2020 Honda Civic – What's the minimum monthly salary to get a loan?

Eric · Oct 06, 2020 11:48 AM

Ever since Honda Malaysia introduced the tenth-generation Honda Civic a few years ago, it proved to be a very popular model. The facelifted Civic was introduced earlier this year, keeping it fresh for a couple more years.

It's an aspirational car for a lot of young buyers, attracting many who can barely afford the car.

So in this article, we will take a look and see how much you need to earn before you can afford to buy and maintain a Honda Civic.

Taking the entry-level Civic 1.8 S (RM 109,326, on the road, without insurance) as an example, the monthly repayment is roughly RM 1,100 per month, assuming 2.25% interest rate with a 9-year loan - not the recommended loan tenure but if you insist on stretching....

Following the recommended guideline that your car's monthly repayment should not exceed 20 percent of your monthly salary, you’ll need to bring home a net salary (after deducting relevant taxes, EPF, Socso etc) of at least RM 5,500 a month before you can afford an entry-level Civic.

With insurance, maintenance, tyres and other associated running cost, your car-related expenses thrown in should not exceed 30% of your total salary.

If you’re eyeing the top-spec Civic 1.5 TC-P which retails for RM 134,661 (on the road, without insurance), you’ll need to fork out roughly RM 1,350 every month 2.24% interest rate, 9-year loan tenure.  

So you will need to have a net salary of at least RM 6,750 before you sign that dotted line.

Keep in mind that the interest rates are always changing. It's very low at the moment. You will need to check with your respective banks to get the latest rates. Also, the selling price indicated here is only valid until 31-December 2020 as it is inclusive of the government's Penjana initiative exemption on sales tax.

Plus, the monthly repayments are based on the maximum 9-year loan – something that we don't recommend.

It's more prudent to take the the shorter 5-year loan tenure.

In the case of the Civic 1.8 S, opting for the 9-year loan means you’ll be paying nearly than RM 20,000 in interest charges alone, versus slightly RM 10,000 if you opted for a 5-year loan.

The problem with 9 year loans is that the tenure is so long, the value of your car is depreciating faster 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.

 RM 100k loan for 9 years incur over RM 20k in interest charges

How much to budget for maintain a Honda Civic?

Honda Civic (estimated budget per month)
Model 1.8 S

1.5 TC-P

Tires (RM)

70/month

2-year: ~1,600

120/month

2-year: ~2,800

Avg service cost (RM)

60

(~700/year)

60

(~680/year)

 

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