A car ranks as the second costliest investment one will ever make in their lifetime and as such, requires adequate research and shopping around before making a commitment.
This New Year is shaping up to be the right time to get a spanking new car, with the anticipated announcement on the National Automobile Policy (NAP) revision on January 15, 2014.
With the revised NAP, experts are expecting car prices to be slightly lower than the year before.
Buying a new car doesn’t have to be complicated. Most of the time, buyers let emotion trumps logic. To prepare you for this season of car shopping, iMoney lays down these handy tips to help you choose the right car for you – jargon-free.
The purchase price of your new ride aside, here is a list of things to consider to choose the right car for yourself.
1) Equipment: Built and options
No doubt you would have prepared a list of must-have equipment that enhances the safety, comfort and aesthetic qualities of the car you will eventually purchase. Such equipment could range from essentials such as airbags, traction control, and anti-lock brake system to more frivolous ones such as fog lights and a sunroof.
While a car with all or most of the equipment you want is likely to be at the top of your list of considerations, it is important to determine the built of the equipment provided.
Equipment that cannot stand the abuse of everyday use will likely mar your driving experience and cost you money to repair or replace.
Consequently, it is important to know that car dealers usually sell equipment in packages.
Before opting for a package, such as a body kit package, scrutinise its contents and weigh it against your wants and needs. It is also a good idea to have knowledge on how much each component of the package costs individually. If you are only interested in one out of four items in a package, you are better off getting that piece of equipment a la carte.
2) Incentive to buy
In a bid to attract more customers, most car manufacturers often reward buyers with a rebate or low finance rate. To qualify for a low financing rate, a buyer would still need to possess a good credit score, but rebates are generally given to all customers.
In some cases, buying during festive seasons such as Chinese New Year can even net you free add-ons, such as body kits, window tints, or a few rounds of free servicing.
3) Resale value
A car’s resale value is often overlooked when buying a car – and with good reason as most of us Malaysians intend to keep the car till the end of time. But for those who foresee themselves getting a new car after 5 to 10 years, resale value is a key consideration.
Generally, a new car depreciates to approximately 60% of its purchase price after five years. A new Toyota Vios priced at approximately RM88,000 in 2008 will only fetch approximately RM52,800 today.
Aside from depreciation, a car’s resale value is also affected by its:
- Brand
- History of reliability
- Distance travelled or mileage (measured in kilometers)
- Degree of wear and tear
- Age (how many years have passed since date of purchase)
- Add-ons that improve aesthetics and performance (if any)
- Fuel economy
- Direct sale or through used-car dealer
In addition to the above, a car with a hybrid engine is likely to fetch a higher resale value compared to its petrol-only counterpart. It’s important to take note however, that the purchase price of a hybrid car is likely to be higher. A 2013 Toyota Prius C (full hybrid) costs approximately RM24,000 more than the 2013 Toyota Vios (petrol).
4) Insurance and road tax
The cost (i.e. insurance premium) to maintain a car insurance policy is an annual expense that you will have to bear for as long as you own a car. In Malaysia, car insurance is compulsory and is needed to renew the car’s road tax – which is also compulsory.
Generally, the higher the purchase price of a car, the higher the insurance premium; but other factors are taken into account as well, such as:
- Age of car owner
- Driving experience: Lower premium rate for drivers with four years and above of driving experience
- Nature of occupation: Classified as ‘indoor’ or ‘outdoor’ occupation. Individuals with outdoor occupation is charged a higher premium rate
- Engine capacity (cc): The lower the engine capacity, the lower the premium
- Year of manufacture: The older your car, the lower the premium
- Type of car
- Type of engine: Higher insurance premium imposed on cars with turbo-charged engines. Some insurers even reject cars with a turbo-charged engine.
Another important factor that affects the insurance premium is the amount insured. Insuring a new vehicle at its purchase price will incur a higher premium than insuring an older vehicle at its market value. Find out more about the secrets behind auto insurance premium before making the decision on which car to purchase.
5) Fuel efficiency
Fuel efficiency is measured by the quantity of petrol (in litres) a car consumes per 100km. With the recent hike in petrol prices (with exception to RON97 fuel), choosing a fuel-efficient car becomes increasingly important.
In recent years, fuel-efficiency has become synonymous with hybrid cars. A full hybrid car such as the 2013 Toyota Prius C only consumes approximately 4.5 litres of petrol per 100km compared to 6.5 – 7 litres of petrol per 100km consumed by the 2013 Toyota Vios.
6) Cost of maintenance
Breakdowns are inevitable even for the most careful drivers, but breakdowns that happen within the warranty period can save you hundreds even thousands in repair costs.
The average period offered by most carmakers is 5 years, but purchasing a new car during promotional periods can net you an extended warranty period.
It is also important to know the components that fall under the purview of the warranty as newer cars may have newer technologies that can be costly to replace. Often, the advertised warranty (usually the longest) only covers the car’s powertrain; accessories and other selected components have shorter or limited warranty coverage.
