True cost of vehicle ownership?

WE often complain about high car prices due to the excise duty. It was reported that Kuala Lumpur is the fifth most expensive city to buy a new mid-sized car compared with 54 cities across the globe, said Deutsche Bank’s eighth edition of its “Mapping the World Prices” report.

However, according to the report, Malaysia is the fourth cheapest when it comes to petrol prices.

The high cost of cars have not deterred Malaysians from owning cars as the number of people using vehicles is projected to increase 1.4 times to 31 million by 2030.

If you are looking to buy a car soon, it would be wise to do research on how much a car costs.

The cost of car ownership is not as simple as paying for a car loan, but it also involves the day-to-day cost of using it.

The total cost goes beyond its purchase price when you consider expenses like petrol and insurance, plus the depreciation of value.

Let’s examine the true cost of owning a Proton 1.6 CVT car cost at RM61,090.94 for five years.

1. Financing

Unless you started saving from the day you were born to buy a local sedan car, chances are you will have to get a hire purchase loan.

If you take the usual route, you will have to fork out 10 per cent of the car price for the downpayment, and the rest of the 90 per cent will be financed. Here is how much you will have to pay in interest over a fiveyear tenure: Interest rate: 3.5 per cent

Tenure: Five years

Monthly instalment: RM1,077

Total interest over loan tenure: RM9,621

*Calculation is based on Proton car loan calculator

With the maximum hire-purchase loan tenure at nine years, car buyers who choose the longer loan tenure will pay more.

2. Depreciation

Depreciation is one of the highest costs in owning a car. It is how well the vehicle holds its value over time. This is important if you keep the car for less than five years as the depreciation rate is always higher in the initial years of ownership.

The moment you receive the keys from the car dealer, you’ve lost thousands of ringgit.

Here’s an illustration of how much depreciation will cost you for a five-year-old Proton sedan car:

Calculation of depreciation of a Proton sedan car 1.6CVT

Price of a new car: RM61,090.94 Depreciation rate: 51 per cent Depreciation value: RM31,156.38 Value of a five-year old Proton sedan: RM29,934.56

Factors that can accelerate the depreciation rate of a car are: mileage, brand, history of reliability, degree of wear and tear, modifications and who you sell your car to (selling your car to a car dealer will lower your selling price further).

3. Petrol consumption

Petrol is the second highest cost of vehicle ownership despite having one of the cheapest petrol prices in the world. Choosing a car with good rated economy can lower this cost.

A Proton sedan car with 1.6CVT boasts a 6.6 litre per 100 km at 90kph. Assuming an average of 1,000km a month, here is how much you are estimated to pay for petrol over five years.

Petrol consumption over five years

Petrol price: RM2.08/litre*

Total mileage: 1,000km x 12 months x 5 years = 60,000km

Total petrol consumption: 60,000km ÷ 100km x 6.6 litre = 3,960 litre which costs RM8,236.80

*Calculation is based on the current petrol price and will fluctuate according to petrol price.

For details, visit https://www. imoney.my.