Buying a car, whether it’s your first car or not, is a long-term financial commitment and it should be a properly calculated decision. This decision requires consideration of all financial aspects, including your financial state after you make your purchase such as monthly loan installments, road tax, insurance, the cost of petrol, maintenance, and emergency repairs.
Mistake 1: Thinking Used Cars Are Low in Quality
There is a common misconception about buying a car – that used cars are unreliable and risky. This is why many car buyers tend to choose a brand new car over a used car as they think used ones are of poor quality and plagued with maintenance issues.
But that’s not true as used cars can be an excellent option. Not only are they more affordable, but used cars have also gone through their steepest (first five years) depreciation. This means by the time you purchase the car, it will suffer a slower depreciation. Its lower value also means that it has a lower used car loan amount and it requires a cheaper insurance coverage. Here are some of the differences between buying a new car and a used car for your comparison.
|Depreciation Rate||Depreciates faster (especially in the first five years).||Depreciates slower (the car has gone through the steep depreciation)|
|Overall Cost||Requires you to spend more on service and maintenance.||Do not require you to spend as much as the car chosen has been maintained well.|
|Insurance Coverage||Higher coverage.||Lower coverage.|
Mistake 2: Not Doing Your Research When Buying a New Car
Besides getting advice or recommendations from friends and family, it’s best to do your own research as well. This means shortlisting the brands you want, the type of car you need, as well as other important factors such as boot space! There are different aspects to a car that you would have to factor in when you shop for the right car such as fuel economy, engine capacity, cabin space, safety features, and price.
There are plenty of articles and guides online on these important factors and even how to buy a car in Malaysia. Here are some of our guides that you can check out:
- 10 Tips to Follow Before Buying a Used Car
- A Guide to Car Loan and Interest Rates in Malaysia
- Car’s Market Value and Depreciation Rate
You can also check out our car reviews as a place to start. But always remember to base your research on your needs and wants when buying a car.
Mistake 3: Not Knowing Your Needs & Wants in a Car
You shouldn’t base your decision based on just how the car looks. Instead, plan out your budget and lifestyle needs. For instance, is the car for your family, are you buying a vehicle for work purposes, what terrains will you be driving on frequently, how much space do you need in the car, do you need the latest car, and so on. With these answers in mind, you can narrow down your car when you visit a car dealership, and you won’t be easily tricked into buying a car that’s beyond your budget and needs. Avoid getting persuaded to buy a brand new car or the latest car just because it’s cool, unless of course, it’s within your budget and plans to begin with.
So, when buying a car in Malaysia, consider your needs first, and everything else as extra.
Mistake 4: Love at First Sight
Have you ever set your eyes on a car and thought, that’s the car I want, even without knowing anything about it? Sure, it looks stunning and you might look good driving it, but what good would a two-seater car be when you have a growing family, or what good is an SUV if it’s just going to be a burden on your finances. Before you buy a car, always base it back to your needs, as you can always upgrade your car when you have the funds later on.
Mistake 5: Not Checking the Car’s History Report When Buying a Used Car
A car that appears to be in good condition doesn’t always reflect the actual situation or the health of the car. This is why it’s important to check its history report, or the inspection report (Carsome discloses all details of its 175-point inspection on its listing!). The history report shows you how well the car is maintained and if it has been serviced according to its schedule.
The inspection report would also show you if the car has been through any major accidents or has any frame damage. If you are not sure of what to look at when purchasing a car, bring along someone who is well-versed with cars to help you go through the reports.
Mistake 6: Not Test Driving the Car
Before you jump to buy the car, be sure to test drive it first. Test driving the actual car would allow you to test, examine and identify the overall quality of the car.
If possible, you should also test two or more cars that are similar in year, model, and make as they can vary in ride quality, performance, cabin noise, as well as options, among others. Whether you’re test driving a new car or a second-hand one at a used car dealership, pay attention to how it drives, sounds, and smells as you drive it. Anything unusual might mean that the car has some issues.
Mistake 7: Not Factoring in Other Costs When Buying a Car on Finance
When you buy a car, your overall budget should include more than the price of the car and what its monthly payment would be. You should also include costs like interest rates, additional warranties, maintenance costs, emergency services, petrol fees, yearly road tax, and insurance to your overall budget to get how much you would spend on your car throughout your ownership. Whether you’re buying your first car or have owned several before, this is a crucial step to avoid any financial disasters.
Mistake 8: Buying a Car on Long-Term Financing
Buyers, especially first-time car buyers are often attracted by longer car financing terms because of its lower monthly payments or zero-down-payment offers. However, and this applies to both used and new cars in Malaysia, be wary as these offers would tie you down to a higher interest amount. Though a longer loan term lowers your monthly loan payments, it indirectly increases the overall cost that needs to be paid.
For example, Ali buys a used car on finance for RM100,000. He takes a loan with a three percent interest rate and a 10 percent down-payment (RM10,000). Here is a breakdown of how much Ali would have to pay if he took a five-year versus a nine-year loan repayment period.
|Loan Repayment Period||
|Loan Calculation Formula||Total Cost of Loan + (Total Cost of Loan x Interest Rate x Years) /Months|
|RM90,000 + RM13,500 (RM90,000 x 3% x 5) / 60 Months (5 Years x 12 Months)||RM90,000 + RM24,300 (RM90,000 x 3% x 9) / 108 Months (9 Years x 12 Months)|
|Total Interest Paid||RM13,500.00||RM24,300.00|
From the calculations above, you can see that Ali would be paying RM10,800 more in interest if he takes out a nine-year car loan, compared to a five-year car loan – that’s 80 percent higher in interest to fork out! That being said, you should always consult someone who’s well versed in this matter and do your own research first.
Mistake 9: Not Understanding the Auto-Finance Contract
If you’re unfamiliar with how to buy a car in Malaysia, it always includes signing various documents or contracts outlining the details of the purchase. It’s always best to make sure you read and understand everything in the documents before signing them. If you buy your car on finance, this will help you avoid complications regarding your car loan down the road.
Make Sweet Memories With Your Car
Buying a car, whether new or used, is truly an exciting experience, so take the time to do your research and buy the car that fits your needs and budget. If you’re afraid or unsure of what you’re doing, bring someone along who has been through the experience with you, and pay attention to the mistakes listed above.
To make things easier, you can always check out Carsome’s huge inventory of quality used cars. Covering 175 inspection points, used cars sold by Carsome are Carsome Certified, with no major accidents, frame, or flood damage. In fact, if you get your car through Carsome, you will enjoy a one-year extended warranty and a five-day money-back guarantee under the Carsome Promise. Good luck with purchasing your car!