How Did I Afford My Dream Car ( A Mini Cooper)

Thursday, February 27, 2020

Dear a&a,
As you know in Malaysia, the price of a car is crazy! Let alone a continental car.

If you know mummy (I’m not sure if I still am by the time you read this) but up till today; I’m very thrifty and calculative.

I’ve always wanted to get a Mini Cooper (and your dad too) but our subconscious mind will never allow it. 

After all it is a depreciation asset and it’s really not a need: it’s a want. A need is a car like mvyi that brings you from point a to b. A mini: is seriously a want.

But then again; it was a car that we always loved. It brings us so much of happiness and we love going on our dates in it (without you girls!) 

Currently we have an old 2007 mini (also bought second hand years ago) and I can’t seem to be able to replace it with something else. 

However; it was already giving us problem so we had to change it as that would make the most financial sense. 

So the choice was; to get a mini or a mvyi. 

After few months (a year to be exact) of sleepless nights; we finally decided on a newer mini (but still second hand). 

Why second hand? Coz my subconscious and conscious frugal mind will not allow a new one.

In Malaysia; the mini I want; if I got a brand new; will cost me about rm 250’000. A second hand one we are getting (directly under Sime Darby preowned) is RM 108’000. It’s a 3 year old car; and it’s still under free service and warranty; it just made more sense to get this. 

It had all the bells and whistles of a new car. Everything perfectly new and the technology is up to date. The only thing I'll probably miss is the new car smell. But I don’t need thatšŸ¤£ since that smell is an addiction so better don’t start smelling it hehe.

So anyways; everything is perfect. But still deep down; your dad and I just can’t justify paying for itšŸ˜“ we had trouble calculating wether we should pay cash, or take a loan. We have the cash; but we still wanted the best deal. After a lot of calculating, we finally decided to take a loan.

You see; with a 3.4% interest for used car, with 7 years loan: we roughly pay 1500 to the bank every month. That basically means we will be paying about RM 126’000 for the car ( extra RM 18k to the bank).

Now if we were to pay cash for the car; we won’t be paying that 18k. But we will be losing RM 56’000 that we get from our investment (6%). This is assuming our return is 6% (based on ASN return). But the truth is; most of our returns are more than that and so because of that, it made more sense to take a loan. 

Even if you say maybe why not pay car cash, and bank in 1500 into the investments every month for 7 years; that will still only give a return of RM 159’000 (profit RM 51’000) still rm 5000 lesser. 

Sure it’s not much difference. But I prefer to have liquid money in hand in case I need it. Also; since I’m putting this under the company; the company also gets tax rebate; therefore it’s more beneficial by taking a loan.

But if you were working as an employee, and not putting it under the company; than you can try option 3. Pay cash, and invest the monthly repayment. It’s always better to be debt free as an employee since you don’t get any tax benefits either way.

Or if you want to go crazier, do like us. 

We always made sure we had 3x of the price of the car. Over the 2 years; because we really wanted this car; we had saved up 300k to purchase this car. 

What we did was; with that money; we bought REITs in Singapore (sgd 100k value) that gives an average dividend of 5-6% annually (inflation adjusted). That translates to roughly SGD 6000 per year = SGD 500/month = RM 1500/monthly which pays for the loan. 

It also means that no matter what; I’ll be able to afford a Mini Cooper all my lifešŸ’ŖšŸ¼  

It’s crazy I know; but this is how you purchase your wants. Get an investment to pay for it. That way; you will never have to work for your luxuries again. Try it:) 

Love;
Mummy

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