Loan Application

Someone close to me wanted to buy a new car.

He is earning about 3k. Up until last week, he drives a local car which he paid about RM500 a month for the monthly installments. Then he has to pay for his Bank Rakyat personal loan monthly installments about RM300. Next, he is paying about RM250 per month for his ASB loan.

Apart from that, a credit card balance of about RM4k is still outstanding. I was made to understand that he has not paid 2 monthly installment for his car due to reasons only known to him

Up to today, he has no asset as yet....

Now, he wanted to buy a new ride. He decided to go for a Korean car amounting to about RM95k. After submitting the loan application, his application was rejected. He then shifts his attention to Honda that costs around RM90k. X bank only approves 85% instead of the usual 90%....which means, he has to fork out about RM13k to buy the car. Erkkk!!

I tried to speak to him about getting a new car is not easy. It's gonna cost a lot of money. To make matters worse, he has since sold off his car to a second hand car dealer for only RM17.5k. His previous balance with the bank for the old car is about RM16k. So, he has a balance of about RM1.5k from that transaction. Disposing a local car for a profit is a good business sense I think. Heheheheh....

He is disappointed obviously. I tried to speak to him about not spending more that what you can afford but it seems, he is very determined to purchase that Honda.

Don't get me wrong, I'm just worried about his financial standings and at that age of 32, he needs to be thinking of building assets instead of 'owning' depreciating assets. I strongly recommend that he should get a MyVi or something below RM65k. If he does get what he wished, he will have to pay about RM1k for the monthly installments for the car. I think....I really think, ini adalah langkah yg kurang bijak....Moreover, when you have to spend RM13k for the deposit/booking....lagilah kurang bijak....I would rather pay RM13k deposit to purchase a property....

Which brings me to another story. Another guy who is related to me, wants to purchase a sports car that amounts to RM200k (maybe more...maybe less). His pay? I don't have a clue but was told that his expenses (rental, fuel, misc, bills) is being paid the parents. He is now close to 30. I wished I could help and advise but who am I lah kan?

How lah to talk to people like this? This is one of the problems of our people nowadays. We always want more than what we actually need. Sometimes, we just cannot see the problems but instead keep on lying to ourselves that we can afford it....

To be honest, when I decided to change for a new car, it took me 6 months to think it over. Plus, only after calculating my household budgets, incomes and expenditures that we took the decision to change. Only after things that I planned materialized, that I decided to change. It wasn't easy and I was a wee bit lucky as I was driving a Honda previously and hence, the value of the car is not as bad if you were to compare it to Protons or Nazas. I only spent RM1k for the purchase of the new car. Nothing more...and nothing less. Since the trade in value is quite high and the balance of the loan was minimal, I had significant balance of 'cash' that was used to purchase the new ride. Hence, the loan amount that I took was not as much as 90%.


Anyway, back to the story, I'm pretty sure, based on my knowledge, he will face problems in managing his finances.

If I could advice, I would only say, we must not live beyond our means. Sometimes, we have to realized who we are and accept things as they are. If you want more, you'll just have to work hard and smart for it. Find yourself some additional income to support your wants and needs. Read books about personal development and personal finance management. I don't wanna be seen as an idiot who wants to teach a fish on how to swim, but sometimes, some people just refused to accept things as they are....