{"id":31254,"date":"2022-08-11T05:51:07","date_gmt":"2022-08-10T21:51:07","guid":{"rendered":"https:\/\/carsome.my\/news\/item\/budget-car-installment"},"modified":"2024-01-26T16:51:05","modified_gmt":"2024-01-26T08:51:05","slug":"budget-car-installment","status":"publish","type":"post","link":"https:\/\/www.carsome.my\/news\/item\/budget-car-installment","title":{"rendered":"Bring on the Budget: How Much Should You Spend on Your Car Installment"},"content":{"rendered":"

\u201cYour car loan application has been approved!\u201d. That\u2019s the magic word that every car buyer wants to hear after sending out their loan application. But what happens when you realize that the monthly installment for your dream car might be a bit too much than what you can chew?<\/span><\/p>\n

Recently, netizens were in for a shock when a man claimed that his loan application for the new Perodua Alza has been approved with a monthly installment of more than RM900, despite his monthly earning of RM1,500. That\u2019s a whopping 60 percent expense for his car installment!<\/span><\/p>\n

When your car installment takes away more than 30 percent of your income, it’s definitely going to strain your financial budget. Here are some tips to help you budget for your car\u2019s monthly installment.<\/span><\/p>\n

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Prepare a Large Deposit<\/b><\/h2>\n

A large deposit equals a lower monthly installment, so if you are able to put down at least 20 percent into your down payment, it will considerably lower your future monthly installment since you will end up applying for a lesser loan amount.<\/span><\/p>\n

For example, let\u2019s say you\u2019re interested in buying the new Perodua Alza 1.5L AV D-CVT. According to the official listing on <\/span>Perodua\u2019s website<\/span><\/a>, the car costs RM75,500. If you put down 10 percent for your deposit \u2013 RM7,550, with a loan tenure of 7 years and an interest rate of 3.5 percent, your monthly payment would be RM1,007.<\/span><\/p>\n

Now, if you put down 20 percent for your deposit \u2013 RM15,100, with a loan tenure of 7 years and an interest rate of 3.5 percent, your monthly installment would drop to RM895. That’s a saving of RM112 in your car installment per month.<\/span><\/p>\n

The 20\/7\/20 Rule to Ensure a Manageable Car Installment<\/b><\/h2>\n

Another way to budget for your car\u2019s monthly installment is by following the 20\/7\/20 rule of thumb when deciding the best way to fit a car purchase into your monthly budget.<\/span><\/p>\n

This is how the 20\/7\/20 rule works:<\/span><\/p>\n