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MY eldest son has been in the working world for over a year now and staying on his own. During his recent visit home, he popped a question about whether he should upgrade his car. He has been using one of our family cars for a while now and was thinking of buying one of his own. Thankfully, he checked with me first.

I took the opportunity to remind him about prudent financial management in the early years of working. I talked to him about the pros and cons of buying a new car. I put it to him in a “three C” analysis — of comfort, convenient and cost. It’s a fine balance. I told him that he needed to make a choice and can’t have it all. So we sat down and analysed each of the “C’s”.

No doubt, a new car would bring maximum comfort. All that fancy technology offered by the latest models would make young people lose any sense of rational thinking. Then there’s also another type of pressure — peer pressure.

Imagine this scenario: Many of your friends and neighbours have upgraded to the latest models. They’ve even offered you a ride and you’ve accepted on a few occasions. How did it feel being driven in a new car?

The cold air-con, the smooth ride and the hi-tech on-board gadgets made you drool. Suddenly your car is no longer good enough. You start to hear noises not heard before. You convince yourself that “If he can get it, so can I!” Does this sound familiar?

Unfortunately, many buyers stretch their loan application to the maximum. They pay a very high cost for temporary comfort. A brand new car looks and smells good, but it’s never worth the price, said self-made millionaire and best-selling author, David Bach. “Nothing you’ll do in your lifetime, realistically, will waste more money than buying a new car. It’s the single worst financial decision millennials will ever make.”


The biggest cost is the depreciation. In general, cars depreciate 20 to 30 per cent per year. The moment it’s rolled out of the showroom, the value is already being lost slowly. If that doesn’t kill your finances, think about the interest rate. It may look small in terms of percentage, but I suggest you view it in terms of ringgit. You’ll be surprised at how much extra you’ll be paying throughout the loan period.

Coupled with the higher insurance cost due to higher car price, many people struggle to make their payments. Yes, they get to enjoy all the comforts of a new car, but at the same time they have to cut down on many of their other needs. Is it worth it?

After the chat, my son looked relieved. He thanked me for sharing my thoughts and said he’d continue to use the family car as it’s already paid off. We hugged and parted ways. Deep inside I’m relieved that he could understand the fine balance between comfort, cost and convenience.

Zaid Mohamad coaches and trains parents to experience happier homes and more productive workplaces. Reach him at [email protected].

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