How Much Car Down Payment to Pay? Maximum or Minimum?

25 September 2009 | Category: Car Loans Malaysia, Financial Planning | Leave a Comment

What is the best way to determine how much Car Down Payment to pay? Pay as much as we can? OR borrow money from bank, family or friends as much as we can?

Case Study:
Perodua Myvi SE ZHS – Myvi Special Edition (Automatic)

how much car down payment to pay
perodua myvi se price list

Scenario 1: Pay Maximum Down Payment with Your Cash
  • Metallic: RM53,400
  • 10% Down Payment: RM5,340
  • 90% Car Loan: RM48,060
  • Car Loan Tenure: 9 years
  • Car Loan Interest: 3.65%
  • Monthly Installment: RM591.18
Scenario 2: Borrow Maximum Car Loan from Bank
  • Metallic: RM53,400
  • 50% Down Payment: RM26,700
  • 50% Car Loan: RM26,700
  • Car Loan Tenure: 9 years
  • Car Loan Interest: 3.65%
  • Monthly Installment: RM328.43
Comparison: Pay Maximum vs. Borrow Maximum
Scenario 1: Pay Maximum Down Payment

Pros: By doing so, we will have an option to have shorter loan tenure by paying higher car loan payment instead of RM328.43. Besides, it helps to save more interests.

Cons: Smaller seed capital

Scenario 2: Borrow Maximum Car Loan

Pros: Bigger Seed Capital. In another words, we have more cash on hand. The extra money can be used to invest in property, share market, unit trust, gold, or amanah saham for higher ROI. Why should I use my own cash to pay RM26,700 for car down payment since I have the option to pay only RM5,340? The difference is RM21,360.

How important is the lump sum money of RM21,360 for us? Ask yourself, how long is needed for you to accumulate the savings of RM21,360? The time frame needed determines the importance. Agree?

Cons: Pay more interest & longer loan tenure. For your information, earlier full settlement on car loan to save interests can be arranged with banker. Who knows you have made handsome money from your investment after few years?

Conclusion

I prefer to pay minimum down payment for car down payment. If options are given, zero down payment loans are even better. Cash is KING! What about if the extra money is invested wisely into property or shares market as young as possible you can?

The Power of Leverage in property investment will shows you how powerful is it to help us in building greater seed capital. Money makes money. It’s a fantastic investment tool! Of course, high risk high return, all the risks must be taken into consideration.

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How Much Can You Afford for a Car?

23 September 2009 | Category: Financial Planning | 2 Comments

How to budget for a car? Especially buy first car in your life. This article shows you step by step buying car guide for those with limited savings or income.
how much can you afford for a car
Step 1: Start recording your daily expenses to find out your total monthly expenses.

Step 2: Analyze your monthly cash flow. Determine how much your monthly savings (extra money) is.

Step 3: Before considering buying a car, setup an emergency fund which is sufficient to support your living cost for 3 to 6 months just in case you are out of situation (jobless, retrenched, and etc).

Step 4a: If your monthly savings are below 30% of your income, it is not advisable to consider buying a car. Because the car loan installment will increase your burden. Therefore, move backward to Step 3 and restructuring your cash flow by increasing the sources of income or to cut down expenses (without affecting your basic living quality) if you insist to own a car.

Step 4b: If your monthly savings are 30% or above of your income, then you afford to spend 15% – 20% of your savings for the car loan installment. This approach will helps you to determine the maximum payment that you can afford for a car loan.

Example:

  • Monthly Income: RM2500 (100%)
  • Monthly Expenses: RM1750 (-70%)
  • Monthly Savings: RM750 (30%)
  • Budget for monthly car loan installment (maximum): RM500 (-20%)

Step 5: Determine which car to buy according to the budget at Step 4b.

Step 6: Determine the car values & down payment (10%) needed and start your savings plan to achieve the target.

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Invest in Gold Coins or Gold Savings Account?

19 September 2009 | Category: Gold Investment | 6 Comments

What is the best way to invest in gold? Buy gold coins from banks? Or invest in gold savings account? Firstly, let see what are the option of gold coins and gold investment accounts we have in Malaysia.
gold investment in malaysia
Gold Coins Offered by Banks in Malaysia:

  • Maybank Kijang Emas Gold Coins
  • RHB Bank Millennium Gold Coins
  • UOB Canadian Gold Maple Leaf
  • UOB Australian Kangaroo Gold Nugget
  • UOB Swiss Kinebar
  • UOB Swiss Pamp Gold
  • UOB Singapore Lion Gold Coin

Gold Savings Accounts Offered by Banks in Malaysia:

  • Public Bank Gold Investment Account
  • Maybank Gold Savings Passbook Account
Gold Savings Accounts & Gold Coins Prices Comparison

gold coins prices comparison
gold savings account prices comparison
Note: Gold Price based on 18th September 2009

Buy Gold Coins or Gold Savings Account?

There are two major points to be considered:

  • Cost of gold
  • Safekeeping storage issue

Decided to buy gold coins due to cheaper cost, maximize the profit, and affordable to take the risk by keeping it yourself in a safe place? Or preferring to invest gold in a passbook savings account for safety purpose since you are heavy-weight gold investor?

Refer to the comparison of gold prices offering by each bank, the % indicates the charges by banks. I hope it could help you to make the right decision according to your unique investment portfolio and strategy.

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