Can I Afford A Car?

[firstgear]

Geetings to everyone.

First up, thanks admin for validating my account; being waiting endlessly.

Going to my question next, please bear with me if I sound odd. I know my question is very personal but I will try to be more detailed so that some of you might be able to give me your opinion based on your experience and general feelings. Since my pseudonym is anonymous, I feel OK in proceeding.

Lately this idea of buying a car has been buzzing me. Mainly because of friends and family members who are suggesting me to buy one as I have just got married. But I am not sure if I am fit for the buy in terms of financial capacity (it's been more than a decade since my immediate family owned a car and I don't have a good knowledge about the expenses coming along with owning a one).

If I am going for a car, I think I would go for something below Rs. 1.4 m and for that budget what is available for my taste is Perodua Kelisa or Ford Laser 1998 among other options.

But the problem is, at the moment I have Rs. 70k take home (with at least 8k annual increment) and Rs.0.00 savings .

Do the majority of the people here think I can be an owner of a car?

If NO, then problem solved; see you all in couple of years

If YES, what are the ways of getting a full lease for a Rs. 1.4m car? I can only go for something like Rs. 25k per month installment. With the balance Rs. 45k could I be able to lead a decent life?

(At the moment I don't have house rents, utility bills, schooling fee for children etc and only have the expenses of food and cloth for about 3 persons)

My monthly run would be less than 500km.

Awaiting your replies.

Thanks

FG.

[luckey007]

I saw a HV spreading her wheels to a freaking three wheeler, so I kinda lost all interest in hiring one.

LOL!!!

[firstgear]

Some very good advice out there. Let me also share a little bit of my own life experience.

Credit Cards

One of the most useful things to have, particularly to use in emergencies, special offers and for safety when buying online. Just note that credit cards are meant for short term borrowing. If you can't settle it within the interest free period, usually from 30-60 days, then it will attract interest as high as 30%. I can tell you there is nothing legal you can invest in that can provide the same sort of return (apart from winning the lottery) so it is can become a serious drag on finances. Use them, but only up to a limit where you can settle in full within a couple of months.

Finance

Another killer though interest rates have come down significantly. Note that interest related to high economic volatility (its a meassure of risk the bank or financial organisation is under taking) and around 10% I still think its a bit on the high side, particularly for a loan/lease that lasts multiple years. Think about the total amount you have to pay vs just the affordability factor (the bank or finance company will give you an illustration of the total you have to pay over the period). Consider the value returned by the cost incurred by you. For example some professions benefit from sporting the latest vehicles (professions where image matters) but for most its a simple modern convenience and need to be seen as such.

Investments

I strongly feel your investments need to be a combination of assets that can be liquidated quickly and assets which can't be liquidated so easily but for part of your long term investment portfolio. In Sri Lanka land is considered a safe haven and lots of people invest in them, and while as long term growth procespects are good, they cannot be liquidated quickly and some require management and can be a liability as well as an asset.

Short term fixed deposits (3 month) offer an excellent method of short term investment and will at least keep your money inline with inflation. Most importantly you can access your money every 3 months. Long term fixed deposits are a lot better for medium term investment.

Ironicallly the most liquifiable investment in SL seems to be Gold though the prices do go up and down.

Cash Buffer

If you are responsible for elderly people (parents for example) or young children, its important to keep some money as buffer for unexpected costs particularly illness. I know you said you had two Insurance policies but they are not likely to pay at the same time due to the insurance concept of contribution. So they will only pay up to 100K in some cases. I'd say its good to have at least double that amount on the side. My last hospital bill for a family member for a medium complexity surgery and a weeks stay including ICU at a private hospital was close to 400K.

Also saving starts small, and never discount the power of small savings.

If I may share a personal story, my parents managed to pay for me to go to University for 1 year in the UK. They paid for both tution and accomodation, but I don't come from a well to do family. My father at the time was on a very moderate salary for his skills and my mother worked for the government as a teacher. Our combined income was less than your single salary in 2002 and they had two kids (one doing her A/L and one at a private Institute learning IT) and a small mortgage and a fairly rusty not so great car. They have no other income other than their salary. Yet they managed to pay for both me and my sister to study abroad (she thankfully got a schol, I had a partial schol which was a discount) from the small amount they had put aside every month anticipating these expenses from about 1997 (so for 5 years. Building our house had depleted most of our savings from before).

So the moral of this story is start small, and don't underestimate its power or effectiveness.

Valuable advice with inspiring personal experience. Thanks mate.

[Sierra Charlie]

Having read all the posts here, wanted to share my experiences as well, since I was at a point in the same shoes as OP.

Like you I didn't have a car when I got married. Had to spend all my savings on the wedding as well as on the startup we launched right along with that. Waited for a couple of years since then before buying a car. We weren't sure whether we are going to stay in Sri Lanka or migrate. Finally, gave in and bought the Galant last April. My lease was with Si*ap*at*a Finance for 1.1 million. I managed to find the rest.

Now, getting a lease is easy. Mine was granted in 3 days. By the time I was getting the lease, I had paid off a previous loan, my CC balance was minus. ( Yeah, I'd paid a little extra too.) no other commitments and I was essentially the ideal customer for Si*ap*at*a.

What's bad was I had to pay 27,700 odd per month for five years to pay off the lease. The interest rates were a bit high then. On top of that, I had to take a full insurance which was about 34,000 odd. I wanted to go for some other insurance company but Si*ap*at*a insisted that I go get it as J*n*s*akt*hi. Plus, they had all these fancy document charges. I insisted on getting a breakdown of all the expenses, but believe, me, most of these expenses didn't make much sense. I had to tag along since I wanted to buy the car before the new year.

Never really liked getting a lease. The only reason why I took the lease was none of the banks I spoke to were willing to give a loan, despite our company having a clean financial record for 3 years. We hadn't even gotten a O/D by then.

Long story short, I always wanted to pay off the lease and finally managed to get a loan last December and I paid off the lease by the end of December. I had paid the lease for 8 months.

Two things;

1. They never honoured what they said about the percentage of the interest I'd have to pay if I settle earlier. I had to pay about 20% more than what they said I'd have to pay.
2. Once I accidentally omitted a single digit on the payment voucher. There were two boxes where I had to put the agreement number. I had forgotten to put the correct agreement number in one of them. Result, it apparently caused an 'administrative issue' and the payment was conveniently delayed by them by 4 days so I missed my payment date. I had to pay something like 2500 as penalty and the record of this was sent to CRIB, so that when I was going to get the loan later, this late payment was recorded. I had to wait a month to get the loan, since the loan officer didn't want to proceed with that blemish on my CRIB report.

That's the horror story with the lease.

The other thing is, when you buy a car and if you're like the most of us in this forum, you're going to fall in love with it. I know for certain that I have. This means, you're spending on her lavishly. In such a situation, your car is like your mistress. You can't stand any minor noise, you have a separate folder on your computer with all the car stuff that you go through when you're alone at night, you begin to read all type of things about your car (in my case including Russian forums), You salivate at all the goodies on eBay and curse the customs for slapping hefty taxes, you get to know your Garage bass quite intimately, your loved ones get to notice that your attention for them have now diminished and all sorts of other weird things. If this happens, you're in for a whole lot of pain since you haven't really nailed down the financial aspect and don't have an already established plan on how and what you're going to do with your money.

Can you afford a car right now? Well most certainly. I was more or less in the same situation as you are when I bought my car, albeit with more expenses since I live in a rented house. But do I recommend you do that? Absolutely not. Save some money, especially with a kid on the way. Kids, like many experienced people have said, are expensive. You're not gonna like having to spend 20k-25k per month on four wheels then. Things will be far more tougher if you love your car too.

[NRX]

My lease was with Si*ap*at*a Finance for 1.1 million. I managed to find the rest.

Dafuq is this company ?

The other thing is, when you buy a car and if you're like the most of us in this forum, you're going to fall in love with it. I know for certain that I have. This means, you're spending on her lavishly. In such a situation, your car is like your mistress. You can't stand any minor noise, you have a separate folder on your computer with all the car stuff that you go through when you're alone at night, you begin to read all type of things about your car (in my case including Russian forums), You salivate at all the goodies on eBay and curse the customs for slapping hefty taxes, you get to know your Garage bass quite intimately, your loved ones get to notice that your attention for them have now diminished and all sorts of other weird things. If this happens, you're in for a whole lot of pain since you haven't really nailed down the financial aspect and don't have an already established plan on how and what you're going to do with your money.

Amen to that. My wifey actually calls the car my mistress/ hora gaani

Edited March 13, 2015 by NRX

[Sierra Charlie]

Dafuq is this company ?

Amen to that. My wifey actually calls the car my mistress

It's s*y*p*th* There, I put stars for all the 'A's. Not surprisingly that reads like Syphilis.

Wait, she does call your ride Hora Gaani? daym, here I was thinking it was weird that my wife call my car that. Think all the women despite the shapes, sizes and looks are wired pretty much the same way!

Edited March 13, 2015 by Sierra Charlie

[matroska]

Dafuq is this company ?

Amen to that. My wifey actually calls the car my mistress/ hora gaani

its a subsidary of SAM**** bank (hint: bank uses orange as it's primary color and has branches and ATM's everywhere.)

[firstgear]

Can you afford a car right now? Well most certainly. I was more or less in the same situation as you are when I bought my car, albeit with more expenses since I live in a rented house. But do I recommend you do that? Absolutely not. Save some money, especially with a kid on the way. Kids, like many experienced people have said, are expensive. You're not gonna like having to spend 20k-25k per month on four wheels then. Things will be far more tougher if you love your car too.

Good to hear your valuable story. Certainly I have lessons to learn from that.

And thanks for your advice at the end as well.

I appreciate everyone of you for spending your time in sharing your valuable experiences so that inexperienced ones like me can learn lots of lesson from them.

[Jor-el]

Wierdly Wired Wives giving Woes to car Worshippers :3

Good thing I'm single

[NRX]

its a subsidary of SAM**** bank (hint: bank uses orange as it's primary color and has branches and ATM's everywhere.)

Got them both

It's s*y*p*th* There, I put stars for all the 'A's. Not surprisingly that reads like Syphilis.

Wait, she does call your ride Hora Gaani? daym, here I was thinking it was weird that my wife call my car that. Think all the women despite the shapes, sizes and looks are wired pretty much the same way!

lol, true that mate.

[Sierra Charlie]

Wierdly Wired Wives giving Woes to car Worshippers :3

Good thing I'm single

Pros and Cons man, pros and cons.

[Seeker LK]

Sorry if I'm hijacking the thread. My situation is slightly different form the OP's situation as I have around 1.5M in savings and I make around 100K per month. My problem is when I want to go for a leasing (I'm thinking of 2008/2009 demio) the companies says that I should have worked at the same company I work currently for atleast 12 months.

Damn, I joined the new company like 6 months back and I'm already a permanent employee there. For next 6 months I can't get a leasing.. that sounds so childish to me. I'm gonna give up on banks and gonna check with finance companies though it's more on the expensive side.

Anyone else had similar experiences? any tips?

Cheers.

[Crosswind]

Sorry if I'm hijacking the thread. My situation is slightly different form the OP's situation as I have around 1.5M in savings and I make around 100K per month. My problem is when I want to go for a leasing (I'm thinking of 2008/2009 demio) the companies says that I should have worked at the same company I work currently for atleast 12 months.

Damn, I joined the new company like 6 months back and I'm already a permanent employee there. For next 6 months I can't get a leasing.. that sounds so childish to me. I'm gonna give up on banks and gonna check with finance companies though it's more on the expensive side.

Anyone else had similar experiences? any tips?

Cheers.

Send me a PM I'll set you up with a couple of my contacts.

[Magnum]

I suggest you start building up your reserve. ave up about 300-400k and then start off from there. Owning a car from zero savings and a 70k salary is not easy. YOu need to eat, clothe yourself, pay rent/bills... then what ever i left only you can use for a car.

Things will get complicated if your wife pops a kid out too.

So take it easy. Sri Lankan elders, when you get newly married puts some retarded notions to the young couple. Such as go bring Grand Kids, go buy a car, buy a house, etc etc.

None of those are easy.

I had a friend when his and the bride's parents at a newly married dinner thingamagic they do here when newly married asked when the kids are coming, took his pants off and asked the wife to sit on his lap in front of all guests....

No more grand kids talk for years... LOL!

You bring in some of the craziest stories to the forum, in another thread you mentioned about a blood streak on the seat of a Honda Vezel driven by a woman lol

[Seeker LK]

Send me a PM I'll set you up with a couple of my contacts.

Thanks mate appreciate it.

[VVTi]

You bring in some of the craziest stories to the forum, in another thread you mentioned about a blood streak on the seat of a Honda Vezel driven by a woman lol

Blood and skid marks and cum stains on light colored seats are far more common than you think machang...

[Hoonigan]

Blood and skid marks and cum stains on light colored seats are far more common than you think machang...

damnit, a whole new angle to look at a used car purchase..

reminded me of that one Top Gear segment where they bought three used cars and got them analysed by some specialist to find everything from pubes, scabs and whatnot.

[whmsujith]

damnit, a whole new angle to look at a used car purchase..

reminded me of that one Top Gear segment where they bought three used cars and got them analysed by some specialist to find everything from pubes, scabs and whatnot.

Prices of "lady doctor owned" cars will reduce..lol

[rameez]

Well this is a good thread...but my situation is a bit wierd. I was employed permanently till 2013 Jan but work as freelancer and do earn from a range of 85k to 160k . banks a reluctant to offer me loans, even in the bank that i have my savings and showing in black and white the money i put and the existing balance.

Is this the fate of self employed people....damn i thouhgt that making money was the hardest

[MkX]

I was at OPs income level when I bought my car first car too. However the differences were, I was single and had about 300K savings. I went for 1M personal loan with 3 years payback period. (32K per month)

What I noticed is, unlike housing loans if you can increase monthly installement and reduce the period it'll be easy in long run. HNB, Comm bank and NTB approached our staff, giving personal loans around 9.5% - 11.5% interest rate these days. These are the good days to get a personal loan and make sure you get at fixed interest rate (it's highly unlikely interest rates for PL go lower than this. Chances are, the rate will increase soon)

And don't get fooled with all the leasing offers. My personal advise is don't go for 5 years loan or leasing on a personal vehicle which you have to cashout from your salary. 5 years is quite a lot to use budget car (asume you will go for small car). Apply PL immediately before interest rates goes up, even if you don't buy the car . Save money for couple of months. Don't forget, if you saved upto 6 months, while keeping your PL money in FD, you have recovered some of the loan interest and 6 months are already paid.

[asrock]

There are quite a lot of high income individuals here

[The Don]

There are quite a lot of high income individuals here

I'm genuinely curious. What is considered a high income in SL thesedays?

I ask because I remember my father earning 25K a month and being able to buy a unregistered van at about 400K or 16 times his salary.

But one of those now cost close to 5 million so...........

[Crosswind]

Going by your calculation its 312,500

I suppose the van must have been around 400k circa 1990 or so... An unreg Toyota Corolla was around 500k at that time as I recall. A 10-perch land in a suburb near Colombo (Kalubowila, Dehiwala or Meda Welikada, Rajagiriya etc.) cost something like 800k-1mill (the whole plot, not a perch).

Fast forward to 2015, a 10-perch plot of land in the same location would cost about 15 million if you are lucky. Axio costs about 5 mill (and that too on a permit).

which means, if your dad earned 25,000 in 1990, you should be earning at least 250,000 - 350,000 per month to be at a equal position now

Edited April 9, 2015 by Crosswind

[Seeker LK]

Well this is a good thread...but my situation is a bit wierd. I was employed permanently till 2013 Jan but work as freelancer and do earn from a range of 85k to 160k . banks a reluctant to offer me loans, even in the bank that i have my savings and showing in black and white the money i put and the existing balance.

Is this the fate of self employed people....damn i thouhgt that making money was the hardest

ha ha crazy things these banks do

[Kavvz]

" I'm genuinely curious. What is considered a high income in SL thesedays?

I ask because I remember my father earning 25K a month and being able to buy a unregistered van at about 400K or 16 times his salary.

......"

"......

which means, if your dad earned 25,000 in 1990, you should be earning at least 250,000 - 350,000 per month to be at a equal position now "

Don: I'm going to need your Dad to give me a loan please!!!

On a more seriously note- Crosswind: Good break down buddy. Its very sad that these days our better educated workforce [in my opinion] have to struggle to live at an equal or higher standard of living that their parents enjoyed back in the day...

[The Don]

Going by your calculation its 312,500

I suppose the van must have been around 400k circa 1990 or so... An unreg Toyota Corolla was around 500k at that time as I recall. A 10-perch land in a suburb near Colombo (Kalubowila, Dehiwala or Meda Welikada, Rajagiriya etc.) cost something like 800k-1mill (the whole plot, not a perch).

Fast forward to 2015, a 10-perch plot of land in the same location would cost about 15 million if you are lucky. Axio costs about 5 mill (and that too on a permit).

which means, if your dad earned 25,000 in 1990, you should be earning at least 250,000 - 350,000 per month to be at a equal position now

Its a worrying statistic isn't it?

The vehicle I used for comparison is a base model Nissan Vanette, and the time was mid 1990s (I went to look for these vehicles myself, hence why I remember). Now my father was not a rich man by any means. He had a mortgage to pay, household bills, Elocution classes for kids, etc (thankfully both my sister and myself didn't take tution till we did our A/Ls and in my case it was a waste of money anyway ). We lived a comfortable but certainly not luxurious life.

We bought the land we live now in 1988 at just over 100K for 10p. The mortgages taken (and there were two) probably added up to about 500K to build the house...

I mean not to offend people, but while people seem to be able to afford fancy cars, overseas holidays etc, it sometimes seem to me that wage growth hasn't kept up with inflation.....

I think some things have become more affordable as the rupee seems to have held reasonably well against foreign currencies in the last decade. The pound for example has constantly fluctuated between 180-240 LKR (yesterday it was 197).