Video summary

What car can you afford at every salary?

Main summary

Key takeaways

Finance

Overview

This video uses a personal-finance affordability framework (based on budgeting rules of thumb) to judge what car price/installment is manageable relative to:

  • your take-home income (Malaysia / MYR)
  • other liabilities (treating cars as depreciating obligations)
  • your ability to continue saving (e.g., for housing)

The core idea is to avoid overextending so that car ownership doesn’t delay long-term goals.

Key affordability rules and numbers (MYR)

1) Installment cap: keep it under 10% of take-home

  • Rule: Car installment < 10% of take-home income
  • Example: if take-home is 10,000 MYR, then target installment ≈ 1,000 MYR

2) Add-on costs increase the “effective” monthly car cost

Installment alone is not enough—ongoing costs matter, such as:

  • Insurance: estimated 10–15% of the installment amount
  • Other recurring costs: maintenance + toll + parking + petrol

A practical estimate described is that total monthly car-related spending can be about:

  • ~30–40% above the installment

Example given:

  • Installment: 1,000 MYR
  • “To be safe” total monthly car cost: about 1,500 MYR (discussed as a sizable uplift beyond installment)

3) Savings target: aim for at least 20%

Budgeting assumes you should still be able to save ≥ 20%.

  • The discussion suggests that 10% savings can become “tight” at lower incomes.

4) “Car vs house” tradeoff (combined-debt pressure)

A family scenario is used to illustrate that once you include:

  • car costs
  • house costs
  • savings goals

…your remaining cash for living may become very low. This is summarized as “car or house.”

Explicit scenarios and recommendations

Earning ~10k take-home (threshold discussion)

  • If installment ≈ 1,000 MYR
  • And effective car cost ≈ 1,500 MYR
  • The video claims the remaining budget can still be “comfortable” enough in KL while saving.

Fresh grad earning ~5k take-home (example-driven)

The video suggests:

  • A new Myvi with about 1,000 MYR/month installment over 5 years
  • Around 1,500 MYR total car cost (including “parking everything else”)

It mentions KL parking can be very expensive, e.g.:

  • ~200 MYR/day

Plus a rental example:

  • ~700 MYR for a room

Under that setup, it describes the leftover for living as tight, potentially as low as:

  • ~1,000+ MYR to spend after additional 10% savings assumptions

It further claims achieving 20% savings becomes nearly impossible in the example, described as:

  • “~1,000 MYR to spend only”

Fresh grad earning ~2.5k–3k (minimum-wage context)

Key points:

  • The <10% rule may make even used cars feel unaffordable, potentially pushing people to very old cars.
  • Suggested affordability example:
    • Buy used Axia around 23,000 MYR (with 7 years referenced)
    • Installment estimated at ~300–400 MYR/month

Recommendation ladder:

  • If you can’t meet 10%: try 20%
  • If that’s impossible: cap at ~30%
  • Exceptions are framed as mostly “impossible” only at very low incomes (e.g., ~1k–2k/month).

Loan duration warning (avoid long tenors)

A strong caution is given:

  • Don’t take a 9-year car loan
  • Reasoning: cars depreciate heavily by 8–9 years, and you may still owe the bank more than resale value, effectively “losing money” and reducing flexibility to upgrade.

Suggested guideline:

  • target ~7 years max (often stated as “maximum it should be 7 years”).

“Cash affordability” rule of thumb

Another guideline mentioned:

  • If you can buy with cash, then you can afford it (framed as a privilege).

Rule of thumb:

  • Car value should not exceed 1-year salary

Example:

  • If income is 3,000 MYR/month → car value should be ≤ 36,000 MYR

It’s linked to the idea that this corresponds roughly to a ~20% installment burden over 5 years.

Practical “what car can you get” mapping (as stated)

If earning ~10,000 MYR

  • Suggested car affordability: about ~60,000 MYR
  • Assumptions:
    • 5,000 MYR down payment
    • Financing designed to land around ~1,000 MYR installment
  • Example model referenced: highest-spec Myvi

If earning ~3,000 MYR (fresh grad example)

Using a take-home cap:

  • A 30% cap on take-home is used
  • Implied installment target: ~700 MYR
  • Suggested options at that level:
    • new Axia (not highest level)
    • Proton Saga
    • or a used car

The video also suggests that higher-tier options (“Honda/Myvi today”) may not fit that installment level and are described with a “rich man car” framing due to cost.

Methodology / step-like framework (as described)

  1. Start with take-home income (not gross).
  2. Apply affordability caps:
    • Primary: installment <10%
    • If too tight: aim ≤20%
    • Worst-case: ≤30% (still described as difficult at low income)
  3. Add real-world monthly ownership costs:
    • Insurance (10–15% of installment)
    • plus maintenance, toll, parking, petrol
  4. Consider debt overlap / combined impact:
    • The video discusses broader constraints (e.g., total loan burden being limited; “car just car vs all loans” is emphasized).
  5. Choose loan tenor:
    • avoid 9 years
    • prefer ~5–7 years max to reduce depreciation/value mismatch.

Disclosures / disclaimers

  • No explicit “not financial advice” disclaimer was included in the provided subtitle summary.
  • The content is framed as personal rules of thumb and subjective opinions.

Assets / models mentioned (context: budgeting)

The video discusses car models as budgeting references (not investments). Mentioned examples include:

  • Myvi, Axia, Proton Saga
  • Honda Accord, Honda Civic
  • Tesla (implied “Tesla level”)
  • BYD Seal
  • BMW X4, BMW 5 Series
  • Peugeot
  • Lexus, Mercedes G-Wagon
  • Bentley, Lamborghini
  • Grab (ride-hailing) and LRT/MRT transit

Presenters / sources mentioned

  • Mr. Money Peter
  • Lise

Original video