Jul 24 2014, 10:41 AM
QUOTE(andrewkyc @ Jul 23 2014, 04:01 PM)
hahah! But you really gotta go in with your eyes WIDE open and do your homework extensively. Have to also understand the nature of the car market for that particular model.
One way of making an assessment is to first decide 1. if you buy new, what car can you afford? 2. how long do you plan to use the car before changing? Then you can roughly work out what 2nd hand cars budget you should look at.
E.g. Say you can afford a Civic and want to use it for 5 years. A new civic is about RM125k. A 5 year old civic is on average around 90k (estimate la from Mudah). Your depreciation is approx RM35k over the 5 years. So, without taking maintenance and financing into consideration for now, techincally you can buy a 35k 2nd hand car, use it for 5 years and throw it in a lake after than and will be no worst of financially. But we all know that the car will most likely have some residual value after that. So, conservatively, say the 2nd hand car has a residual value of RM15k after 5 years. That means, your 2nd hand car budget is now RM35k + RM15k = RM45k before you can be financially worst off than buying a new car. Go to mudah and see what cars you can get for RM45k. You'll be surprised.
You may say financing 2nd hand car more expensive. Agreed. But you are financing over a lower amount too.. i.e. 125k vs 45k.
What about maintenance? Won't it be higher for old cars? Agreed. It will be. But thats where you need to do your homework and research. It can be minimised. And OEM parts are way much cheaper than parts from authorised dealers. Also, check the warranty on new cars. Not all include free service, only warranty. So you still have to pay for your regular service... at authorised workshop.... and we all know the prices there are... ahem
.
Take it a step further, you can actually buy cars that depreciates less than 35k in 5 years, and won't be worst off. So, if you think a car will half its value in 5 years, you 2nd hand car budget is now RM70k... getting interesting ya?
Anyway, just food for thought. Its not 100% foolproof and I'd suggest you have a healthy cashflow before you embark on this journey to be on the safe side. But the reward is sweet!
Spot on!
Amazing. What is your current ride?One way of making an assessment is to first decide 1. if you buy new, what car can you afford? 2. how long do you plan to use the car before changing? Then you can roughly work out what 2nd hand cars budget you should look at.
E.g. Say you can afford a Civic and want to use it for 5 years. A new civic is about RM125k. A 5 year old civic is on average around 90k (estimate la from Mudah). Your depreciation is approx RM35k over the 5 years. So, without taking maintenance and financing into consideration for now, techincally you can buy a 35k 2nd hand car, use it for 5 years and throw it in a lake after than and will be no worst of financially. But we all know that the car will most likely have some residual value after that. So, conservatively, say the 2nd hand car has a residual value of RM15k after 5 years. That means, your 2nd hand car budget is now RM35k + RM15k = RM45k before you can be financially worst off than buying a new car. Go to mudah and see what cars you can get for RM45k. You'll be surprised.
You may say financing 2nd hand car more expensive. Agreed. But you are financing over a lower amount too.. i.e. 125k vs 45k.
What about maintenance? Won't it be higher for old cars? Agreed. It will be. But thats where you need to do your homework and research. It can be minimised. And OEM parts are way much cheaper than parts from authorised dealers. Also, check the warranty on new cars. Not all include free service, only warranty. So you still have to pay for your regular service... at authorised workshop.... and we all know the prices there are... ahem
.Take it a step further, you can actually buy cars that depreciates less than 35k in 5 years, and won't be worst off. So, if you think a car will half its value in 5 years, you 2nd hand car budget is now RM70k... getting interesting ya?
Anyway, just food for thought. Its not 100% foolproof and I'd suggest you have a healthy cashflow before you embark on this journey to be on the safe side. But the reward is sweet!
Spot on!
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