A question asked by parents and also young adults in recent times on their first car ownership.
We were invited by the BFM’s ‘Ringgit Sense’ to share some advice, insights and thoughts about which car makes sense for this first time car owner, especially a young adult.
QUESTION: Let’s start with the basics – what are the main considerations you have to make before deciding to buy your first car?
Answer: It is all about available income and savings. Buying a car is a big step, especially today with our economy struggling to recover and uncertainty in the global economy also. If you have ‘Bank Of Appa’ then there should be no problem buying a new car. But if you are buying a second hand car, then you need to have savings or a line of credit from ‘Bank Of Amma’.
QUESTION: And when buying it, what kind of costs do you have to consider, apart from the cost of the car itself? (How often cars go into workshops, how much it costs etc)
Answer: Car insurance and road tax is a formality. Biggest issue will be your car maintenance. On a Brand New car, there is worry for the first year or so, depending on your mileage.
With a second hand car you need to worry from the week you take ownership. There are many things a trusted mechanic can look out for in a used car, but the inspection of drivetrain parts have their limitations.
If your gearbox fails after a week, your air-conditioning compressor fails, your fuel pump fails, your alternator fails, your battery fails, your steering rack fails or even your electric control unit (ECU) fails, you have to count your luck.
QUESTION: Can you roughly explain to our listeners how car loans work?
Answer: It is simple, you borrow money from a bank to buy the car, used or new and you pay back in equal payments over a decided tenure (time period), 3 years, 5 years or 7 years with a fixed interest rate included.
QUESTION: Is it better to save up cash and just buy cash straight away?
Answer: Cash is King and you save on interest rate and NOT have the worry that some day you might not be able to make the monthly payments and a couple of burly guys will come to your gate to take away your car on behalf of the bank.
QUESTION: What are the dangers to watch out for? (Banks are often predatory, and car salesmen will offer all kinds of incentives etc).
Answer: Banks conform to Bank Negara rules and there are no hanky panky issues. Nothing devious. All nicely presented upon signing. However, the loans officer, some of them, can be an issue.
Car sales people, well, they are good and bad. Do not take their word. Do not trust them completely. Do not believe in the ‘FREE GIFT’. Car window tint, car coating, umbrella, T-Shirt and so on. Get a CASH discount, then buy your tint and coating from a reputable dealer with an ONLINE factory warranty. Not a SHOP warranty!
QUESTION: Buying a new car vs a second hand car? Pros vs cons.
Answer: If you have money, nothing like new. However, I strongly believe that the first car must be USED as this is the best way to learn a little about your car and be ‘ONE’ with your car.
Get to know the mechanic (ask us for recommendations), wash your own car. Clean your own car. (Better than paying for a gym membership) Then you will respect your car.
QUESTION: So let’s get down to the car models – which would be your recommendations?
Answer: Budget buyers looking at a used car. Buy a Perodua, Toyota, Nissan or Honda as these are relative safe brands to start with. Don’t look at a used hybrid, there is a reason why they are going cheap today.
A little more money in hand… then buy a used Mercedes or Volvo. Built tough and easy to get fixed, but cost higher over a Japanese car to maintain.
If money is no issue, then you will NOT be listening to us. You will buy what tickles you. Like a pickup truck!
QUESTION: What about car leasing – is that an option available in Malaysia?
Answer: Yes, this is a growing business and will probably be 20-30 percent of all new cars on the road in the coming 5-6 years. Why? Well, it is a no headache car ownership plan that young people with money and company accountant want. Renault in Malaysia was the first to start and they continue to grow. Mercedes-Benz has their leasing for the rich and company fleets. Then there is Lexus, same segment as Benz.
Other car manufacturers are coming along soon. It is going to get competitive and all the better for consumers.
It is expensive in the long run, but with no worry about wear and tear and depreciation costs, this is the direction that the younger generation is moving towards.
I can also see retired well to do people moving in this direction. No worries about who will inherit the car some day.
When we were young, decades ago, owning a car was a ‘thing’. Today it is fading away, the new generation wants easy trouble free transportation. The rich want a luxury car like it is an ‘accessory’ like a handbag or a watch.
