Got my loan approved

New car, continental brand
Loan for RM260k
Down-payment - RM10k++

HLBB - 9 years, 2.23%

Can I afford it?
Good question.

Sitting on a huge chunk of cash but decided to take loan and max it out at 9 years simply because I can confidently get about 8%~10% returns per annum over a 9 years horizon. If bullish, then will be anything between 10%~14% per annum.

Doing the maths, if I were to buy the car today with cash (RM270k), after 9 years, I would have RM0k and a car that is worth probably RM30k.

On the other hand, if I were to take a 9 year loan, pay down-payment RM10k and invest the balance RM260k, which, let's say, generates an average of 9% returns per annum, while at the same time, withdrawing RM2.8k++ every month from this investment to service the loan, after 9 years, I would still have RM103k and a car that is worth probably RM30k.

Both scenarios, I take it that the RM270k is gone. One I pay upfront while one I pump into an investment vehicle and let it run by itself with the auto-debit set in place to service the loan.

Can I afford to buy the car outright in cash? Probably yes, since I do have that amount in cash.
Do I want to buy the car outright in cash then? Probably no, since I'll be better off taking a loan.

Only thing that is impacted is my DSR, since I'm utilizing a fair bit of my 'financial ability to take a loan'. But that aside, seems like it makes perfect financial sense to get a loan in my scenario.

Yeah, it's a common mindset, especially among those who somewhat fall into that category. Not all, but quite a handful that think like that. From past experience, either themselves or someone they know, thus, the thinking and impression that long car loans means one is not able to afford.

Always good to know that they are financially savvy people out there like yourself. 👍

Yeap, had quite a huge rebate as the owner of the dealership was a close friend of mine.

Which bank was yours? 2.21%, awesome rate.

Just had to revisit this topic and share my progress on the money which I could have used to buy the car via outright cash, but decided to take a loan and invest the cash into shares instead.
It's been a crazy year indeed, with Covid-19 taking main stage, but behind all the misery, there is also so many opportunities out there to make money - the equity/share market is certainly one of them, and some shares are big winners.

So, instead of buying the car back in mid August with cash, I decided to dump the money into Tesla. A whole huge chunk of USD80k into one single share, although the purchase itself was via dollar cost averaging (multiple purchases over a period of time). As of today, only 4 months++ since I started investing in Tesla, my profit today stands at 50%, which is approximately USD40k++.

Totally exceeded my expectations on this. What a wild ride with all the ups and downs in between.

So yeah, my loan is a 9 year loan. Wonder what will this investment of USD80k be like after the end of loan tenure.

On the outcomes, if I were to buy cash, I'll certainly have RM0 after 9 years and a car that is worth probably RM30k. But if I were to take a loan and invest the money, hmphhh, looking good that I will have at least RM160k and a of course, a car that is worth probably RM30k. Well actually, RM160k is way too pessimistic. More realistic figure, I'm guessing, it will land between RM500k~RM700k?

So back to the question - can I afford it?
Hell yeah, I can, but I'm better off taking a loan. :-)

This post has been edited by DrPitchard: Jan 1 2021, 12:09 AM


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Revisiting this post yet again.
10 months down the road, and Tesla has increased 50%, total share value now is approximately RM750k.

Looking back, best choice that I've made to date, to take that 9 years loan instead of buying the car with cash. By the way things are going, I think after the end of 9 years, once I settle my loan (via small monthly drawdowns from my Tesla shares), I reckon I would be sitting easily on RM1~RM1.5mil of cash.

And someone once questioned me if I can afford the car since I took a 9 year loan.
Zzzz.....

Am using eToro. Registration and onboarding quite fast, including verification of ID.

Nope, gains from investment are not taxable. Even if invest in local stock market (Bursa Malaysia), investments gains are not taxable. Different from trading ya (active buying and selling), those are taxable.

If buy now, leave the stock sitting inside account and sell a few years down the road, perfectly fine. Just need to make sure all properly documented and will be fine.

Was referring to capital gains when I mentioned investment gains, which is essentially the difference between the buying price and selling price. Yes, there is stamp duty which is charged, but that's for performing the said transaction. If I were to buy Nestle back in 2016 at RM80, 1 lot and sell today at RM135, the profit of RM5,500, there is no tax to that investment gains.

Dividends are tax, but to me, that's the small money, relative to the multiple fold increase of the share price.

Not an issue that it is not recognized in Malaysia, in eToro's case. There are many trading platforms and it is not possible for the trading platform to be recognized in the market that it has customers. For my eToro account, it falls under 'eToro AUS Capital Limited', whereby it is regulated by Australian Securities & Investment Commission, which in my personal opinion, is more reputable and reliable than our Securities Commission. eToro is also recognized and legal in European Union, which again, in my opinion, has tighter and stricter regulations than what we have here.

Have personally tried to withdraw money to my local Maybank account and also Singapore OCBC account and it was smooth. Nevertheless, I do acknowledge that there is risk and I will not be protected under Malaysian law if anything goes wrong (protected under Australian law instead....LOL)

All about the pros and cons and the risk appetite. Just like investing itself, in crypto and of course my favourite, Tesla!!
To the moon!!!

LOL. You're in the right thread. To summarize all my previous postings, it isn't a bad thing when one takes a 9 year hire purchase (car) loan. As a matter of fact, if done correctly, it might be a damn smart move.

The end.
Hahahahaha.

Adjusted rate, not actual market rate.

MBB, 7 years, 25% downpayment, 0.78%. Loan amount = RM150k.
Promo from Tesla, where they offer low interest rate (they will pay the difference in market interest rate directly to the bank).

Nope, not limited to inventory. New, customized also applicable. If Model 3, even lower rate.
Tesla truly has the cash to splash and hence, are able to give low interest rates from time to time. Not just in Malaysia but globally.

It's a seasonal thing. Upon placing a booking for a Tesla, the Tesla Delivery Advisor will reach out to you and share more details on the eligible banks. From there on, you can reach out to the preferred bank of your choice for the loan application. Interested to get a Tesla? PM me!!! :-)