Refer to my previous post about the cheapest consumer debt: Mortgage – The Cheapest Debt , it is wise to keep the mortgage as our only debt.
Most people hesitate whether to buy a new car first or a house? Let’s see the pro and con:
| Car | House |
| Maintenance, petrol, servicing cost about RM300-500/month | Maintenance, electricity, water bill, assessment cost about RM200/month |
| Most likely Depreciate in value | Most likely Appreciate in Value |
| Loan: Hire Purchase Agreement Only a little bit discount if we want to pay advanced installment Higher interest charge |
Loan: Mortgage Advanced payment will settle on the principle loan Daily rest Lower interest charge |
We can buy the house first, then serve the installment for a few years. After we build up more equity in the mortgage, we can refinance the house to higher loan amount. The extra cash we get can be used to buy our dream car.
{ 16 comments… read them below or add one }
One more thing : Car (transport) has alternatives like bikes, train, bus, carpool
House, you can choose somewhere nearer to workplace.
What do you think?
Interesting Article,
I am a guy age 24, Currently renting, I am planning to buy car, but at the same time i need to buy a house as an investment.
I can’t afford to buy both. But please provide any advise.
@ Safnate,
We all have limited financial resource. So you must decide for yourself which one is more important. We have different values in life.
If I am in your position, with my own set of values, I will buy the house first.
@ KCLau,
Thanks 4ur reply!
I decided to buy a car first, as i knock off very late @ work, cause i study aftet working hours. I am currently grooming my career. I bought a used car cash, it was a good deal, and used the money left to pay off my debts, If u want to save money you must pay your debts first.Now i am saving to buy my house.
Great to hear that!
hi KC,
i have some friends and also relatives who advise me to buy a good car, even if pay back in 7 years, just think of it as renting the car, use my extra cash monthly to get property. meaning using the 7 years to pay back to buy time. is this idea correct?
i mean all these while, i always think a car is a liability, and can never understand their point. maybe because i am an employee, and some of them are actually self employed. maybe it is the tax reason??
Hi Lai,
Some people need a good car as an investment – these people are businessmen, entrepreneurs, salesperson who need to give confidence to their employees and customers.
For an employee, car is indeed a liability.
I have a fren who doing well in his career and his boss proposed him as a business development manager which he should always drive here and there to their branches. His current car is old and for those who have same experience will understand that the old car to drive from KL to Perak to Seremban to Melacca & heading to JB everyweek is terrible. So he was thinking to change a new car but at the same time he is preparing for his wedding and would like to own a house….He ask for my advice…I hv no idea… Pls advice…
Hi Suanze,
It depends on his priority. Of course, it makes financial sense to buy a house first because property will appreciate and cars definitely don’t appreciate in value.
But if he desperately need a better car, he will need to sacrifice some financial resources.
I just bought a unit of high rise condominium in Penang. This is a new launching property and i found that it’s great in value and good location will definetely allow the value to appreciate in long term. Somehow, i m still driving my old cars that i bought in year 1999 and i find no reason to buy a new car since the existing car i m driving now still in good condition and fun driving around.
Great to know that.
hello KC,
I am 29 years old and currently own a medium cost terrace house in Kuching. By the way, i also own a nasional car and still leave 4 years to pay for the loan. I am just wondering should i refinancing the house for renovation purpose or sell the car as i am no longer using it. ( working in oversea )
Please sell the car if you don’t need it anymore (it depreciates). You can buy back the same model when you come back in the future and it will definitely cost less.
Refinancing for renovation? Since you are at oversea, why do you need to renovate your house? is it for your family?
thanks for your reply KC. I agreed with u car ( drepreciation ) but i still wondering if i sell the car which still have 4 years loan to go..my parent will dun have any transport already. Do you suggest me to sell the car with loan n reloan another cheaper car for my parent? By the way, if i am not renovate the house can i still reloan the house since the interest ( BLR ) is quite low now. KIndly help .
Hi KC,
I am 46 yo, own 3 cars which is one for me, my wife and my younger sister to drive my mother around. I have 2 bungalows, a double storey terrace, 2unit condos and 1 medium cost flat. Recently I sold a low cost flat and earn 100K in cash. I really crazy about to own a 2nd hand Mercedes sport. I felt bit strange with my desire coz when I was young I only bought a station wagon instead of sport car. My friend said that my behavior is normal as to balance up with my age as I am getting older. I am in the dark now, could u give me some advice weather to invest more on property or enjoy my car enthusiasm.
Hi Rudy,
We all have a desire for something.
It is nothing wrong to buy your dream car, as long as you had planned for it. If it is within your budget, please go ahead.