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#BreakingItDown - The True Total Cost Of Car Ownership In Malaysia Team Team

Last updated 05 May, 2021

The cost of car ownership is more than just the monthly repayment. There are several other factors you need to consider like the petrol cost, car insurance premium, road tax and more. Read this article to estimate and calculate how much it costs to own a car in Malaysia.

If you are looking to upgrade your car to a newer model or buy your first car, bear in mind that the total cost of car ownership is more than just the sticker price. From the finance charges and insurance, to maintenance and petrol, a lot of factors influence the total upfront and ongoing costs of a car.

Either way, it is an established fact that cars are expensive, regardless if it’s used or new, and understanding the different costs associated with owning a car can really help you figure out what you can or can’t afford when car hunting, as well as to make sure you spend below your auto budget.

What factors affect the total price of a car?

There’s a very simple formula that you can use as a guide: an affordable car is one with a price that’s equivalent to or less than your monthly gross salary x12 months.

For example, let’s use the average starting salary of a fresh graduate, RM2500 (in most industries); their annual gross income is RM30,000.

Using the annual gross income as a guide, a viable car for fresh grads would be any cars below RM30,00 – anything above that is way beyond their means.

Besides that, you should also take into consideration other factors beyond the sticker price and the finance cost.

We crunch the numbers below to help you estimate the different costs needed for a car. We break it down for you:

1. Finance charges aka your monthly payment

Though buying a car with cash isn’t entirely impossible, most people choose to finance their car by taking out an auto loan.

You could, however, reduce the overall payment due, by pumping in more for your down payment because then you’ll need to borrow less money, and pay less interest.

Besides that, your loan amount will also vary depending on the length of your loan. The longer your loan period, the lower your monthly payment, but it also means you’ll pay more in total interest.

Let’s use this as an estimate to calculate your total loan amount:

Vehicle cost (with taxes and fees) RM50,000
Your down payment RM5,000
Total car loan amount RM45,000

Your car loan’s interest rate will also depend on your credit standing and employment status as well as pre-established stipulations that are car-related such as car make and age of the car.

Beyond just car-related factors, banks and dealers may influence interest rates via special arrangements or promotions to market a certain car make or model. These bank-dealer related features include the loan amount, down payments and specific dealer-bank arrangements.

If you want to get a loan with good interest, remember to maintain your credit, because the better your credit standing, the better rate lenders are usually willing to give. By the way, if you are on the hunt for a credit card or personal loan to improve your credit score, check out our website as we have some cool deals going on right now. If you need to check your credit score, you can do that here for free as CTOS is currently giving out free reports until December 31!

Let’s use this example to illustrate how your loan interest and loan term will affect your total car loan amount.

Total car loan amount RM45,000
Interest rate 4%
Loan term 5 years
Total monthly payment (installment) RM900
Total paid via loan over five years RM 54,000

You can also refer to this hire purchase loan calculator we found on CIMB Bank to get an estimate for your car loan.

2. The cost of petrol

Cited as the second highest cost of car ownership, it is advisable to consider the rate of fuel consumption of a vehicle before buying it.

If you drive a lot for work or in general, it would be beneficial to calculate the litre-per-kilometres rate of the car you want to buy.

Let’s use an example:

The fuel economy of X car is rated at 5.5-litres per 100km. Assuming a person drives a total of 1000km per month, the distance travelled over 5 years would be 60,000km. Using the current petrol price of RM1.70 per litre for Ron95, the total estimated cost for a year would be RM1,122.

Litres per kilometre 5.5litres /100km
Distance covered 1000km
Over five years 60,000km
Petrol price RM1.70
Petrol cost in one year RM1,122
Total petrol cost over five years: RM 5,610

Total petrol cost over five years:
(RM1.70 * 5.5-litres / 100km) * 60,000 =RM5,610

Find out the latest petrol price here.

3. Cost of depreciation

It’s no surprise that cars aren’t the best types of investments - a car’s value declines as much as 10% the moment it drives off the lot, and can further depreciate by more than 20% after just one year. But either way, we still need them to get around and commute to where we need to be.

But even if depreciation is bound to cut through the value of your car, there are some things you can do to maintain the resale of a car. For instance, you can make sure you buy a car with traditional colours like white and black, and invest in maintaining the interior and exterior. For a full list of factors that affect the resale value of a car, click here.

Let’s assume that the depreciation rate is 20%, then this would be the value after five years:

Car’s sticker price RM50,000
Depreciation 50% in five years RM25,000

We found this super cool car value calculator by Takaful Malaysia if you need to calculate the value of your car.

4. Car insurance and road tax

The cost of road tax is pretty affordable as we found out that 1500cc or 1.5-litre cars only cost RM90 per year in Peninsular Malaysia. If you’re in East Malaysia, it’s even cheaper at only RM56.

Cars with good or better fuel economy will obviously help you save on cost. For example, cars with 3000cc could cost up to RM2,130 in road tax.

Check out this road tax calculator we found on to help you calculate how much your vehicle’s road will cost.

Let’s assume our car is 1500cc:

Car engine capacity 1,500
Cost of road tax RM90
Total five year cost RM450

The cost of car insurance depends on various factors like the type of insurance, the car’s market value, your No-Claim Discount (NCD), the type of vehicle and engine capacity and your risk profile. If you need to calculate how much your insurance could potentially cost, we recommend you trying this calculator out.

Here’s a rough estimate of the cost of car insurance:

Market price of car RM50,000
Coverage type Comprehensive
Location Peninsular Malaysia
Engine capacity 1401-1650 cc
No Claims Discount None - 0%
Total car insurance in one year RM280
Total cost in five years RM1400

In total, car insurance would cost RM280 per year and RM1,400 in five years. This is just an estimation.

Related: #WhatIWishIKnew – The Cost Of Getting Car Insurance In Malaysia​

Click here to purchase or renew your car insurance and get eVouchers worth up to RM200 for FREE!

5. Car maintenance and repair

All cars need maintenance, but it will also depend on how many times the car has been driven, the distance it has covered, and the wear and tear.

Though there is no fixed cost, as it depends on the car age, model and make as well as mileage, but a car that has driven 50,000km to 80,000km, could cost at least RM1,500 from our rough estimate based on personal experience and research.

This does not include batteries, the tyres, timing belt and brake pads, all parts that will need to be replaced over time as well. Check with your service centre if you need a more detailed breakdown.

Let’s assume this is the maintenance cost:

Average maintenance cost in a year RM1,500
Total cost of maintaining a car over five years, assuming the figure stays the same RM7,500

6. Parking and tolls

We don’t enjoy paying it, but parking and tolls are payments that you’ll need to factor in when estimating the total cost of your car.

Assuming your daily spend on parking and tolls is RM10 and RM6, respectively, you will spend about RM352 per month on tolls and parking alone.

Of course, both parking and tolls rates also depend on where you work and live because it will likely be cheaper in the suburbs and in rural areas than in the city.

Parking rate (daily) RM10
Toll rate (daily) RM6
Total monthly rate RM352
Total rate in five years assuming the price stays the same RM1,760

Here is the total cost of car ownership over five years (duration of the loan)

Installments RM54,000
Petrol RM5,610
Depreciation RM25,000
Road tax RM450
Insurance RM1,400
Maintenance RM7,500
Parking and tolls RM1,760
Total cost RM95,720 give or take

Are you ready to commit that amount of money for a car (by the way, there may be additional payments)?

The total cost of owning a car is more than just the monthly repayments for your loan, it also depends on all the other factors we’ve stated above. If buying a car is way above your budget for now, you could always consider taking public transportation until you have enough money to buy one.

Bottom line - buying a car is expensive so make sure to do your homework before committing to a car loan

As always, the advertised price of a car is just one of the many factors that affect the total cost of a car. Other expenses like car insurance, petrol, parking and tolls, and maintenance can drive up your monthly costs as well.

With anything in life, make sure to do a little extra research so you can get a more comprehensive sense and view of the potential costs - upfront and ongoing - of a car. But more importantly, do so to ensure you stick to your budget!

Related: #BreakingItDown – Don’t Make These 9 Mistakes When Buying A Car

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.

The team is comprised of many talented individuals, sharing their knowledge, experiences and research to help others make better financial decisions.


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