Car purchase and bankruptcy

AMONG Asean countries, Malaysia has the highest rate of car ownership.

In 2016, it was estimated that 400 out of every 1,000 Malaysians owned one or more cars on average.

Apparently, ownership of cars has become a goal of those who just started working. Almost all office workers own cars. And with so many car owners around, the inevitable conclusion is that Malaysians have strong purchasing power. However, the reality is that a lot Malaysian car owners are buying themselves into dire straits.

Minister in the Prime Minister’s Department Datuk Seri Azalina Othman Said recently pointed out that data, published by the Malaysian Department of Insolvency from 2013 to August 2017, showed a total of 91,180 people failed to repay their car loans and had to declare bankruptcy.

Of this figure, people who failed to keep up their car instalment payments made up the highest number of defaulters, resulting in a total of 25,137 bankruptcies being declared.

It has to be said that due to the inadequacy of public transport, going without cars in Malaysia can severely restrict your mobility. It’s frustrating, to say the least, if you need to move around quickly. Hence the oft-repeated comment – “no car means no leg.”

There are many public transport options in the Selangor area such as light railway and MRT. However, even with such facilities, the problem of poor convergence is still prevalent.

In most of the other states, buses and taxis usually provide the main mode of public transport. But overall, most of the operators are neither reliable nor punctual, especially for the buses.

Given the sorry state of public transport in the country as a whole, Malaysians have come to regard car ownwership as no longer a luxury but a necessity. This, coupled with the relatively laxed control and simple process of purchasing automobiles, has made Malaysia a country where the “love” of buying cars is phenomenal, and with the explosion of the vehicular population, traffic jams have become a big headache on our roads.

While the need to buy a car is understandable if it is necessary for work, the purchase should also be made within financial means, not beyond.

Even if we can afford the monthly installments, we must not forget there are still incidental expenses to cover such as on insurance, petrol, tolls and repairs. The true cost of a car goes far beyond the monthly instalment payments.

Some young people in Malaysia choose to buy foreign branded cars possibly because it makes them feel macho or they just want keep up with the Joneses.

Many new workers with a salary of RM3000 to RM4000 a month go for a Honda or a Toyota instead of cheaper home-assembled models.

As a result, they have no savings or money to invest on self-improvement to enhance their professional worth. Sadly, at a young age, they have become not only slaves to their cars but are heavily in debt as well.

Buying a car that exceeds one’s financial capacity, necessitating the tightening of belts or at the risk of bankruptcy, is never a wise choice.

A car can be a luxury or a necessity but putting everything aside, it is still only a means of transport. Unless you can afford it, buying a car for the sake of status symbol can spell big financial trouble.

If you spend beyond your financial capacity, the consequences are never pleasant. Your life will be made miserable by the ever present need to keep the wolf from the door. The bottomline is spend within your means.

In the meantime, we should look seriously into upgrading our public transport not just in some cities and towns but on a nationwide scale.

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