Rule of Thumb

As a rule of thumb, if you can't pay your car loan within 3 years [ yes 3 years], you can't afford to have a car. How many of us have car loans for more than 5 years? I'm sure most of us have 5 years to pay for our vehicle loans. When I first have my car, the loan was for 5 years, then it was extended to 7 years. Nowadays, it is not uncommon to have it for 9 years. I would think most of us Malaysians cannot afford to have cars. It's amazing that we have so many cars on the road and most of us cannot afford them.

I do not know the rule for having housing loans. I'm sure I can't afford a house if the same rule applies. Of course, for a housing loan it can't be for 3 years, but nevertheless it can't be for 25 years either. The rule is there for us to follow so that we will not be caught in a financial mess. The banks give us easy loans so that they can make money out of us. Just imagine how much money they make from us for the extra 2, 4 and 6 years loan?

The next thing that came to my mind is.. if we can't afford to buy a car, don't buy it. With a low or zero down payment, we are so tempted to buy something that we can't afford. Well, if you must buy a car, then you have to save and have at least 50% deposit before you can afford it. The same goes for houses. The banks would not like it and certainly most of us too. Who are you to tell me that I can't buy a car or a house? Well, as I have said earlier, it's a rule of thumb but as always rules are meant to be broken. It's okay if you are not caught.. if you are caught then you have to face the music..