Advice you can't miss if you borrow 300 million to buy a car
Used cars, with many famous brands such as Mercedes, Toyota, Honda, Nissan, Ford,... are being sold for about 300 million VND. Many people think that they only need about 100 million VND, then borrow another 200 million VND from the bank to have a car. However, many people later realized their mistake by borrowing money to buy very old cars because the cost is not low and suddenly they get into debt.
Thought it was cheap but turned out to be expensive
Mr. Do Lan in Van Quan (Ha Dong, Hanoi) said that in mid-2017, seeing that the car was cheap, he bought a Ford Escape 2.3L, manufactured in 2005, for more than 300 million VND. He thought it was good, but as soon as he bought it, he had to spend another 30 million VND on it. Some old, expired components were left as they were by the previous owner, or replaced with floating parts such as: spark plugs, air filters, oil filters, fuel filters, air conditioners, etc. had to be replaced.
Not to mention that during the trip, many components malfunction, causing the car to have problems. The gearbox and chassis also have problems. If left for a long time without replacing and redoing, there is a risk of affecting other parts. If all of them have to be replaced, it will cost nearly 100 million VND more. If not replaced, the car will not run stably. I thought it was cheap to buy, but it turned out to be expensive.
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| Borrowing money to buy a used car: Inviting debt to yourself. |
Not to mention he had to borrow 200 million VND from the bank to buy a car with an interest rate of 8.5%/year, fixed for the first 2 years. With this amount of money, he had to pay more than 5 million VND per month. Suddenly he was in debt, just because of the "burning dream of upgrading to a new car".
According to auto engineers, used cars, currently priced under 300 million VND, are usually manufactured from 2005 or earlier. Up to this point, after being used for over 13 years, there will be many problems.
Old cars, the frame and chassis will be rusty and worm-eaten. Brakes, steering systems, etc., if not well maintained and up to standard, are at risk of unsafe malfunction.
The biggest advantage of buying a used car is the low price. The older the car, the cheaper the price. Along with that, taxes and fees are also significantly reduced. Buying a used car when changing the name only has to pay a registration fee of 2% of the remaining value, compared to buying a new car which has to pay 10-12%, saving a fair amount.
But used cars that have been running for more than 10 years have a lot of spare parts and components that need to be replaced. The car is too old, and spare parts are not easy to find. Finding replacement parts is not easy, you may have to buy them at high prices or accept using old, floating spare parts with uncontrolled quality. Meanwhile, with cars, just neglecting to repair broken or worn parts will also cause many unpredictable effects.
According to auto expert Nguyen Minh Dong, Director of Viet-Duc Technology Company, in Vietnam, cars are often not properly maintained by their owners. Many components are not replaced when the time comes, or even replaced with low-quality, floating parts, so many cars quickly deteriorate, not ensuring quality and safety.
Furthermore, with current car manufacturing technology, every 3-5 years there is a new car model, or a new version with many modern features, so cars produced before 2005 are now 3 generations behind.
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| You should only take out a car loan when you have a higher income and can't spend all your monthly expenses, or buy a car for business purposes. |
The burden of raising a car
Therefore, when you are planning to buy a car from a very old model (for example, it is 2018 and you buy a car from 2005 or 2006), you need to consider. Because it is very likely that the "owner" will have to pay a large amount of money for maintenance and repair. In fact, the cost of an old car in the long run will be more expensive than a new car. If you borrow money from a bank to buy a used car, you should consider it even more, because in addition to the monthly cost of the car, you also have to pay the principal and interest. Maintaining such an old car is extremely expensive, and people who do not have a car, have little money, and want to "upgrade their car" need to calculate carefully.
According to many experts, with 300 million VND, it is possible to buy a new car, such as small models, in the A-class segment, produced and assembled domestically. However, if you still have to borrow about 200 million VND to buy a car, you should consider it, because the monthly cost of a car is not small.
Banks often advertise low interest rates of 8-8.5%/year, but they increase fees such as credit opening, credit management fees, notary fees, early repayment fees... These fees usually have to be paid immediately so customers have to be careful. In the end, the interest rate can be 10% or more.
When borrowing money and completing procedures to buy a car, if the customer mortgages the car, the buyer must buy insurance designated by the bank. This is also a significant expense.
Difficulties usually do not arise at the beginning. It is only when the customer has transferred his equity (usually 30%) that there may be problems. At that time, the bank will have a loan approval form to send to the car dealer. Depending on each bank, the fees will be notified or not. When the seller brings the car to register and sends the appointment letter to the bank, the customer will be notified of all the fees to be paid. This will be a significant amount that buyers should consider.
Borrowing 200 million VND with an interest rate of about 8.5%/year will also cost more than 5 million VND per month in the first year, not including fees and insurance. In addition, the cost of maintaining the car is also about 5 million VND/month, including parking, gasoline, road fees, etc., totaling 10 million VND/month. Families with an income of 20 million/month should consider. You should only borrow to buy a car when you have a higher income and cannot spend all your monthly expenses, or buy a car for business purposes.