Should I buy a car right now or wait? More so, you may wonder - "should I buy a car during recession?" In the context of 2020, where there's this economic crisis triggered by health crisis caused by the c.oved pandemic, it's definitely a very tempting question to ask. Especially when you're in Malaysia, when Penjana economic package exempt sales tax on locally-assembled cars purchased between June and end-December.
The 10% sales tax on complete knock down (CKD) passenger vehicles will be waived while the tax on completely built-up (CBU) passenger vehicles will be halved to 5%, said Prime Minister Tan Sri Muhyiddin Yassin.
But would Malaysians actually find if right now is the time to buy cars when job prospects are dim, economic outlook is gloomy, retrenchment spread like wildfire and even biz owners are conserving cash to pay for their staff salary, rental and operating expenses?
What are the real reasons of this Penjana initiative? Is it to really a cannot-be-missed incentive for you to buy a car this year in 2020? Does this work for your benefit?
No actually you are the sacrificial lamb if you think this is the best time to buy a car.
Fact is, this move is aim to prevent the local car automotive industry from collapsing. It's too big too fail when it comes to national car maker like Proton or Perodua. Heck, even continental car brands have factories in Malaysia.
With more people being 'tricked' into car buying spree, sales of passenger vehicle will pick up and the entire automotive supply chain can sustain and stay intact until we are out of the woods. That includes car manufacturing, car parts suppliers, car service providers and even logistics sector supporting the car industry in Malaysia.
Even banks will benefit from this when most people take hire purchase (car loan) to fund their car buys.
Everyone earns your money, while you are the only one parting with your hard-earned money.
Not saying you should not buy a car, but consider rationally - why do you actually want to buy a brand new car in the first place?
Is it because your car is unusable already? Repair costs skyrocketing because its' old? Then that's justified reasons.
Else, for reasons like - boost your ego or to impress your friends, colleague, relatives or stranger, it is an unwise decision.
The only other reason which you should answer YES to the question of "should I buy a car now or not" is the fact you are using the car bought for income generating activities.
That's right, like if you're an insurance agent who needs to drive a Mercedes to rub shoulders with your customers or prospects in order for you to close sales.
Then there is no best time to buy a car other than now. Instant 10% or 5% savings back to your pocket!
Another thing is -
You couldn’t be more wrong when you try to compare the interest rate quoted in hire purchase (HP) aka car loan interest rate with lending rate, mortgage rate or fixed deposit rate.
HP rate quoted by banks is calculated based on a flat rate. To make an apple-to-apple comparison to simple interest rate quoted in fixed deposit account or house mortgage, we need to convert HP rate to its annual percentage rate (APR). I have demonstrated how this is done -
Summary: Car loan interest rate is 1.9 times home mortgage rate.
Simply put, if you car loan interest rate is 3 percent for a HP tenure of 3 years, that’s equivalent to 5.68 percent mortgage interest.
CF Lieu is one of the most trusted & respected independent consultant in the financial advisory space in Malaysia.
CF works exclusively with personal clients who want a more sustainable and safe lifestyle and investment portfolio through REIT (Real Estate Investment Trusts). Check out where he co-founded the educational program with KC Lau.
CF Lieu is also one of the rare financial planners aka financial advisers who is actually engaged by banks and financial institutions to conduct investment seminars & workshops - like Maybank, RHB, PNB (Permodalan Nasional Bhd), FPAM (Financial Planning Association of Malaysia)...where his audience include CEOs, CFOs, accountants, investment analysts, private bankers, relationship managers etc
CF Lieu’s availability to work 1on1 with clients is extremely limited. As such, he's very selective and he is expensive (although it will be FAR less expensive than staying where you are).
Many of his clients are seeing a positive return on CF Lieu’s advice in days, not months.
See CF’s clients’ testimonials here -
If you think you might benefit from one-on-one interaction with CF, visit
#cflieu #carbuying #personalfinance
0 Comments