Since they say don't have big head don't wear so big hat, so when buy car, how much salary is consider big enough head to buy 260k car assuming 10% downpayment?

If too small head and buy expensive car I think salesman also laugh you.

Please advice realistically cos I expect some ppl will say income 1 million and other troll post.. but this is serious kopitiam.

The car you can afford is your current salary x 12

if you are asking this question, you can't afford it.

So according to this, to afford a rm260k car, you need a salary of rm21,666.66 per month.

Yes... else will be like the ridsect woman honda city case...

My opinion is car cost should not exceed 6-12 months of our pay.

Get ready with 5 months of instalment and a can of Ridsect

which case are you referring to?

for a person going to buy 200K++ car
they dont pay 10% downpayment
they pay whole lot more.

25k /month is a good number to start provided ur debt ( cc debt or other loan not alot )

I always wonder when people mention about salary in the context of financial planning, are you referring to net income or gross income ? Gross income of 22k net could like RM17k?

I always refer to gross income. Not just tax and EPF, but insurance, loans, and other commitments should be also be taken into account, and carefully weighed by each individual on a case by case basis.

Realistically, there is no fixed ratio as to what is deemed to be affordable - affordability depends on each individuals however there is a general rule to refer and that is your car payment installment should not be more than 30% of your net income however the flaw of this general rule is that the individual is assumed to NOT save any part of his/her income at all.

Let's just go through briefly on numbers for a better perspective.

If you are talking about a RM260,000.00 car, a 90% loan @ 2.40% interest p.a. for a tenure of 7 years would generate a total repayment of slightly short of RM40,000.00 annually - that would be about RM3,200.00 monthly.

Mind though, this annual projected figure has yet to take into account the maintenance costs for wear and tear which if the car you are looking at has a RRP of RM260,000.00, it is best to set aside 3% - 5% monthly of the RRP for these. Taking the median of 4%, you'll need to set aside close to RM10,000.00 annually.

Ideally if you want to drive a RM260,000.00 car comfortably then you should at least generate RM133,000.00 annual income which translates to about RM11,000.00 monthly salary (this figure is net by the way).

So yeah, most Malaysians are generally living beyond their means and does not consider saving for rainy days. Such is the culture currently.

For me, max price of the car = a year's salary. My current car = 50% of my annual salary.

Btw TS, what makes you think people who drive a 260k car, bought it at that price? Rich people have... ways to stay rich instead of paying off a car they can barely afford.

yeap around there. don't forget tire also more expensive. road tax insurance also more expensive. some parts not covered by warranty also.

My opinion is don't spend more than 10% of your income on car installment. And the down payment should not be more than 10% of your net worth.

To buy a 260K car, your need 260K net worth or more, and monthly income of 35K or more (if you only pay 10% of down payment).

I pay 0 car installment and my clunky junk car residue value is not even 1% of my net worth. No motivation to buy a new car, take MTR and Grab is better. I prefer to spend the car installment on good vacations.

Your salary > 10% dp

12 months salary min because need to include maintenance and other expenses. Plan properly. Otherwise if u stuck, bank will repo the car.

Yes, that’s the formula.

what kind of joke is this? Can elaborate?

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.

actually, no one disagrees with you on how you determine affordability of cars as everyone has their own budget and planning. if you find one that works for you, great.

the point of dispute is where you imply buy in cash else it is unaffordable and that's a very bold claim to make because then it becomes an even bigger decision to make than undertaking a new car purchase because you are basically exhausting all your liquid cash in one instance.

"buying in cash" cannot possibly be interpreted in any other ways other than paying off the entire purchase price of the car at the point of purchase else which dealer will allow you to take possession of the car?

so with your PROVISO in place, do you now still advocate buying cars in cash or take up a loan to part finance the purchase?

i like your ideology because you like to live debt free without financial commitments but i'm intrigued to know what is your position in terms of purchasing real properties.

your last sentence is quite unnecessary

you no longer receive salary la .. if 260k car .... you give salary to your worker ~

stop dreaming la... da gong zai ~

Ya, same answer.

180k car. k thanks. i’ll see what options.

Dave Ramsey kaki spotted

Now I am at Baby step 2, consumer debt free next year June except mortgage

When u reach that income level u won’t need money to buy that car

Co will provide co car worth 260k

i got another thought. if i current 7.5k then i up my salary to 10k, means i can afford the loan and not change in my lifestyle right?

That works.

THats why I bought my house 3 yrs ago.

3 yrs later my increment since then is enough to cover the monthly mortgage

cool. i have same thinking like u maybe in future can reach your level 😄

people who can afford a 260k car in cash will not be so financially immature as to buy it in cash when the hire purchase interest is merely at 1.88% (for example). Most new luxury car have various finacing option on offfer thats way lower then even the FD rate. Allowing the buyer to make their money work elsewhere instead of sinking everything down one shot to "buy a car with cash".

After all said and done, I was guilty of the above (cause the interest rate was high) when I bougth a 170k car on 3 yr loan and paid it off by the 6th month...

depends on how comfortable you want to be in your life

total value of your car vs your comfort

1/2 year salary = very comfortable
1 year salary = just nice
3 years salary = you can give it a try, it can either push you further or break you down

happy buying your MB

yes.

what you are asking now is basically the same question you were asking previously, just in different context. it's not another thought, it's the same train of thought.

in conclusion, you will never be able to buy a RM260,000.00 car with a meager monthly salary of RM7,500.00 because no finance company will loan you money.

Agree.

Maybe. Depends on situation.

Just because you have that amount to spend, does not mean you need to to spend that ceiling amount.

I would suggest that you make a huge down-payment to lessen the monthly expenses.

Benefits of buying the car outright is thats second year onwards you can get 3rd party insurance. No need to worry about installments. Save money for another car. I find it better to buy a proton savvy outright than to hutang a civic. Peace of mind. However, this also depends on your time. If you have lots of time to cater to maintaining a car, used is always best. 5 year old kia is great value.

One thing in Malaysia is that there are some people who care about resale value. If you want the best rv, buy a civic, sell after 5 years and buy another civic.

but in more radical thought if current salary 5k then i up my salary 8k this year still can afford without change in lifestyle right? haha

If you ask in serious kopitiam, we will give u a fair answer. I find salary x12 is a good formula to follow.

Another one i like is, you drive the car, don't let the car drive you. As long as it can move you and don't give you trouble, don't spend your entire life enjoyment into it.

Maintenance is another cost. A lot of people don't know before buying a car and got even stressed out after knowing the cost of the parts, notably european cars. They are meant for people who are rich to change every 5 years.

When you are buying cars above 200k, you should already having around 100k of free flow cash (based on my observation from the owners). No point squeezing money to buy luxury car with limited salary.

Don't compare with those fresh grads buying vios or full spec myvi, there are a lot of parts you cant see. Maybe their parents are rich and did a lot of down payment. What you see is just they drive their fancy new car, you don't know if they can only afford bread everyday. I have a friend buy a myvi and can only afford mamak everyday, while another one buys bezza and the money flows freely. Can buy new laptop, can buy new pc, can go vacation, order as he wish in expensive restaurant and etc.

You can do anything you want if you treasure your car very much, but when u ask in serious kopitiam, we give u safe and fair answer.

I personally thinks 200k can buy half of the house already in some places, i like house more than car. car value depreciate very fast. at the end of the day, it moves me. no revolutionary technology like changing smartphone every 3 years. still gasoline engine.

This post has been edited by NoobHacker: May 23 2019, 07:05 PM

thanks. very good write up. i think i got the point. we should not focus buy car but use the money for better purpose right.

that’s why my topic is don’t have so big head don’t wear big hat but need to know how big is the head for 260k car

This post has been edited by MasterConfucion: May 23 2019, 07:18 PM

People who really should be buying >200k car without affecting their networth, normally buys it under company and not individual.
But if you really wanted one, paying 50% down without affecting your financial situation is a good guide

When you need to ask, 12 x salary is the max amount you can stretch.. or
10% of your salary is the max installment..

But imo, it's always good never go overboard. like if you can afford 260k, aim for 130k.

Reason, uncertainty. Business might drop, company might bankrupt or vss.
When that happens, your cash flow might restricted. For how long.. you never know..
Even if you have backup/emergency cash, how long can the cash tank your expenses?

yes but actually no.

practically speaking, there is a social status that you need to maintain when you are earning a certain amount of monthly salary because study shows that for the majority of people, their expenses increase linearly towards their earnings.

you will be inclined to go for a RM13.50 cup of coffee and no longer the RM1.50 when you are earning RM8,000.00 monthly - human behavior always predicts improvement of standard of living whenever possible.

therefore i wouldn't really agree that there will not be a change in lifestyle - if you can maintain your standard of lifestyle at RM5,000.00 when you are earning RM8,000.00 then there is definitely something that you have sacrificed (whether tangible, perceivable or not).

the law of physics cannot be denied.

Cars are money pits. Don't be dumb to invest in cars.

yeah after the advice here i think i’ll be going for cheaper car. just fyi i’m more than 8k tho

that would be a wiser choice especially if you have dependants and unless you have your own business where financial freedom is a thing, whether you are drawing RM8,000.00, RM10,000.00 or even RM20,000.00 monthly, you are susceptible to retrenchment and is financially insecure.

one of my acquaintance, a captain ranked pilot with MAS during their good years (safe to say he draws at least RM18,000.00 a month based on his standards of living), got retrenched during MAS's corporate exercise of downsizing - he basically went from hero to zero rendered redundant by MAS.

sold almost everything he had that are still under financing including his Semi-D in Cyberjaya and 4 of his luxury cars.

remained jobless for close to a year before finally deciding to start up his own small business and is now doing well above average and he was glad that despite his lavish uncontrolled spending during his good years, he somehow managed to save up a portion of his salary and that is what got his family and him through the tough times.

so yeah, market is a bitch.

this is how u calculate:

car: 260k
down payment: 10% @ RM 26k
financing: RM 234k
tenure: 9 yrs
interest rate: 3% (assume)
monthly: RM 2,750

so u only need a salary of RM3k u can surely buy a rm260k car

dun listen to haters. listen to your inner want

surely your salary will incresae every year ma

by the time u finish pay, ur slary must have grow from rm3k to rm 8k liao

Where got bank lend you 234k with only 3k income?

please don’t investigate here. later my mind get change again

RM260k car, installment around RM2,600. Some bank can give loan up to 60% salary. so RM2,600/60%x100% = RM4400. GG

Frankly, you should be earning RM130k per year, MINIMUM. No ifs, no buts.

Yes I agree.

TS did not mention what else need to pay from salary. How much is other expenses. Unless TS debt free.

+1

TS should listen to us old timers...

Those newly registered dupes are just trying to cramp his style by pouring cold water.......

yes i can meet but not sure if consider big enough head to make the purchase. i’m very conservative in finance

now i’m more confuse after got 2 different opinion here. any car salesman in forum?

Ofcourse 2 opinions la.

Buy or No buy ....

Anyway... YOLO man... I also just bought a 260k car for my mother...

as someone already pointed out the monthly payment for a 9 year loan is 2.7k, if your average monthly salary is 10k, it *should* be OK. But this is bare minimum, because at RM10k salary, your take home pay is around RM8k only. After you pay your car, you will need to pay for maintenance and ownership costs. You're lucky if you're left with RM5k, which is not much if you have a property or a family to feed. Even if you don't, you'll be looking at lifestyle expenses, eg mobile service, internet service, insurance, rent, etc.

Don't forget, the car is going to cost you a lot more the longer you own it. You will feel A LOT more comfortable buying a car around the RM130k range with a 5 year loan. That's what it is, isn't it? What are you more comfortable with? Are you comfortable staking 9 years of your life on a car? If yes, then go ahead, if not, then downscale.

u r different level bro. if reach your level i also will buy luxury car for my mother.

yes that is why i dilemma. one hand is as u said to be comfortable with the purchase and leaning to that after all the advice. also the maintenance cost will be much more than the car price. but on another hand i’m still young if i don’t make the purchase now i don’t think i will make it when i’m older due to more things to worry about. also seen how some of ppl i know just suddenly have big issue when they old time and didn’t actually enjoy their life when they young. means they never actually live their life before. when u do stupid things during young time is more forgivable than do stupid things when u r older and society not so lenient to u

This post has been edited by MasterConfucion: May 24 2019, 03:11 PM

ah... that's another problem

i was just merely answering TS problem in most hypothethical manner

Someone once told me, the money you earn with all your blood and sweat... is not yours until you spent it. If you dont spend it, its just numbers on a piece of paper... it will never bring you any pleasure.

The feeling of walking into a luxury car centre, and driving off with a brand new shiny car is fun yo!

So what brand/model you goign for? Dont hesitate lor, now got raya promo... huge savings

Well... we're not going to topics that are outside of that to buying car, but since this is "serious kopitiam", I can share my view.

- I've bought some fancy cars also, it was fun for about a year, then the fun factor wears off. At that point you'll only be thinking about "upgrading"
- It's ok to do stupid things while young, but not ok to do stupid things that you'll pay for when you're older (e.g. getting in jail)
- Young people (i'm saying young people as in those half my age, i.e in their 20's) typically do not know what it is in life that is enjoyable. I know I didn't when I was younger. I only thought I will enjoy the things other people tell me are enjoyable. You need to find out for yourself whether or not you like those things. E.g. clubbing, scuba diving, travelling, etc. Over time, I realize I don't really like some of the things other people like, and after a while, those things are meaningless to me. Is driving a nice car something that you like, or something that other people tell you that you will like? What does it mean to you?

It's a boring thing to think about, because when it comes to buying a nice car, all we can think about is how awesome it will be to get behind that steering wheel, feeling the leather seat, flooring that gas pedal, enjoying the admiration from friends and strangers alike. That too has its value, if you think it will last for years and years until you replace that car. Once that is over, and when looked back, all I can think of when I see another fancy car was "been there, done that".

TS how old r u? I don't think you can afford it..

You should work out your finance first.. how much you are worth, how much is your nett saving per year, what is your projected income in the coming 5 years..
After that then u can make a clear decision

Last year i also bought a car... it was a nice upgrade but I dont think much about it... bcoz i have enuf cash to buy several of it

In general most Msians can only afford less than rm 40k cars

post ur salary and ur expenses.. net salary. lol. as I said some people spend most of the income into cars.. some prefer cash.. some prefer house.. let us know the number first.. then we recommend hat size.

You ask like that, we never know how big is your head, of course give u very general answer.

If you are young, no gf, no kids, at 8k range, no plans for babies soon, willing to spend more in cars, maybe 140k cars are safer deal.

https://siakapkeli.my/2019/05/19/tular-vide...eri-penjelasan/

Manyak syiok meh pakai 260k car? As far as i know there's always gonna be that next upper level car that people will aim to own.

20k gross single no dependents can laa buy 260k car. Priorities change when the number of mouths you are responsible to feed multiplies.

However ive seen pipu with 4-figure celery did a 9-yr HP on a 330e. Smh, but well that probably makes him happier so be it lah

all posts made my other members here do really sound like people who have done it, tried it, and looked back and very definitely will question them self after 5 years/time to change new car: "was it worth it? was that past 5 years of "enjoyment" worth the amount of money spent? ie.for sure you will lose a higher grand total for these cars"

i won't add anymore calculations as i really feel it's pointless and only yourself can decide, but i can tell you - i am still in touch with my childhood friend who conveniently is a luxury car sales advisor, and a very successful 1 at it (from guesstimate, confirm above 15k net monthly excluding quarterly sales bonus)

pretty sure he wouldn't like this being shared publicly as this really is against the company's privacy agreements:
he works at a very famous AD which, and he shared before, in the past 1 year a shockingly huge amount of his centre's clientele are people who earns LESSER than 10k nett aims at cars in 200-300k range, while those who buys 350-450k car are people who earns 20k~ nett.

While it's true that almost all customers who buys 500k~ range cars(s-class,740, actual peformance cars etc) are businessman either for tax purposes/fleet cars/management cars OR are people who is obviously rich and can afford such car like how a fresh grad can afford an ex5 motor.

take it as how you like, but the general perception he shared is, people who buys sub 300k car (c-class/3series) are people who can barely afford it, but still die die want to sacrifice their lifestyle just to get that car.

my personal advice? Don't buy the entree level of luxury brands, if you really want to enjoy what luxury cars have to offer - wait until you truly can afford it, aim for the middle-ground (commonly in 350-380k range is a good start), and when you are starting to look at cars in 350k price range, you should already be in a matured enough mindset to make your own call of "can i afford it?"


**ps- yes people who earns lesser then 10k nett DID get their loans from what he told me, it's not impossible, but at least be very close to the 10k mark la of course, not 5k nett.

This post has been edited by Spitzer: May 25 2019, 02:20 AM

Dave ramsey is American, referring to american households where car prices are cheap there..a honda civic in America is like USD20k i think?
So for them, monthly salary of 2500 can already afford a civic.

Not applicable to Malaysian since car prices in malaysia is 5th highest in the world..tks to taxes

But if you want to live by Dave Ramsay's way, then good for you. That means youre living extreme frugally..

This post has been edited by Financier: May 25 2019, 10:42 AM

thanks. that’s a very good view to measure my head based on actual scenario.

Rather than how much salary

Saved up enough cash such that you can afford the monthly payment of a car by interest paid on investment (ASB, FD, dividend yielding stocks)

It's not salary, imho... It is how much remains after you deduct everything (taxes, epf, foods & groceries, housing, zakat, parental support, etc.)

Me salary ~rm45K per month and use rm160K car also feel heartache paying thousands monthly to car, let alone rm260k car.

Affordable to own a 260k car , at least 6k disposable income monthly. Thats estimation is based on stretching the loan to maximum tenure with 10% dp and caculate in maintenance plus yearly insurance and roadtax.
I only consider car within my allocated disposable income every month.
No point looking at gross or nett because each people have different expense and commitment so just deduct everything out and how much your disposable determine your affordability to own that 260k car.
So i would say 6k is the minimum you will need in order to enjoy the car without worrying about the maintenance and some other unexpected repair.

If u ask this question means you cannot afford.

Coming from a car seller, selling RM 260k over cars are quite common.

And probably half of the buyers of those RM 260k cars dont earn 20k a month as other forumers said. Most of them earn 8-10k but there are some of those that earn up to 20k.

What im saying is, almost all of my customers, and people, dont follow the 12x salary rule.
Im not saying its not a good rule of thumb, but thats just how society is.

I think we can all agree that the rule of thumb is:
Net Annual Income (own business) or 12 x net monthly salary (if you are employee)

Last i know... Car loan is the biggest culprit of bankrupcy among ppl in msia.

Buy is easy... Maintain is hard.

If u ask me... 20k min to buy a 260k car.