To my humble opinion,

whenever you decide to purchase a tangible asset, in this case, a 120k car, it can also be a 300k property,

if u do it with cash in a lump sum, LHDN or inland revenue will be alerted. Simple audit will figure whether your legal earnings (those figures that you report to Tax dept. annually) enable you to do so.

Back to the question, if HP interest rate is 5%, and you take a 9 year loan, cost of car + ins. appx.1.5k,
100% loan spread 9 years, you will have to bear appx. 55k in interest. Need not be overwhelmed with the interest considering inflation rate of appx.3% annually and theres no econs crisis, i would say you may have actually earned if HP % surge steadily with inflation.

Assuming you are a typical wealthy person whom is eager to settle things on the spot....
you may consider, paying a minimum downpayment to get the car on the road instantly without flashing your LHDN friend. Commit to your instalment plan, actively repay in comfortable amount say 10k, 15k every couple of months and settle the loan in 2 years spread.

I am not sure whether it will work for u, welcome to comment and advise.

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Added on September 18, 2011, 5:31 pmprovided your investment doesn't take years, otherwise the 500k may worth not much than 120k in future God knows when.

This post has been edited by scottlwt: Sep 18 2011, 05:31 PM