Buying A New Car vs Used Car: Which Should Malaysian Millennials Prioritise And Why?
For most Malaysians, a car is the second biggest investment in their lives after a house. While some have the perception that a car is just for showing off, it is actually a necessity in most cases. More so if you need mobility at your disposal for work, family and emergencies.
Well, if you’re in the market for an automobile, the age-old question will definitely arise: should you buy a new car or used? If you’re in limbo for an answer, don’t worry as we’ve got you covered! Read on below for some arguments on both sides to help you decide which option is the best for you!
Psst, this handy article is brought to you by our good friends at Caltex. Whether new or used, read on to find out the best way to protect your car’s engine with Caltex below!
Buying a new car
1. The latest safety features
Automobile safety has greatly advanced in the past 20 years and here are some safety features that are now commonplace which older models might not have:
Anti-lock braking systems
Automatic Emergency Brake
Adaptive Cruise Control and more!
In contrast, a used car may even lack standard safety features such as airbags. So, if safety is your top priority, then a new car is definitely the better choice for you, especially if you’re using it to drive your family around.
2. Dependability and reliability
Besides safety features, new cars also come with better security. Did you know that the most stolen vehicles in Malaysia are those made in the early 2000s? In fact, the unwanted title for the most stolen car in our country last year was actually the Proton Wira! This is partly due to the lack of security features which newer cars have rectified immensely.
Engine-wise, newer cars are equipped with the latest technology too. Here’s why this is important:
They’re more efficient than older counterparts hence better fuel mileage
They’re cleaner too which means lower gas emissions
Less hassle to maintain
Not only can you skip services like carburettor tune-ups (since modern cars have ditched them altogether) but newer cars are easier to find spare parts for as well. Besides, most car manufacturers provide additional warranty for their car as well which gives you free services for up to 5 years!
Well, no matter how long a warranty you have, taking care of your engine and knowing the best engine oil for your car, whether petrol or diesel-based is still important. We would highly recommend going with Caltex Havoline® and Caltex Delo® Sports engine oils ensure smooth engine operation to maximise your engine’s performance in all conditions. Read until the end of the article to find out more!
1. Higher depreciating value
Did you know that a new car’s value depreciates an average of 10% to 20% annually in Malaysia? That means your car will lose almost all of its value by the end of your loan tenure!
Add up all the maintenance fees required throughout the lifespan of the car, it is definitely not a worthwhile investment in the long run. That’s why cars are considered a liability instead of an asset in most financiers’ views.
2. More money spent in the long term
Car loans are a flat interest rate loan that is very different from other loans. Here’s a simple explanation:
With a flat interest rate, the amount of interest paid is fixed upon the principal and does not diminish the more you pay.
For example, say you’re purchasing a car with a loan of RM74,000 and the interest rate is 3.4% per annum for 9 years.
Your interest per year would then be: 3.4% of RM74,000 = RM2,516.
The total interest paid over 9 years would be: RM2,516 x 9 = RM22, 644.
RM74,000 + RM22,644 = RM96,644.
So, you’re actually paying RM96,644 for your car at the end of the loan tenure. That’s far more than what the 3.4% interest makes it out to be!
Furthermore, you need to think about insurance premiums as well. The most important factor for calculating is actually the market value of the vehicle hence a used car would automatically translate to cheaper insurance due to the market value being low. Considering this is something you have to fork out every year, the expenses will be significantly higher in comparison to used cars.
Buying a used car
1. Significantly cheaper and doesn’t affect your DSR too much
Generally speaking, a used 5-year-old car can be half the price a newer generation of the same model. Just take a look at the price comparison between popular car models in Malaysia below:
Used car prices according to Mudah.my | Source: majalahlabur
A cheaper price tag is definitely better for your financial track record as a lower monthly repayment would not affect your Debt-Service Ratio (DSR) that much. DSR is a method used by banks to calculate whether or not you can afford the loan you’re applying for.
Here’s the formula used to calculate DSR:
Each bank has its very own DSR evaluation but you should ideally keep it within the 60% range. Your monthly commitments include bank debts (car loan, credit card bills, and personal loans.) and non-bank debt (PTPTN loan etc.). Hence, if you’re planning a much bigger investment such as a house, buying a used car is definitely the more sensible choice.
2. You can buy a better car with a lower price tag
Furthermore, considering a car’s decrease of value over the first few years, this means that you let the first owner absorb the massive depreciation hit. This gives you a much lower-priced car that will depreciate more slowly as it ages. Hence, if you’re willing to buy a car with higher mileage and a few wear and tear, you can actually buy a nicer car which you might not afford otherwise.
Used car prices according to Mudah.my | Source: majalahlabur
Take a look at the table above again, for the same price, you can actually buy a used Honda City instead of a Myvi and have a few extra thousands of ringgits to spare.
1. It’s a gamble
Although you can check the history of a used car through its insurance, PUSPAKOM or JPJ report, some may not be that thorough and only shows whether it has been involved in an accident before. Therefore, you never truly know its history or problems that the previous owner may not disclose to you.
Besides, most used cars are sold as-is, therefore any issues with the vehicle will belong to you so it’s definitely a gamble!
2. More upfront cash needed and harder to get a loan
Another issue with buying a used car is financing. While most prefer to just purchase a used car by cash, that requires a lot of capital especially for high-end cars. Getting a bank loan approved for a second-hand car can be tricky and have significantly higher interest rates.
Banks also may rate the automobile much lower than what your used-car dealer hence you need to put a higher downpayment for it.
The bottom line: Which is the better option?
There is definitely no right or wrong answer to this question. At the end of the day, the answer lies within your needs, lifestyle preferences and financial capabilities.
Here are some questions to ask yourself before deciding:
Are you looking for just a car to transport you from A to B or are you looking for something aesthetically pleasing?
What is your budget?
What is the most important aspects of car ownership to you?
Are you looking to keep the car long term or just for a short while?
Only after weighing all of them thoroughly will you know which car you should prioritise!
Well, no matter new or used, we know that a car is definitely a precious investment that you treasure. That’s why you need to take care of its engine for the most optimum performance. The best way to do so? Through high quality and premium engine lubricants such as Caltex Havoline® and Caltex Delo® Sports of course!
Specially designed to enhance protection and performance in your petrol or diesel vehicles, Caltex Havoline® and Caltex Delo® Sports premium engine oils engine oils offer a range of engine oils for your car for a most enjoyable journey!
For more than 100 years, people have relied on Caltex Havoline advanced motor oil technology for their petrol-based engines!
Engine oils form a thin layer between the components in your engine to lubricate them.
It continuously protects petrol-based engines against premature wear and tear.
Ensure smooth engine operation to maximise your engine’s performance in all conditions.
Protect your vehicle and keep going with Caltex Havoline® motor oils! Check out their full range of synthetic and mineral engine oils here.
Caltex Delo® Sports
For diesel-based engines such as SUVs and 4×4 vehicles, Caltex Delo® Sports’ offers the best protection.
It’s specifically formulated to meet the intense demands of your vehicles.
Properly lubricating the inside of your diesel-based engine and creates a protective film
It also disperses soot and control sludge to extend service intervals and maximise engine life.
Explore Caltex Delo® Sports full range of advanced engine oils here.
Well, as if you need more reasons to use Caltex lubricants for your vehicles, check this out:
Buy any selected Havoline® and Delo® Sports lubricants product from your participating Caltex Havoline® autoPro branded workshop and Caltex fuel station today and get an exclusive Travel Buddy item to have a comfortable and rejuvenated drive on the road!
Awesome! For more information on the Caltex Lubricants Holiday Travel Promotion and the best Caltex Lubricants engine oil for your petrol or diesel-based vehicles, visit their official website here.
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