2020 Honda City – What’s the minimum monthly salary to get a loan?

Eric · Oct 18, 2020 09:00 AM

A couple of weeks ago, Honda Malaysia finally launched the all-new 2020 Honda City, replacing the GM6-generation model that was introduced back in 2014.

Unlike the aspirational Honda Civic, the Honda City is aimed a more price-conscious crowd.

In this article, we will take a look and see how much you need to earn before you can buy and maintain a Honda City.

How much do I need to make?

Take for example the entry-spec Honda City 1.5 S (RM 74,191, on the road, excluding insurance), the monthly repayment is roughly RM 740 a month, factoring in a 2.27% interest rate with a 9-year loan.

As such, following the recommended guideline that you should not be paying more than 20 percent of your monthly salary on your car’s monthly repayment, you’ll need to bring home a net salary of at least RM 3,800 a month.

Sure that new car is swanky and all, but you should not neglect its maintenance

Throw in the cost of insurance, maintenance, tyres, and other associated running cost, your car-related expenses should not exceed 30 percent of your monthly salary.

But that’s just the entry-level City 1.5 S.

If you’ve been eyeing the City 1.5 V (RM 86,561, on the road, without insurance), you’ll need fork out roughly RM 870 a month.

Keeping in mind in the same factors as above, you’ll need to have a net salary of at least RM 4,500 before you sign that dotted line.

With that said, interest rates are always changing. Given our current situation, interest rates are very low, but you will still need to check with your respective banks for the latest rates. On top of that, the prices we quoted here are only valid until 31-December 2020, as it includes the Government’s Penjana sales tax exemption incentive.

Don't take the 9-year loan option

We’ve said this once, and we’ll say it again. We don’t recommend taking the 9-year loan option.

It’s wiser to take the shorter 5-year loan tenure.

In the case of the City 1.5 S, opting for the 9-year loan means you’ll be paying roughly RM 14,000 in interest charges alone, as opposed to RM 7,500 if you opted for the shorter 5-year loan.

The problem with 9-year loans is that the tenure is so long, the value of your car is depreciating faster than your ability to pay off the loan.

You could also end up in a situation where if for whatever reason, you are forced to sell the car or claim total loss from your insurance, you will have to top up more money before you can settle your loan because the outstanding balance is more than your car's market value.

So keep that in mind before signing for a 9-year loan.

How much to budget to maintain a Honda City

Honda City (estimated budget per month)
Model 1.5 V

1.5 S, E

Tires (RM)

30/month

2-year: ~800

40/month

2-year: ~1,000

Avg service cost (RM)

60

(~730/year)

60

(~730/year)

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