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Malaysians, here’s a tip for you!

July 11, 2009

In the name of Allah, the Most Gracious, the Most Merciful.

I read a book called “Top Money Tips for Malaysians” the other day. I must admit, it was one of the best financial guide book i have ever read. One of the tips that really caught my attention was the “How to get your first car for free” tip. I went “Oh, shoot!”. It was too late for me since I already bought my first car last January. But hey, you know what, I will still give myself a pat on the back for cleverly resisting myself from buying the RM60,000 Persona SE and settling on buying the RM38,000 second-hand Waja instead. A good deal I must say and the credit goes to my dad for his brilliant chaffering skill.

Anyway, here’s the tip given by the author KC Lau:

“Before making a down payment for a new car purchase, please consider getting a used vehicle. If you are a responsible driver, apply the following strategy and you will be able to get your first free car free of  charge.

The secret is to take advantage of the no-claim discount (NCD).

No Claim Discount, or NCD is  a discount given to the policyholders upon renewal of their motor insurance if no claims arises or is made from the policy of continuous coverage of 12 months. The discount given is based on a fixed rate provided by Persatuan Insurans Am Malaysia (PIAM) Motor Tariff.

NCD For Private Car

Period of Insurance Private Car
After 1st year 0%
After 2nd year 25%
After 3rd year 30%
After 4th year 38.33%
After 5th year 45%
5th year onwards 55%

The tactic here is to use a very cheap old car and pay low insurance premium for the first five years. When you’ve reach the maximum no claim discount, only then would you pursue for your dream car.

Example:

Suppose you are buying a 15 year old proton saga 1.51 (automatic, power steering)

Cost: RM5,000 (pay CASH)

Insurance: RM277.50 (comprehensive)

You could consider buying a 3rd party insurance as it may work out cheaper. Worried about getting an old car? Believe me, the maintenance cost for the old car is much lower than the interest payment for a new car. After you use the old car for 3 to 5 years, buy your dream car.

Example:

Buying a new Honda Civic 1.8 iVtec

Cost: RM 113,800

Insurance: RM 3,225.90

After a NCD, you get a 55 percent discount. This means you pay RM 1451.65.

You save RM 1,774.25 every year onwards for car insurance premium alone!

RM 1,774.25 x 3 = RM 5,332.75

In three years time, you already save RM 5,322.75 assuming that you stil enjoy the full NCD, provided that you don’t make a claim. So, you can now consider your 1st car FREE!”

There you go! Interesting eh? So, those of you who just graduated and would like to buy a new car (or learn how to manage your precious money), this book is definitely for you. Other tips that I found to be useful are:

  • 50 things you can do to reduce expenses.
  • 25 things you can do to increase your income.
  • How you can be a millionaire in 12 years.
  • How to earn passive income.

p/s: Now every time I saw an old Proton Saga on the road, I went “Maybe that guy has read the book too!”

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2 Comments leave one →
  1. deeyana permalink
    July 18, 2009 5:23 pm

    Good one… i might consider to buy a used car first..

  2. leolumpy permalink*
    July 20, 2009 11:49 pm

    yeay, glad i could help! so..can i expect you driving a new(second hand) car anytime soon? i would like to request for a free ride if that’s a true case. hehe

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