Car Ownership Costs: Car Installment and 6 Other Expenses to Consider

Car ownership expenses go beyond monthly car payments, as there are numerous other costs to consider. Making a rough calculation of your monthly car expenses can be beneficial if you want to estimate your monthly expenses before buying a car. This article breaks down the actual costs of car ownership to help you make your monthly expense calculation

How Much Does It Cost To Own A Car in Malaysia?

Owning a car can be costly, regardless of whether it’s a new or used one. There are various expenses to consider such as petrol, car insurance premiums, road tax, and others. As a car owner, it’s essential to be aware of the estimated monthly calculations for these expenses.

1. Monthly Car Installment Payments

The first cost to consider in your monthly car expenses is the monthly car payment that you need to make each month. Many people take out car loans and pay them off in installments over a set period of time, usually between seven to nine years, to buy a car. The loan amount depends on the duration of the loan. Therefore, the longer the loan duration, the lower your monthly car payments will be.

In addition, the down payment also determines your monthly car payments. The higher the down payment you make, the lower the loan amount you need to take out. You can refer to the example below:

You will also be charged an interest rate on your car loan by the bank. Typically, the car interest rates range from 2.3 to 3.5 percent for new cars and from 3.5 to 4.2 percent for second-hand cars.

Factors that affect your interest rate include the car model, credit history based on your CCRIS or CTOS report, financial status, bank policies, and loan duration. Here is an example if you purchase a new car and are charged a 3.5 percent interest rate:

2. Car Insurance

Car insurance is a mandatory requirement for all vehicle owners to protect the driver or third parties in the event of any incidents that may cause death, damage or loss.

You need to renew your car insurance every year. The amount of insurance premium you need to pay depends on factors such as the type of insurance, whether it is third-party insurance or comprehensive insurance, the market value of the car, your No-Claim Discount (NCD), the type of vehicle and engine capacity, and your risk profile. To estimate the cost of your car insurance, refer to the example below:

3. Road Tax

In addition to car insurance, road tax for cars is also another mandatory requirement for every motor vehicle before it is allowed to be driven on the road legally. Payment of road tax is made to the government through the Road Transport Department (JPJ).

Usually, you need to renew your road tax every six or twelve months. The price of road tax depends on the car’s engine capacity in cc. This means that if your car’s cc is large, you will need to pay more. The following is an estimated price of road tax for a car with a 1300cc engine:

4. Car Petrol

The next monthly expense for a car is petrol usage. Some cars require a lot of fuel to move from one place to another. Before you buy a car, you can do research or ask the dealer about the fuel consumption of the car you want to buy.

Your monthly petrol costs depend on factors such as the current petrol price, frequency of use, driving style, daily travel distance, and the engine capacity of your car. If you buy a fuel-efficient car, your monthly petrol costs may be reduced. The following is an estimate of car fuel consumption:

5. Car Service

Car servicing is necessary for all cars when it reaches its scheduled time. The cost of car servicing is not fixed and depends on factors such as the age, make and model of the car, and the mileage. It is advisable to follow the recommended schedule for car servicing to maintain the car’s comfort and drivability.

When you first own a car, you should be financially prepared for the relatively large cost involved. It is important to pay attention to things like engine oil, gearbox oil, engine oil filters, car tires, spark plugs, and brake pads.

Car servicing is divided into two types, minor and major services. For a more accurate cost estimate, you can consult your car service center. The following are the estimated costs of major and minor car servicing that you need to take into account:

6. Toll and Parking

If you plan to commute to work with your car, toll and parking fees are expenses that you need to consider in your monthly car budget. Toll and parking fees can amount to hundreds of ringgit per month, especially if you live in big cities.

For tolls, you can choose to use Touch N Go, Smart Tag, or RFID. As for parking, you can consider getting a monthly parking pass at your workplace. The following is an estimate of toll and parking costs:

7. Car Depreciation Rate

As you may already know, a car is not an investment that will bring you profits because it will experience depreciation in value. This should be taken into consideration as you can estimate the potential loss you may experience if you decide to sell the car one day.

The value of your car depends on factors such as demand, condition, specifications, and others. Generally, the depreciation rate of a car ranges from 8 percent to 15 percent per year.

Do You Feel Ready to Own a Car Now That You Know the Estimated Monthly Expenses for It?

Owning a car is undoubtedly expensive, whether it is a used or new car. The actual cost of owning a car far exceeds the monthly payments made to the bank for car financing. Therefore, you need to know the costs involved to estimate your monthly car expenses. In conclusion, you need to be 100 percent financially prepared to own a car and it is hoped that this article can help you.

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