Your car loan amount is
RM 45,000 for 7 years
Find the ideal financing option for your next vehicle purchase with Carlist's extensive car loan calculator in Malaysia. You can easily estimate your car loan interest rates and eligibility in Malaysia with a user-friendly car loan payment calculator from Carlist, which streamlines the process.
Whether you're an experienced buyer or a first-time car owner, our second hand/ used car loan interest rate calculator offers insightful information to support your decision-making.
What is a car loan? A car loan in Malaysia is a type of financing provided by banks, financial agents, and other lenders to help individuals purchase a vehicle. The loan period typically ranges from 3 to 9 years, spreading the cost of the car, including interest, into monthly payments. Car loan interest rates vary from bank to bank and depend on factors such as the loan amount, loan tenure, and the borrower’s credit score.
Before we get deeper into the topic, here are some of the essential terms we should familiarize ourselves with:
Fixed Rate Loans Most of the borrowers opted for this type of car loan, which the interest rate remained constant throughout the loan tenure. It is preferred by many as it has stable and predictable monthly payments.
Variable Rate Loans The variable rate loan has an interest rate that can fluctuate based on the Base Lending Rate (BLR), which is determined by the Bank Negara Malaysia (BNM).
Here are the formulas that we will be using to calculate the monthly installment:
Now, let us apply the same formulas to what has been offered by the bank, as stated in the table above.
There you have it, the monthly installment would be RM870 which is derived from the total loan amount (with interest) of RM52,200.
Monthly Income and Affordability "Buy what you can afford” is advice we've heard countless times, and it's what all banks or lenders consider most when assessing a person's ability to repay a loan. Enter DSR, also known as Debt Service Ratio, which is a quick and easy way to calculate your loan eligibility based on your monthly net income against your total fixed debt, including the loan amount you are applying for.
Banks generally accept a DSR below 60%, and if your DSR doesn’t exceed this limit, your loan application will have a better chance of approval.
The formula of the Debt Service Ratio is Total Debt Commitments per month including the loan amount, divided by the Total Income per month.
For example, John’s monthly net income is RM6,000. He has a home loan which requires him to pay RM1,800 per month, a personal loan with monthly installments of RM500, together with a car loan which he is applying for that requires him to pay RM900 per month. Therefore, his DSR calculation would be:
Calculation
As per the calculation above, John’s DSR is 53.333%
Another method, primarily aimed at preventing you from overburdening yourself while getting your dream car, is to follow this golden rule of thumb: only spend 10% - 15% of your income on your car loan, with 20% being the absolute maximum. This approach leaves you more freedom for future plans as well as a cushion for any unexpected expenses.
Credit Score A person’s credit score is tied to their credit history. Many of us begin our journey to a healthy credit score by owning a credit card, starting to swipe it, and making all the required payments on time for a minimum of 6 months. If we don’t, banks will not be able to assess a person’s credibility to pay for a car loan and chances of getting approval are very low.
A poor credit score will lower a person’s chances of getting a car loan approved. If you find yourself in this situation, the only way out to get that car key is to start making those payments on time or in full. It is advisable to maintain a consistent monthly payment habit for up to 12 months before applying for another loan.
If you are unsure and wish to know your credit score, you can register for a CTOS credit service account and request a credit score check in just a minute.
Compare car loan interest rates Banks offer varying terms and interest rates for new and second-hand car loans, so researching their rates is crucial. Applying to multiple banks allows you to select the best offer available.
Secure a guarantor If your credit score is low or nonexistent, consider securing a guarantor to bolster your application. Typically a close relative, the guarantor assumes the same risks as the borrower.
Always bear in mind that when purchasing a car, you should also account for various additional expenses that could arise. These include petrol, upkeep, repairs, road taxes, insurance, parking fees, and travel expenses such as highway tolls. It's essential to factor in these costs when budgeting for a car.
Q: Can foreigners apply for car loans in Malaysia? A: Yes, many banks or borrowers offer car loans to foreigners, provided they meet certain criteria such as a valid work permit and steady income.
Q: What happens if I miss a car loan payment? A: Missing a payment can result in late fees and potentially affect your credit score. Continuous defaults may lead to repossession of the vehicle.
Q: Can I settle my car loan earlier in Malaysia? A: Yes, you can. Most banks or lenders in Malaysia offer a certain percentage of rebate if you choose to settle the car loan before the end of the loan tenure.
Q: Do I have to continue paying my car loan installment if the vehicle is stolen? A: Yes, Unfortunately, your car loan still continues even if your car is stolen. On the bright side, you can claim insurance losses and use the compensation to settle your loan with the bank, based on your car's market value or the sum insured, whichever is lower.
Malaysia Bank Car Loan Interest and Profit Rate Comparison
Malaysia Road Tax and Insurance Renewal Services at Carlist.my
Find the ideal financing option for your next vehicle purchase with Carlist's extensive car loan calculator. You can easily estimate your car loan interest rates and eligibility in Malaysia with a user-friendly car loan payment calculator from Carlist, which streamlines the process.
Carlist provides easy options for insurance and road tax renewal in addition to our car loan calculator.
With our convenient road tax and insurance renewal services, you can minimize your administrative workload and guarantee that your car stays compliant. Carlist provides coverage for every stage of the process, from insurance coverage to road tax renewal.
Carlist provides all the information you need to apply for a car loan or investigate your options for car installments. Getting your dream car is now easier than ever thanks to our platform, which offers easy access to car loan applications and installment plan comparisons.
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We aim to make the process of buying and owning a car as easy and stress-free as possible by providing a range of tools and services such as an application for a car loan, options for renewing insurance and road tax, and a RHB car loan calculator.
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Your dreams of owning a car can come true when you rely on Carlist as your partner. Try it now!