured!

You’ve always been a safe driver; maybe you’ve never driven before. Either way you’ll still need car insurance to drive on the road legally. There are 3 types of car insurance offered by insurance companies:

• Third Party

• Third Party, Fire and Theft

• Comprehensive

Third Party, Fire and Theft provides the basic coverage of Third Party insurance and additional cover if your vehicle is stolen or damaged by fire. Comprehensive on the other hand provides the coverage of Third Party, Fire and Theft and also insures your car for damage or loss. For a quick summary of what is covered under each plan, take a look at the car insurance summary table below:

GST TiP #3Your car insurance premiums are subject to 6% GST. If you do not make any claims, you may be eligible for lower premiums when you renew your car insurance the following year. Which means you’ll pay less GST!

Trying to figure out how much your car insurance will cost you? You can compare the different car insurance plans at RinggitPlus.com

third party, Protection coverage third party fire and theft comprehensive

3rd party’s property damage or loss Yes Yes Yes

Your property’s damage or loss No No Yes

3rd party’s bodily injury and death Yes Yes Yes

Your vehicle’s accidental fire or theft No Yes Yes

You and/or your passenger’s bodily No Yes Yesinjury and death

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Cars Need Attention And Service Too

As a paying customer you’ll always want great service coming your way. Put yourself in your car’s shoes, and you’ll realise that your car likes great service too – except you’re the one forking out the bill! You’ll be surprised how much attention a car needs in order to run like a whistle, from engine oil changes to wheel alignments, air filter cleaning and brake fluid top-ups and more.

It is not worthwhile to make claims from your insurance company for minor car dents and scratches. For this you will need some spare cash, especially if you decide to buy a less than trustworthy used car. We talked to a few people in the automobile industry to find out how much servicing and car maintenance might cost you annually:

Car Range Estimated Annual Cost For Servicing & Maintenance

Below RM50,000 ≈ 0.8% to 1.0% of your car cost

Above RM50,000 ≈ 0.6% to 0.8% of your car cost

Did you know?Car manufacturers aren’t the only ones that provide a warranty. If you feel insecure about getting a used or reconditioned car you can consider buying warranty provided by a private company instead.

These warranty packages will insure your car for a specific time frame or distance driven. Depending on the car model, it is likely that these warranty packages won’t apply for cars above 5 years, or with more than 100,000 kilometres recorded.

* Note that 6% GST charge is applicable for servicing and car repairs.

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Here’s the same calculation for a new and used BMW 320i Sports. While the percentage difference in depreciation is not significant, the BMW 320i Sports loses a lot more value due to its higher purchase price.

What is depreciation? Unfortunately, its actual meaning is a lot more ominous than trying to pronounce it. Buying a car is never actually an ‘investment’ in its literal sense, as its value will always go down over time – this is what you call dih-pree-shee-ey-shuh-n.

Depreciation is usually linked to how saleable a particular car model is. A well maintained car will retain its value better, but depreciation will always occur regardless of how careful you are as an owner. You can expect the value of your car to drop by 10-15% each year

Here’s an example of depreciation for both local and foreign cars. From the price difference between a new and used Proton Saga BLM (Auto) as show in the table below, we can calculate the amount of depreciation a brand new Proton Saga BLM (Auto) will go through in 6 years.

*Prices are based on price listings at the time when this eBook was written; both used Proton Saga BLM and BMW 320i Sports had less than 40,000km recorded. These prices may not match what is offered by other car dealers.

Depreciation

$$$$$$$$$$$$$

$$$$$$$$$$

$$$$$$$$

$$$$$$

Year Of Registration Vehicle PRICE

2015 New Proton Saga BLM (Auto) RM36,998

2009 Used Proton Saga BLM (Auto) RM18,800

Year Of Registration Vehicle PRICE

2015 New BMW 320i Sports (Auto) RM257,800

2009 Used BMW 320i Sports (Auto) RM129,800

Depreciation Percentage 50.3%

When planning for your first car, you want to ‘Fit your car to your needs and budget’. There are a lot of car models and brands out there to indulge Malaysians’ favourite past time. But before you begin car shopping, you might want to know some basics about buying a car. And ‘No’, you don’t have to overspend to find a car which is value for money!

There are various criteria to choose from when buying a car. In this section we’ll focus on two points of consideration, namely ‘New or Used? and ‘Local vs Foreign’? Once you have a general idea of what you’re aiming for, you’ll be able to work your way towards narrowing down your choices from the numerous selection of cars out there.

Criteria To Think About When Choosing Your First Car

Step 2: Finding The Right Car

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Ownership

• New

• Used

• Refurbished

Manufacturer

• Local

• Foreign

Should I Buy New Or Used?

All Things NewMaybe you can’t put it into words, but there’s an appeal to new ownership. Which is why you’re willing to pay the asking price of a brand new car.

Compared to getting one that was previously owned, the obvious plus of getting a new car is you know where your purchase has been – freshly manufactured in a factory and shipped to your local car dealer. Cars both new and used will depreciate over time. So even if your shiny new purchase loses more than half its value past the 5-year, mark that is a trade-off in value which you are willing to part with.

A new car also comes with the manufacturer’s warranty. You’ll be covered for the first year or 3 after your date of purchase, so you won’t have to worry about repair cost. Just remember to keep your car serviced regularly to keep it running optimally and to avoid unnecessary and costly repairs in the future.

Car manufacturers also offer car models in different ranges and with different add-ons. Depending on your budget, you’ll be able to pick and choose your customisations – from basic features such as auto gears, comfy leather seats and sun roofs, to high powered speaker systems, auto-parallel parking systems and more. All this on the condition that you can afford to pay the extra cash!

At the very least, you’ll be able to pick your new car in your preferred colour.

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USED NEW

GST TiP #4When shopping for a new car, you’ll notice that 6% GST is included in the price tag. But that doesn’t necessarily mean that the overall price has gone up.

Before GST was implemented a 10% sales tax was charged when you bought a car. Because this tax has now been removed you may actually get some savings on your purchase!

Did you know?Before a car is sold, a basic inspection called the B5 or Transfer of Ownership Inspection by PUSPAKOM is required. But if you would prefer a more comprehensive and thorough examination of your car, you can also opt for the B7 Inspection. The B7 or Hire Purchase Inspection is a mandatory assessment if you are applying for a car loan to finance the purchase your used car.

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Remember dih-pree-shee-ey-shuh-n from the previous chapter? Depreciation is the reason why a used car always comes with a lower price tag. This makes it the cheaper alternative when you can’t afford the asking price for a brand new car. But is a used car the obvious second choice just because someone else has sat in the driver’s seat before you?

Have you ever wondered why ancient cars like the Volkswagen Super Beetle are still able to run on the road? A used car can be great value for money if you are able to find the right one at the right price. Find the right model, well-maintained and kept in good condition by its previous owner and you may as well have struck gold – plus you may just have found one of those lucky gems that will outlast all its peers on the road.

Maybe those are too many ‘ifs’. There are still those nagging questions every buyer has to think of when contemplating to buy a used car. Was the previous owner a heavy-handed driver? Has this car been involved in any major accidents? Has this car even seen the inside of a workshop since the day it was purchased?

Your guide to good vintage

RM

GST TiP #5You don’t always have to pay the full 6% GST when you buy a used car. Check to see if your used car dealer is GST Margin Scheme registered. You’ll get a discounted GST rate on your purchase which is based on the difference between the purchased and selling price.

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Did you know?New or old aren’t the only roads to travel when getting your first car. If you can’t afford a brand new car but don’t want to settle for a used one either, a refurbished car might be an alternative.

Refurbished cars are typically used and unregistered cars which have been refitted to meet industry specifications. If you’ve developed partiality for a particular car model not available locally, you may consider importing one through an agent or refurbished car dealer.

Here’s a quick table of comparison of the pros and cons of getting a new car or a used car:

Price

Financing

Warranty

new USED

Full price. Car dealer might throw in a few freebies.

Cheaper. Price will be based on depreciation and condition of car.

No issue here. Get a bank loan. No issue here. Get a bank loan.

Likely no, unless car is sold close to purchase date.

1-3 years

Local Boleh!If you’re a proud Malaysian and buying local-made products is a personal priority, you’ll be happy to know that our local car manufacturers offer a wide range of cars at affordable prices. Foreign cars come with marked up price tags due to high excise and import duties. While foreign manufacturers offer some of the best cars on the market, your local options come budget-friendly and also quality-made.

If you want every Ringgit you spend to benefit the local market, Proton cars are your 100% Malaysian option. Manufactured and assembled locally, Proton offers a wide array of car models from superminis, to compact cars and MPVs in its product line. You’ll have no problems finding a trendy Iriz, a sleek Inspira, or the multi-purpose Exora to fit your everyday car needs.

Let us not forget Perodua, which also happens to be the proud assembler of our favourite budget car, the MyVi! While its product line isn’t as diverse as Proton’s, Perodua also offers the Perodua Axia, which is the cheapest new car on the market. Or if you’re looking for a family vehicle, you can opt for the Perodua Alza.

At the end of this section we’ll show prices for some of the local and foreign cars models available. There’s no right or wrong way when it comes to choosing what car to get. But if you choose to buy a Proton or a Perodua rather than a foreign-made car, you get your hands on a value purchase while supporting the local market and economy.

Local Or Foreign?

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The Foreign CompetitionA foreign-made car might be the prize possession on the road, but it’ll also come with a hefty price tag. Almost half of the cars sold in Malaysia in 2015 were foreign-made2. Of the many brand names from the United States, Europe and East Asia which populate Malaysia’s automobile market, the three top selling foreign brands – Toyota, Honda, and Nissan all hail from Japan.

There are two types of foreign-made cars out there. CBU cars, otherwise known as Complete Built Up, are foreign imports which were manufactured and assembled outside the country. CKD or Complete Knock Down are cars whose major parts and components were manufactured abroad but assembled locally. The difference between the two is the import tax levied of up to 30% for CBU cars and 10% for CKD cars.

Once you break the numbers down you’ll find that much of what you pay for when purchasing a foreign-made car are taxes. You’ll pay import duties regardless of whether you buy a CBU and CKD foreign car. But the real kicker is the excise duties which amount to 75%-105% of the car’s actual value, based on the type of car and its engine size3.

*All cars and prices were obtained directly from the manufacturers’ websites at the time when this eBook was written. All information listed

in this table is for comparison purposes only and may not include cost for car insurance and GST. For more information on actual car price

listings, do contact a car dealer directly.

2 Market Review For 2015,MMA

3 Duties and Taxes on Motor Vehicles, MAA.

At the end of the day, everyone will have their own reasons for opting to buy a foreign car over a more budget-friendly locally made car. While the asking price may be steep, what you get in return – top quality, reliability, and brand assurance may be well worth that money you put in.

The Goods and Services Tax has caused a lot of prices to shift around. So we decided to compile a list of some of the latest car prices in the market, for both local and foreign cars, as of February 2016:

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TYPE LOCAL FOREIGN

Class / Body Style Car Model Price (RM Car Model Price (RM)

City car / Perodua Axia 24,437 Kia Picanto 61,888

5-door hatchback

Supermini / Perodua Axia 40,862 Suzuki Swift 65,788

5-door hatchback Proton Iriz 41,077 Honda Jazz 73,800

Kia Rio 81,888

Compact car / Proton Pesona 44,658 Nissan Almera 64,765

4-door saloon Honda City 76,100

Toyota Vios 77,980

Compact car / Proton Preve 44,658 Nissan Slyphy 111,900

4-door saloon Honda Civic 116,400

Toyota Corolla Altis 120,900

Mid size / Proton Inspira 57,686 Nissan Teana 133,285

4-door saloon Honda Accord 141,100

Toyota Camry 154,900

Compact MPV / Perodua Alza 57,686 Toyota Avanza 71,538

5-door saloon Proton Exora 55,592 Nissan Grand Livina 83,975

Toyota Innova 103,210

Step 3: Making The PurchaseNo, you probably won’t be able to swipe this one with your credit card. But you’re almost on your way to getting your first car. For most who can’t afford to pay for a car upfront, all you need right now is to get a loan approved. That just leaves a few transactions left.

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Estimating Your Down PaymentIf you plan on getting a car loan, you’ll have to put forward an initial payment which is to be paid in full. This is called your down payment.

In most cases the absolute minimum that you have to pay as down payment is 10% of the car value. For those who need slight help with the math, the down payment for a car with a price tag of RM44,936 would be RM4,494 for example.

While you may only be required to pay 10%, it is always financially beneficial to put forward a higher down payment. The higher your down payment, the smaller your loan is going to be. And because you have to pay interest on all the money that you borrow, you will pay less interest at the end of the day

Financing Your Car

GST Tip #6 Your car down payment has to include 6% GST. But since the car price which is listed at a dealer is already inclusive of GST, your total down payment with GST will still work out to 10% of the retail price.

*Interest rates listed are for comparison purposes only. Contact your bank for more information about the car loan interest rates that they offer.

The Fine Print

Interest ratesThere are a few things you’ll want to take note of when getting a car loan. As explained in the first chapter, your car loan falls under hire purchase financing which follows a flat interest rate. Your interest rates will vary based on the type of car you get.

Late Payment ChargesWhen you take up a loan not paying your instalments on time is the 8th deadly sin of the modern day. Remember to ask your bank about late payment charges! Banks will charge as much as 8% interest p.a. of the total outstanding balance due.

RepossessionIf you fall behind on paying your monthly repayments for two consecutive months, action will be taken towards repossession of your car after the bank issues a 21-day notice.

Once your car has been repossessed, you’ll be given another notice to settle your outstanding payments. If you are unable to make these payments, the bank will sell your car through an auction or private sale.

Rebates On Early SettlementDepending on your loan agreement with your bank, you may be allowed to get a rebate on early settlement of your car loan.

These rates will likely be prorated based on the remaining monthly repayments left on your loan. You’ll want to check with your bank on how these rates apply, or if they are offered at all!

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Types Of Cars Range Of Interest Rates

New national cars 2.80% - 4.10%

New foreign cars 2.15% - 3.40%

Used cars (national/non-national) 3.40% - 4.30%

Don’t run off to the bank nearest to you just yet! Check and compare the different car loan deals at RinggitPlus and get more savings.

Depending on your financial circumstances – such as your credit rating, the bank will request for a guarantor if they aren’t convince that you can pay back your car loan. Your guarantor, be it a parent or legal guardian, will have to pay what you owe if you are unable to meet your loan repayments.

For this, your guarantor will need to prepare the following documents.

If you’re planning to get a used car above 7 years old, it is likely that a bank won’t give you a car loan. Depending on the bank’s policies, you may have to get a regular personal loan to finance your used car instead.

How To ApplyRemember that you came this far through careful and methodical planning. So don’t rush the process of signing a car loan, especially if you know you’ve overcommitted on your car budget. If you know nothing about bank loans, or car loans in particular here are some basics.

The bank will first need to verify that you have a stable source of income before they consent to give you a loan. For those who are employed, above 21 years of age and Malaysian we’ve prepared a checklist of documents that you will need:

Malaysian NRIC

A valid driving License

Your latest 3 months bank statements

Your latest Borang BE (with tax payment receipt)

Your latest EPF statement (showing at least 6-months of contributions)

Letter of employment

Malaysian NRIC

A valid driving License

Your last 3 months salary slips

Your latest 3 months bank statements

Your Document Checklist:

Your Document Checklist:

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Buying A Used Car ChecklistPlanning on getting a used car? It is important to do your homework and get your hands dirty before deciding to make this significant purchase. We’ve provided a checklist below to help you determine if a pre-loved car from a private seller or dealer is worth your hard earned cash!

Or you could leave all the dirty, technical and maintenance work to the expert (i.e. your friendly neighbourhood mechanic) – strongly recommended for newbies.

BEFORE YOU VISIT THE SELLERRESEARCH

Read reviews on the car – look online or ask friends

Make sure car specification meets your needs e.g. family car, 4-wheeler etc.

PREPARATION

Make an appointment to view the car

AT THE SELLERASK THE RIGHT QUESTIONS

Ask about the age of the car (year of manufacture and year of sale)

Ask about the car’s maintenance history

Ask about the number and type of previous owners

Ask about any major modifications or repairs to the car – this information can also be found on the Car Registration Card

Ask if car dealer is GST Margin Scheme registered

BEFORE THE TEST DRIVE

Switch on ignition but don’t start engine – check temperature, oil, and charge warning meter.

Check mileage and odometer readings – crosscheck with maintenance records for discrepancy

Check everything else: suspension, transmission gear, oil leakage, electricity switches, sound system, brake pad, air conditioner condition and filter, tyres and spare tyres, and windscreen damage – phew!

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GET COMFY!

Can you and your passengers get in and out of the vehicle easily?

Are the seats and steering wheel adjustable to meet your needs?

Is the car boot big enough?

TEST DRIVE – RIDE AND HANDLING

Can you get a comfortable and safe driving position?

Can the car operate normally? - clutch, gears, brakes and steering

Are you and your passengers comfortable on a variety of road surfaces?

Is the car easy to park?

Check for unusual noises from the engine or breaks

POST DRIVE INSPECTION

Open the bonnet. Hear or see anything unusual?

Check if the engine has overheated

DOCUMENTS

Manufacturer handbook

Service history or JPJ traffic offense records

B5 and B7 Certificate from Puspakom * B7 Certificate is required for users obtaining a car loan

JPJK3 form from the Road Transport Department

Car Registration Card

Insurance policy

Manufacturer warranty, if still applicable

Invoice (if charged GST Margin Scheme) OR Tax invoice (if charged full 6% GST) * If you pay GST Margin Scheme on your used car, you will not be able to claim any input tax

DRIVING AWAY

Negotiate the selling price

Confirm collection date

Make payment, and enjoy your ride!

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Driving Off!

Just like that you’ve reach the end of this guide! If you took some time to read through some of the tips that we drew up, you probably know a few things more about getting a car than you did when you first started.

Buying a car is a big commitment. So take your time to make a well-informed and planned out financial decision – don’t rush! If in doubt, talk to your bank about your financial state. Remember that your first car is called your first for a reason. Don’t overcommit to payments which you cannot afford.

If you’re planning to go ahead and buy your very first car, we wish you many exciting journeys ahead. But that doesn’t mean this is the end of the road.

You can stay in touch with the latest news and bank deals by signing up for our newsletter! And before you make any purchases, remember to visit RinggitPlus for the best car loans and car insurance deals in the market!