If based on your calculation I can afford..

But if based on the 12X monthly salary to car price ratio then I cannot afford. I think 260k car is not that expensive yet compare to others whose car cost 300+ - 500k.

According to Dave Ramsey, you want to drive your car and not let your car drive you, i.e. you shouldn't be the slave of your car...

Value of the car that you want to buy should be:

50% of your annual income after tax.

So, 260k x 2 = 520k annual income after tax.

oh ya, and buy it with cash.

Otherwise, means u can't afford. sorry

that "12x" presumption takes a very comfortable and simplistic approach on the matter in the sense that it assumed:-
1. the entire purchase price of the car is to be settled within a period of 12 months as opposed to the 7 or 9 years tenure; and
2. all your generated income for the entire year goes into car loan repayment only (which isn't realistic).

therefore i find that the "12x" presumption is a very unreliable notion to determine whether an individual can afford to buy a certain car at a particular price point.

take for example an Axia at RRP of RM22,990.00 @ 2.40% interest for a tenure of 7 years. the monthly loan repayment should be at around RM320.00. the maximum amount spent on car loan repayment should not exceed 30% of your net monthly income therefore by theory, you should be able to buy an Axia if you are earning the minimum wage here in Malaysia - that's why Perodua priced the Axia at that price point.

this is of course assuming that you do NOT save any of your income and spent every thing which is highly not advisable - for good measure, always adopt the 50/20/30 rule and tweak it to suit your lifestyle.

RM260,000.00 for a car IS expensive because you'll need an average of RM11,000.00 (after tax) monthly income to afford it comfortably. Read up on the recent economy study of income distribution here in Malaysia, majority of Malaysians are still in the M40 region (meaning we are all getting by "just okay". there is only a handful that are in the T20 group.

Lease volvo seems good deal. No commitment beyond monthly payment.

haha it's a running joke of a case where a lady drove a Honda City, missed payment for 5 month. When approach by repo men then decided to cry wolf and spray the men with ridsect. sekian.

20k at least

Got it! Cos if calculate by 12X monthly, many fresh grad salary 2-2.5k and they usually buy city or vios as first car. That's 3X the ratio. Based on that situation, a 260k car is only need 7.5k salary.

golf R?

Frankly that scale is workable for the lower to mid end.

Once you make 500k and above annually, that scale doesnt work anymore, cause the cars i buy now are not even close to my annual salary...

You cannot afford a 260k car on a 7.5k salary.

My monthly repayment for my mom's 260k car also 5k plus a month alrdy..

Buy with cash is the most sorhai thing i heard...

a new merc comes with 1.88% interest, the EIR for that is lower then what you can get for yoru FD....

i don't think you "got it!".

owning a RM260,000.00 car with a 90% loan will commit you to at least RM3,200.00 monthly repayment and if you have RM7,500.00 net monthly income, that is already about 42% of your entire active income - that kind of ratio is to be avoided at all costs.

after deducting your monthly car loan repayment, the disposal income you are left with is about RM4,300.00. bear in mind, this RM4,300.00 is not yet inclusive of your other necessity financial commitments (eg: housing loans, utilities, management fees, sinking funds, insurance etc).

assuming these vicissitudes of life takes up only 30% of the RM4,300.00 then you'll be left with about RM3,000.00 monthly and this will be your "life support fund", the funds you need to basically stay alive, that loosely translates to about less than a hundred daily.

what can you do with about a hundred a day with today's cost of living?

driving a premium luxury sedan and eating nasi kandar with only curry sauce and one piece chicken isn't the lifestyle premium car manufacturers envisioned their clientele to be comprised of.

a RM7,500.00 net monthly income will only put you within the RM140,000.00 - RM180,000.00 range - anymore, you'll be sacrificing other parts of your life.

it's very tempting wanting to own a premium luxury sedan but if you ended up sacrificing all the creature comforts that makes life comfortable, it's wrong.

not so sorhai if u are the person who wants a piece of mind.

Im buying a car with my 5% of my gross salary. Anything above, gg.

As maintenance and also what if the car broke down. Got my lesson with my last car but lucky i buy below 10% of my gross salary. So can pay it off one off easily and no disturbance.

frankly, while 20kish salary is a good benchmark to say yo qualify, also take into account that that salary range is likely to be first to go at harder economic times.

I always think that the luxury cars are truly for businessman which have made it. not dependent on salaries.

kudos to you, not everyone has that discipline to spend 5% to 10% of their salary to buy a car.

what 'peace' of mind?

Heard of auto debit bro?

only if you don't foresee that you may need that large chuck of money anytime soon - car loans are not flexi property loans so once you pay it off, it's off the grid and you will never be able to sell the car for a profit therefore in economic sense, it's never a good idea to buy your cars (which are depreciative assets) with cash.

having the sufficient amount of cash to pay off your car loan kept in the bank however is a different thing altogether.

in fact, nothing other than a basic car (save for some exceptions) is known as a commodity because they just make you lose money over time and eventually lose all of its residual value.

This post has been edited by shaniandras2787: May 23 2019, 02:38 PM

Wait until tow car going to your house to collect it back.

i still stand by this principle for the masses. only buy a car with the price that is 50% or less or your annual income, and buy it in cash. If you can't, means you can't afford it.

Not really to ask u to buy in cash, u can still take a loan, PROVIDED that you have the money and use the balance of that money to invest it wisely.

Else, don't buy things you can't afford with money you don't have to impress people you don't like.