According to a news item in The Star, there were more than 500 bankruptcy cases every month due to the failure of people to service loans for their hire-purchase of motor vehicles during the past five months this year. How can you prevent such a thing from happening to you?
1. Factor the monthly repayment amount into your monthly budget: The big question is: Do you think there is room to accommodate the monthly installment in your monthly budget? If the total cash outlay including the car installment is more than your inflow, you can forget about getting a new car, bankruptcy will be the only outcome.
2. Hold on to your gratification: Don’t follow others just because one of your friends has got a new car. Exercise self-discipline to live within your means.
3. Get a smaller c.c. car: Opt for a smaller cc car so that you are comfortable with your monthly budget. Don’t overstretch.
4. Save more for a bigger down payment and a smaller monthly installment: This is the most sensible thing to do so that the monthly amount fits nicely into your monthly budget.
5. Wait for the next pay increment to buy a new car: Perhaps now you are not in a position to get a new car. How about the next pay increment? Can you hold on to it?
6. Wait for your next bonus to make the down payment: Bonus time is a good time to consider making a down payment for a new car.
7. A used car: What do you think of a used car? It should not be more than three years old and free from accident.
8. A shorter installment period: Just imagine an interest rate of 3% for a loan of 50,000 the amount of interest for one year is 1500, for 2 years it is 3000, for 3 years it is 4500, for 4 years the amount will be 6000 and for five years it will be 7500. Go for a shorter duration. Besides, the future is unpredictable; the sooner you complete the installments the better it is
9. Get the basic model: Get the basic model with manual transmission minus the leather seats and wood paneling. It costs very much less.
10. A need or a want: In a country like Singapore with an effective public transportation system such as MRT and buses, going from one place to another is a breeze. You don’t really need a car. Ask yourself: Is it a want or a need? It is easy to purchase a car, but maintaining a car is a different story. The cost of petrol, parking fee, maintenance cost, insurance and not to mention depreciation and accidents, will burn a big hole in your pocket.
You get a good feeling to show off your new car among your friends, but if you fail to catch up with the monthly installments just for three consecutive months your car will be repossessed. If you still owe more than RM30, 000 after disposing of your car, the bank will make you bankrupt. Where are you going to hide your face?
Source: 10 Tips to Avoid a Default on a Car Loan and Bankruptcy
1. Factor the monthly repayment amount into your monthly budget: The big question is: Do you think there is room to accommodate the monthly installment in your monthly budget? If the total cash outlay including the car installment is more than your inflow, you can forget about getting a new car, bankruptcy will be the only outcome.
2. Hold on to your gratification: Don’t follow others just because one of your friends has got a new car. Exercise self-discipline to live within your means.
3. Get a smaller c.c. car: Opt for a smaller cc car so that you are comfortable with your monthly budget. Don’t overstretch.
4. Save more for a bigger down payment and a smaller monthly installment: This is the most sensible thing to do so that the monthly amount fits nicely into your monthly budget.
5. Wait for the next pay increment to buy a new car: Perhaps now you are not in a position to get a new car. How about the next pay increment? Can you hold on to it?
6. Wait for your next bonus to make the down payment: Bonus time is a good time to consider making a down payment for a new car.
7. A used car: What do you think of a used car? It should not be more than three years old and free from accident.
8. A shorter installment period: Just imagine an interest rate of 3% for a loan of 50,000 the amount of interest for one year is 1500, for 2 years it is 3000, for 3 years it is 4500, for 4 years the amount will be 6000 and for five years it will be 7500. Go for a shorter duration. Besides, the future is unpredictable; the sooner you complete the installments the better it is
9. Get the basic model: Get the basic model with manual transmission minus the leather seats and wood paneling. It costs very much less.
10. A need or a want: In a country like Singapore with an effective public transportation system such as MRT and buses, going from one place to another is a breeze. You don’t really need a car. Ask yourself: Is it a want or a need? It is easy to purchase a car, but maintaining a car is a different story. The cost of petrol, parking fee, maintenance cost, insurance and not to mention depreciation and accidents, will burn a big hole in your pocket.
You get a good feeling to show off your new car among your friends, but if you fail to catch up with the monthly installments just for three consecutive months your car will be repossessed. If you still owe more than RM30, 000 after disposing of your car, the bank will make you bankrupt. Where are you going to hide your face?
Source: 10 Tips to Avoid a Default on a Car Loan and Bankruptcy
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