7/5 years loan often warrants higher monthly installment

for cars with a "reliable" track record and "high resale value", is 9 year old too much ? since the monthly commitment for 9 and 7 years old vary greatly.

or is it a 9 year old a B40 trap?

Trap. U ended paying more.

The car maybe be reliable but higher target for thieves. When a car gets stolen, the owner still needs to pay the installments regardless.

If u plan to use the car for longer then 9 years is ok. But if u jenis easily influence or frequently change car, shorter loan between 5 to 6 years is better

Only pay until the insurance claim kick in

car is only buy to use ..no value...

The thing with this and any loan is that, it's a rich or poor thing

To the poor, they are kinda pushing something they may or may not feasibly able to afford.

To the rich, they are just leveraging low interest rates and keeping cash flow.

Middle class? Will never even consider beyond loan period over 5 or 7 years.

Which perspective you're asking from?
Or you're just trolling/wanting to spark discussion with your threads?

coming from other people advise, take 9 years loan and finish it in 5 years.

and i agree with Quazacolt statement above.

9 years loan is only valid with high resale value brand like Toyota, Honda and Perodua.

Other brand will trap you.

asking from all perspective.

if you are a rich/middle person, would you leverage the lower monthly commitments for cashflow?

buying cash don't seem to make sense especially if its a chunk from your savings.

This post has been edited by MegaCanonF: Sep 25 2024, 09:30 AM

Ok la conlanfirm troll/just attempting to spark discussion.

Enjoy bro.

tldr : 9 yrs is way too long.
imho, m40 & t20 would only take 5 yrs max.

same one la. bank target u to gain profit for few k
then divide by month. there kira rate.

in the end bank took same amount of profit no matter which plan u took

For a normal Chap, most ppl loan 9 years due to lack of fund. Bank loves these ppl, as they are constant income for banks.

Is totally fine to think that 9 years loan give u extra cash flow. But can you generate extra cash flow to cover the effective interest of 9 years compare to 3 or 5 years? Most people can't do it. In fact to generate enough to offset the extra interest itself involve higher risk than putting in FD, let alone benefit from the extra cash flow.

To me, paying down the loan in shortest time possible is the best.
If buying car like saga or bezza just cash saja. They are lumpsum but small enough to save within 1 to 2 years.

After the car is bought, the savings that goes to car can now directly goes to investment /savings. No need manage the debt

just pay a higher deposit if u dont want high monthly for a 5 or 7 year loan...the problem with people in malaysia...when they see 0 deposit all fof them kene racun kaw2...they dont even do the math and calculate what monthly they will be paying...end up monthly pay high like shit...then blame economy bad....but ownself dont know what is need or want

Personally I prefer a loan tenure that matches the warranty period of the car.

5 year warranty, 5 year loan. Don’t like the feeling of paying installments to the bank after car’s warranty has expired.

car loan and house loan is a good thing, it depends on how you use it

financial goal is #1 - how much you want to save a month/year etc
then, taking into how much you can spend on a car, and then resale value are secondary

take 9 years loan, if you want to change car at 3rd-4th year you might need to fork out to repay the loan.

i always take max 3-5 years loan only.

Usually within 3-6 months depending on the insurer. Cap X insurers usually up to 9 months to claim.

take 9 years loan and trade in after 5 years.
do that every time... more saving...

Can cover loan?

I also did that for local brand Perodua 9 yrs on full loan. Sell after 5 yrs and still got 1-3k cash after loan settlement.

Btw..mine considered low mileage and full service at SC.

This post has been edited by gahpadu: Sep 25 2024, 12:20 PM

Yup, can but need to buy the right model & price.
must take the lowest loan interest also..

very good n very deep reply...

true also

When o first bought an used Triton some years ago, the agent told me to take a 7 year loan because lower monthly commitments.

I told him to can it and chose a 5 year installment instead. Monthly was 1371. Heavy especially if when cash flow is stuck. But I paid on time and eventually after fully settled, I sold the truck for 55k to a dealer and opted for cash.

Bank will provide lower interest if you go for longer loan period but that also means you pay more

But if they able to provide 0 interest rate like tesla then different story

Majority people who take 9 years loan plus zero downpayment they are not afford that car but desire to own it. We have 1 problem that we always blame public transport not good and rationalize buying a car putting ourself in financial difficulty situation. Look at KL and Selangor, there were MRT 2 lines, LRT 3 lines (3rd one onbaord soon), 2 KTM and 1 monorail, and yet majority still choose to "drive" even if station is less than 1km walking distance. Btw in Japan, Korea and western countries it is common people walk more than 1 km to nearest train station. Those resident areas less than 1km from train station is extremely expensive.

The last car loan I got was 10 years ago for my Kia Cerato, it was a 9 year loan. My salary at that time was more than RM15k but below RM20k. The reason I took a 9 year loan was to keep my monthly installments below RM1k per month. Didn't want to have too high monthly commitment with a shorter loan tenure coz I had a young family and other commitments too at that time.

Right now I don't have a car loan but if do buy a new car, I would prefer to keep the tenure as short as possible because I really dislike having loans and I am not so young anymore and may decide to retire early.

Some people give financial advice like there is only 1 way to do things. As long as you are aware of what you are doing, then just do what works best for you. We all go through different situations in life and need to tailor the solution to our needs, there is no one size fits all. Long tenure is not advisable but it is there if you need it.

I am working in finance for about 25 years by the way.

Another perspective on opting for a longer tenure is that it reduces your commitment at CCRIS, allowing you to allocate more funds for other important obligations, thus improving your loan margin.

Imagine applying for a mortgage loan. If the bank sees your total installments are high due to a shorter car loan tenure, they may reject your application.

In conclusion, if you aim to save money, choose shorter terms. Conversely, if you want to improve your loan margin for future financing standby, opt for longer terms.

Personally, I prefer longer terms because if I have the funds, I can still do early settlements.

If rich, you would know the interest of car loan is quite low, the extra cash you have in hand might as well invest it. If you know how and provided you have the cash already. If you don’t have the cash ready then means not rich la lol. Other than that, it’s emotional department already as you “don’t want to pay loan so long psychologically”

This post has been edited by cempedaklife: Sep 28 2024, 02:55 PM

if u need to loan 9 years just able to buy a car, u are certainly overestimated yourself....

No one talk about total loss situation?

If such accident, insurance reimburse market value which is below outstanding bank amount for longer loan periods.

No car, no collateral, bank will ask you settle remaining balance immediately.

I took 9 years loan for the Tesla I bought last year at flexi rates about 3.7% which is even lower than my home loan of about 4%. I have the cash to pay full but I would rather keep the cash to invest to stocks and whatnot.

If bank allow me to take 30 years loan for car I will be very happy to take.

Insured Agreed value.

Won't be too far from market.

But can try see if Insurance companies will accept till outstanding bank amount for long loan periods.

Anyone successful please share here at least got options by paying higher premium.

Nope, I disagree. Some people take 9 years loan, for a very good purpose. Like myself, I take because I want to roll the money as long as possible into investment.

Back in Aug '20, during Covid-19 days, I bought a conti car, RM300k++. I could have used to buy the car via outright cash, but decided to take a loan and invest the cash into shares instead.

So, instead of buying the car back 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).

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 and I'm half way through, already served 4 years and 4 months (what an inauspicious number).
So, on a monthly basis, I basically sell some shares, that is equivalent to the monthly installment amount (approx RM3k).

The results, I have a balance of 56 months of the loan, which will be about RM168k to pay off (principal + interest).
BUT, the Tesla shares that I have now, is worth RM280k. If the share price maintains stagnant as it is today, with no ups and downs, at the end of my loan tenure, I would be left with RM112k.

More realistic figure, I'm guessing, it will land between RM200k~RM300k?

And to recap, if I were to buy cash with the RM300k++, which I could, at the end of 9 years, I would have a car that is worth perhaps RM60k and RM0 (since all the cash is paid upfront for the car purchase).

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

Nope, 9 years loan is not a bad thing at all. It depends on how one approaches it. For me, it's God sent, that I can take a 9 years loan.
Refer to my previous post above.

Hence, for anything, I always stretch the loan as long as possible. It's my way of getting rich.

It is nothing wrong, Suit to your own finance status

Bank Negara said it will prohibit financial services providers (FSP) from using Rule 78 in personal financial products, but they may offer fixed rates or a floating rate or where interest is charged on the remaining principal balance after deducting payments made by the borrower.

reducing the tenure here in Malaysia to seven years would mean households’ indebtedness is limited to seven years instead of the 10-year maximum tenure.

https://www.thestar.com.my/business/busines...-rule-78-timely

This post has been edited by dogbert_chew: Jan 9 2025, 07:32 PM

All about cash flow breh

If you have cash in hand, then it’s cash flow for taking 9 years loan.

If you can’t afford the installment for a 5 year loan, so you stretch it to a 9 year loan to “afford” it, it’s not cash flow. You memang insufficient cash so nothing will flow. Buy something cheaper so got leftover cash.

Nobody cares you drive a Civic or an Axia except your MLM/agent down line.

Manyak assumption

Not bad

If breh

If you cannot means cannot liao don't care if bank loan you 50 years breh

Lol

Those who understand will know what to do de la breh

This post has been edited by AthrunIJ: Jan 10 2025, 09:43 AM

later got people will come comment say, imagine u buy axia

then the extra extra cash u all in tesla some more

later end up positive can buy 2 biji tesla cash

bring me fly

LOL. This 1 is super smart, guru level liao.
Hard to believe, sounds crazy, but actually, totally possible 1.

I never ever buy the idea of taking longer loan tenure and we can take extra money to invest on somewhere else. Those who take 9 years loan and zero downpayment are majority buying car value below RM100k. Those people who are wealthy are usually taking shorter loan tenure and higher downpayment. Those people who take shorter loan and putting more downpayment mean they have already got extra money to do so and of course they have money either saving or invest on elsewhere. I do not believe that saving 20-30k downpayment will help you flip the value to become double within 9 years easily (got some cases but very rare). Bare in mind taking full loan mean higher principle value and the total interest we pay to bank is higher too.

You are saying investing n Tesla which is one of the world MOST valuable company. How many people know this 5 years ago and invest on it? I believe in Msia 99% people are not investing on Tesla shares. And the flip does not apply to anyone and also no one can verify your statement of earning huge on Tesla. And do you think there will be another Tesla for you to earn huge money in near future?

To me those who take 9 years full loan they are just simply not ready to own the car but force themselves to fulfill their own desire. End up they putting themselves in financial difficulty then blame on government, blame on their job salary and others but not themselves.

This post has been edited by autodriver: Jan 15 2025, 09:16 AM

I declared my strategy (Aug '20) and investment into Tesla (Jan '21) many years back, on the same topic, regarding decisions and reasons on taking a 9 year loan. Hence, my recent post here is basically just to revisit and recap the decision and the progress since.

Below is the link to my post:

https://forum.lowyat.net/index.php?showtopi...&#entry99452870

https://forum.lowyat.net/index.php?showtopi...&#entry97800443

Yes, most Malaysians do not invest in Tesla or let alone, invest in the equity market, which is a rather unfortunate thing. As for Tesla, the next 5 years will even see bigger growth. Conservatively, I would expect it to at least double to triple ($1k~$1.5k) in the next 5 years, which is roughly when my 9-year existing car loan will come to an end.

And if Tesla is too risky, there’s always safer options, such as the S&P 500 ETFs, which give and take, returns approx. 10% per annum. Yes, that’s the average return, dating back to the 1900s. At 10% return per annum, starting off with USD80k, and with a fixed car interest of 2.3% per year for 9 years, investing will yield a net balance amount of USD46k at the end of the 9 year period. Can verify this in a simple excel sheet.

What I’m trying to do here is merely to offer a perspective on why some people take a 9 year loan instead of a short loan or instead of paying cash. I know of people, who run businesses, and they also happily max out their car loan to 9 years and use the money for their cashflow of their business. From what I heard, the returns are even way greater than what I’m getting. Again, this is just another perspective on why people do such. And this does not mean that they need to hold the cars for 9 years. We can cut it short and do an immediate settlement, and yet, we would be better off, from a financial perspective.

Last but not least, those who take 9 years loan, certainly does not mean that they can’t afford the car.

Peace.

Principle remains the same, but the total absolute interest is much higher. Nevertheless, the key consideration point is ultimately, the effective % of the hire purchase interest vs the % of what one is able to get in terms of gains.

A fixed interest of of 2.3% for hire purchase actually works out to be only a 4.5% effective interest rate. This is not too high a benchmark, in all honesty. EPF gives an average return of 5.95% in the past 10 years!

Hence, if one is confident to match this amount in terms of investment gains, then he/she can strongly consider taking the a 9 year loan and have cash in hand. Will be a wise decision and the cash will be very useful when it is needed.

This post has been edited by DrPitchard: Jan 15 2025, 06:00 PM

HP in malaysia is cheap.

Opt 9 yrs, put the extra cash to any investment / house loan etc that hav higher interest rate / return than ur HP

I take loan because I want more cash flow.
You take loan cause you cant afford.
Kita Xsama.

For me I will take 7 years loan with 30% or more down-payment.

This post has been edited by shyan90's: Feb 13 2025, 11:49 AM

So you want employees to arrive at work all drenched in sweat with all kinds of odours Izzit ?

This post has been edited by Roman Catholic: Feb 13 2025, 12:48 PM

When I did not have much money. I took 5 years loan with 35% down.

Now? I take 9 years loan with 0% down.

I can get higher return with the cash yet remain liquid (e.g. ASM), no reason to pay cash.

Can I afford to pay cash? Yes. But why would I?

IF you have higher return with the cash then go for it.
There is no right or wrong. Luckily car loan is fixed loan.

sure bo?

Until insurance pays out. Correct la need to continue servicing the loan.

And if you under insure.. you gg lor

Yes..example u pay 0% 9 years. car 100k, example rebate 5k, means they need mark up your car another 5k and any way to make you 0% dp to get the car.
If your car get stolen, your insurance at most can cover 95k only..means u need pay 10k balance.

Banyak jugak la tu (4.5%), bang!

Say one buys 200K car, hence s/he will be paying about 10K/year, kan (rounded to 5% for ease of calculation). So for 9 years, the owner paid extra 90K...jadi 200K car jadi 300K car, bukan?!

Why not?

As long the insurance haven't paid out, the owner still need to service the loan. Banks don't care the car stolen or in the workshop. Loan still need to pay.

Please share la why you doubt the highlighted text la. Your banker told you no need to pay betul ? I knew it. Your banker contact info please.

This post has been edited by Roman Catholic: Feb 13 2025, 05:54 PM

Based on your logic employees should only drive to work? In the morning before the sunrise walk it is hard to get sweat unless you run. You can give thousand of reasons to rationalise our motive to own a car, work place is far, drive is more comfort no need squeeze inside bus or train, can go any place after work and so on. Majority or at least 80% of cars in KV are stationed for long hours inside carpark. People drive to work and park all day long. The vehicle is extremely under utilised meanwhile every month need to pay instalment for loan, parking fare, tolls, yearly insurance and car maintenance. Owning a cheap car like Axia G spec the monthly instalment for 9 years is about RM450 (if full loan) and petrol, tolls plus others make up another RM200. RM650 to own a car while myrapid pass is only RM50 for unlimited ride in a month.

Of course it is no issue for those who capable to own a car, but those who take 9 years loan mean they are not ready to own that particular model. Some people trying to say they took 9 years loan to have more spare cash to invest, but in reality very rare people who take 9 years loan got spare cash to do other investment. Those people who good in investment generally took shorter tenure because it save the interest to pay to bank.

In reality most people who take 9 years loan are unable to have extra cash to do other investment. I saw many people they can afford for City if paying 7 years loan tenure, but they upgrade to Civic by taking 9 years loan with couples of hundreds extra monthly.

Cuba teka siapa yg introduce 7 & 9 years tenure in the 90s and why? It is to save the so call national car maker back then during the economic crisis. And it has overstayed since then and allowed the car manufacturers to increase car prices consistently as they see it as "baru extra RM5" sebulan kalau 9 year loan. It was never for the consumer cash flow or whatever reason (insert your reason here). Buy what you can afford (including repair and maintenance).

Ye betul, total untuk interest tu RM90k (rounded up to 5%). But again, back to the concept, janji your interest gained is higher than the 4.5% interest charged by bank, then it's OK. Simple je concept dia.

EPF historical dividend payout for the past 10 years (2014-2023) is 5.95%.

Nak execute strategy ni, need to be confident to be able to invest the cash and get returns of more than 10%, on average, over that 9 years. Not impossible, but will need some effort. S&P500 ETF, track record over the past 60 years, on average, is about 10% gain per annum.

Epf cant wdraw. If can wdraw like house installments then many people will benefit from it
9yrs loan but payment made by monthly epf wdrawal

9 years loan end up you pay more, but if no choice then what to do right

same idea, for Car loan interest that below 3% (if jackpot got 2.2-2.4%) it is good already, and put cash to other investments. Just hope many will try to maintain the car properly and can use it to at least 10 years, instead of take 9 years but after 3-5 years, already eyeing new car hence need to trade in. Well, my idea, if we maintain the car properly, change all wear & tear, the car for sure can drive normally and efficiently even after 5 years above.

T5 said i can pay cash for a car below 150k. Just like my Maseli A class Sedan cost 241k and i up front 150k and loan only 91k for 3 years.
Each people had their capability. So of course approaches is different.

I took a 9 year loan before and while I finally settled everything on time and in full, the amount paid is about 36-45% more on top of the vehicle's cost.

Since then I only took min 3 years and max 5 years since I always buy low RV vehicles. I will never buy Perodua, Toyota or Honda because these brands are easy target for thieves and vandals. Had I bought a new Myvi and only to have it stolen after a few years later, the insurance money will not be able to cover it especially on a 9 year loan. Even if it does cover, there won't be any money left to put up as deposit for a new car.

Another example was my 2007 Mitsubishi Triton bought back in 2008. Took a 5 year loan against the SA advice and paid almost 1.5k monthly. But I was glad instead. Because after 7 years or so, I sold the car for 55k cash. No loans to pay and even got a refund from the insurance company. With that cash, I bought an used Navara and used until it broke down and sold it for 35k cash. Kept that cash to survive during the MCO. Lucky...

How do you count affordability? Is it the yearly salary thing?

can afford to pay in cash (theoretically). can afford
take loan for the cashflow

Affordability based on yearly salary is a reference. Some people if they do not have many commitment of course they can afford higher price car and even more than 30% of their income. For bank they only evaluate our fix commitment and they do not really factor in whether we need to pay for wife or kid expenses or not. And for banker who desparate for sales they will try put the bank loan approve. Example a couple with 2 kids and house instalment 1500 with salary of 5000. If they wana buy a car monthly instalment of RM1500 bank will surely approve. But when the family have house and car instalment total 3000, they only have balance of 2000 for 4 person living expenses. In this case buying a car with instalment of 1500 is not ideal at all coz family have to sacrifice many things like reduce outing, reduce kid's extra activities or courses etc.