1. Be honest about your needs – is buying a car a necessity or a want? 

Answering the big why is something that you must do before going ahead with all your different plans. Why do you need a new car? Do you just need it for long trips or for more frequent use? 

If you only need it for long vacations, you might want to consider renting a car instead because it could be the cheaper option. Different people will have different needs and reasons for wanting to buy a car, but it makes more sense, financially, to buy a car for your daily commute to work or school than a one-off or occasional trip.

For instance, buying a car seems unnecessary if you can get about and carry out your day-to-day and weekend activities without it; if you are a student who lives close to your university or you work near to your office – then you don’t need a car, if you don’t already have one. 

Besides taking into account the convenience of having a car, also think of how having a car could be important for your personal safety, especially if you are the type who leaves school or work late at night. Don’t hitch rides just to avoid getting a car because that is definitely not safe. You also shouldn’t walk to your regular destination if it’s too far. 

Figuring out this step is important because it gives more clarity on your own intentions. 

2. Have you thought about your budget and financing options? 

Though this step may be the most tedious part of it all, it helps you figure out whether you are financially-ready to buy a car in the first place. 

Your car’s total price is more than just the sticker price you see online or at the dealer; it will also include other things like title and registration fees, sales tax, and optional items, like extended warranties. 

The total cost would also include other factors like financing (aka monthly payments), road tax, maintenance and repair, insurance, petrol, depreciation, among others. Bearing this in mind will help you be more flexible with your budget when looking for a new car. 

Overall, the total cost of ownership of a car is significantly more than the actual price you pay at the store. From these additional costs, depreciation or the loss in value over time makes up the highest (40%), according to a study.

When financing your car, make sure that you can afford the monthly payment to avoid grappling with high debt. When taking a loan, it’s important to consider how the loan term, interest rate and down payment, will affect your monthly payment. 

If interest is high, maybe consider until the rates have gone down and are cheaper in order to avoid high monthly bills. You could also dedicate more money into your down payment to avoid high bills.

To better manage your debt, we recommend you try the 20/10 rule, which is defined as how much of your annual and monthly take-home pay should go toward your consumer debt payments. In this context, that means dedicating around 10% of your income towards your vehicle, if you can. So if you make around RM5,000 a month, you’ll want to spend RM500 towards monthly payments for your car.  

Another good financial tip is the 28/36 rule, which states that a household should spend a maximum of 28% of its gross monthly income on total housing expenses and no more than 36% on total debt service, including for debt such as car loans, credit cards, and mortgage.

Read also: 10 Examples of Poor Money Management (& What You Can Do About It)

3. Exhaust all options, it’s easier now thanks to the Internet

There are many factors that you need to consider when looking for a car. Beyond just the type of car, you’ll also need to consider other things like: new vs used car, dealer vs private party, the different makes, and the colour of your car.

To not overwhelm yourself with all the different options, consider making a checklist for all the factors you consider a necessity or a priority as different people value different things. 

Thanks to the internet, information is really at the tip of your fingers, so if you need a place to start, just Google the information you are looking for. 

Find out what sellers are within your area or beyond, and look for sellers from different price points, i.e. from cheaper to more expensive ones. 

This is also the stage where you need to determine what car you want such as safety or auto type (like SUVs, hybrids).

While buying a new car sounds enticing, their usually high price may be a turn off, especially if you’re young and have just entered the job market. Using a used car would make more sense for you, financially, as the overall cost may be cheaper. 

But of course don’t go for a totally worn out car or old car because that may cause more headaches for you. Instead look for a gently-used vehicle,to save yourself thousands. Some places to go if you’re looking for used cars include Carsome, Carlist, CarBase.my and Mudah.com. One point to make: although used cars are cheaper, the insurance premium may be higher because the car is riskier by default of age.

It may not be a focal point of fuss, but who you buy your car from, matters. Some car buyers tend to prefer private owners as these could be close friends or relatives who offer better price points, but shopping through dealers have strong selling points, too. 

For example, dealers offer certified pre-owned vehicles, and these cars have passed industry standards of excellence. This is an almost certain guarantee that you won’t be walking away with a risky purchase. Used cars from dealers also often come with a warranty, giving you more reassurance if you find something wrong after making that purchase. 

Though it may not seem obvious at first but the best value for money may not necessarily be the lowest Ringgit price, because value is measured on the outcome of the product. 

Related: #NewNormal: Top 3 Factors To Consider Before Buying A Car In Malaysia

4. When looking for a car, ask the right questions

You won’t know what you don’t know without first asking the right questions. Don’t be afraid to ask as many questions as you need in order to get a clearer picture of what you’re about to invest in. 

But at the same time, you gotta ask the right questions in order to get the right answers. Therefore, ask as many questions as you can that pertain to the car’s performance and history.

Here are some suggested questions to ask about used cars based on our research

• “Why are you selling this car?”
• “Does this car have any issues that you are aware of?”
• “How many previous owners did it have?”
• “Do you have paperwork about recent maintenance or repairs?”
• “Has this vehicle ever experienced or been in any accidents?”
• “When was the last oil change?”
• “Who is your mechanic?”

Remember to request for the vehicle’s history report. Find out if it has been involved in any major accidents, as well as it’s repair history. Also find out if any of its parts have been recalled.

Lastly, get your own independent mechanic to inspect the car. If you discover a problem – find out how much it costs to fix, and figure out if it’s worth it. 

5. Your credit score matters – make sure it’s good if not better

The score you have will influence the interest rate you pay on a car loan or car insurance.

Having better credit means you are in the position to get more favorable interest rates, affecting your overall car-buying budget.

So if your loan application got rejected, then it could possibly be due to your poor to low credit score, which usually ranges between 300 to 651 according to CTOS. A bad credit score not only affects your chances of securing a loan, it may also be the reason you get rejected for a new credit card, have to pay higher interest rates, or even be denied a job.

Here are some steps you can take to improve your score. You can also read this article to get a better sense of how to improve your credit score.

1. Update your personal information
2. Get out of debt
3. Pay your bills on time
4. Check your financial relationships
5. Build up your credit history

6. Take time to shop for car insurance and loan – don’t rush through it

The car you choose to buy will influence the type of coverage that you will need and vice versa. And you can’t really skip this part because you will need car insurance and a road tax to drive legally on the road in Malaysia! 

Find a policy that suits your needs, has maximum coverage but at a minimum cost. If you need more tips when looking for car insurance, we recommend you giving this article a read. By the way, you can buy car insurance through us, and stand a chance to get Petronas gift cards worth up to RM300. 

Similarly, shopping for a car loan gives you an idea of how much you can borrow (and at what interest rate). It’s important that you know how you are going to pay your car off!

By the way, if you are on the lookout for a personal loan or credit card, it wouldn’t hurt to check out a comprehensive list of personal loans and credit cards on our website.

7. Stay away from cars with low resale value

We usually don’t stick to a lot of our firsts, and the same rule applies to our cars – you are most likely going to sell it off in a few years once your mobility needs start increasing or when you start earning more, and are able to afford a fancier vehicle.

Cars are pretty much like computers, electronics, clothes or shoes – they don’t last that long, so at some point you will need to invest in a new one. Oh and this doesn’t include antique cars, as those are only driven occasionally, and cost a lot to maintain. 

If you are on a budget – which is usually the case for first time car buyers – you could do your bank account a favour by not overspending on an item that will not last long. The goal is to keep the value of the car rolling until your next purchase.

If you were thinking of modifying your car, we will recommend you to reconsider that thought, too. Don’t waste your money as it could be used for your other investments. This includes not changing your wheels or exhaust and intake – essentially don’t do anything that voids the warranty on your car. 

8. Take that car out for a test drive – see how it feels and performs

You won’t really understand a situation until you’ve been through it yourself.

The same can be said with cars. Even if you read hundreds of reviews, you won’t really understand or know if a car feels good with you until you take it out for a test drive.

Each driver will have a different experience behind the wheels, so make sure you give it a test before you decide to buy the car you’ve just chosen.  

Some factors we found are crucial to be on the look out for include: 

• Make sure the seats are comfortable and easily adjustable.
• Test the blinkers.
• Be aware of any sounds of clinking, clanking or grating which could mean engine trouble
• Test the brakes.
• Is it easy to drive? See if the steering wheel is responsive.
• Blast the air conditioner to make sure it works effectively.
• Look for any warning lights or symbols flashing on the dashboard panel.

Buying your first car is a big deal, so make sure you dedicate enough time for the entire process 

For many of us, our first experience with anything holds significant value, like our first property or car purchases. 

It’s not a decision that can be made overnight or even after a month – it’s a process that takes a long time because of how important it is. 

So don’t feel pressured to get it all figured out immediately. Definitely don’t rush through it or succumb to peer pressure either because things that matter require more of our time, attention and patience. 

We hope you found this article helpful!

Whether you are a first-time or seasoned buyer, the process of buying a car can be complicated if you don’t know the industry that well. The #BreakingItDown series is all about addressing this problem. Stay tuned for more content.