Wednesday, November 11, 2009

How much should we buy that car ?


Most personal car purchases are sentimental and relate to quality of life ... however if purchasing a car is mainly a transport and finance matters then it could be iron out this way ...

First lets start with some facts of transport life around me;
  • Taxi is as good as my own car if not better ( its my own car + a driver ) but its costly
  • Bus stations are near by and can go almost anywhere but it takes too much of my precious time
  • Intra city trains are fast and efficient but only after you are IN the city
  • Car rental gives the highest flexibility but it could be expensive if park aside too long
So I will need a hybrid solution if I don't have my own car. For me, I will use Taxi - Train - Light Rail during normal days and Bus and Car Rental during weekend and holidays.

First I take a taxi to the near by train station (KTM), once in town I use light rails ( PUTRA, STAR, MONORAIL etc.) to travel almost anywhere within the city. Typically I would need to exchange once within the light rail systems to reach my destination. Return trip same path.
$8 : Taxi to station
$1.40 : Train to Town
$1.80 x 2 : Light rails within city

One way = $13
Return or one day = $26
5 days week = $130
50 weeks a year = $6,500
By weekend, I would rent a car and run away for 2 days ...
$180 / day x 2 days = $360
4 weeks or 1 month = $1,440
12 months or 1 year = $17,280
Adding both up is $23,780 a year.

If $2,000 a month of transportation fee seems ridiculously high, you probably do not need to rent a car every weekend, perhaps every bi-weekly or even every month if at all needed. Run your own numbers for your own scenarios. This example is trying to mimic the same lifestyle with a car.

Now if I do all that with my own car, I would need to pay for
  • petrol : $400 a month
  • parking : $10 / day x 5 days x 4 weeks = $200 a month
  • maintainence : $100 a month
That is a total of $700 a month burn. That leaves $1,300 a month for the car itself. So if I can find a car that I have to pay monthly less than $1,300, it may just be a good deal.

So if I take 3 years car loan at 3% interest I probably should buy a car less than $43,000
if I take 5 years car loan instead, I could spend up to $67,826 for a car.

Consider the resell value as a bonus or final fund consolidation just in case maintainence shoots up or you ended up not using that car that much after all.


2 comments:

nali said...

agreed about using the public transport.. but our public transport are not efficient and too crowded during peak hours....

Michael Tsen said...

indeed, great for hamsap folks, poor for others ...