Buying a 2021 Toyota Innova? Here's the minimum salary required for a loan

UMW Toyota Motor has just announced the official prices of the 2021 Toyota Innova facelift in Malaysia. Prices start from RM 111,622 for the entry-level Innova 2.0 E variant and tops out at RM 129,667 for the Innova 2.0 X variant.

Although there is a slight increase in prices across the board for the updated Innova, it is justifiable as UMWT has improved the safety and features of its people mover.

Now, you might be thinking what’s the minimum salary needed in order to apply for a loan. Well, you've come to the right place as we will show you how much is the minimum monthly salary required to purchase the Innova.

How much do I need to make?

Let's take the cheapest variant of the Innova, the 2.0 E, as an example. Starting from RM 111,622 (on the road, without insurance), you are looking at a monthly repayment of around RM 1,120, factoring in a 2.27% interest rate with a 9-year loan.

Based on the recommended guideline that you should not be paying more than 20% of your monthly salary on the car's monthly repayment, that's a minimum net salary of at least RM 5,600 a month.

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

However, if you want the range-topping Innova 2.0 X that is priced from RM 129,667, then you will need to put aside around RM 1,300 a month for monthly repayment. In other words, you’ll need to have a minimum net salary of RM 6,500 a month.

Below are the monthly installments for the 2021 Toyota Innova facelift for 5-, 7-, and 9-year tenures. These rates have already factor in an interest rate of 2.27%

That being said, interest rates are always changing. Given our current situation, interest rates are very low but do check with your respective banks for the latest rates.

Plus, the prices quoted here are exempted from SST which are only valid until 30-June 2021.

Don’t take the 9-year loan option

It’s definitely worth repeating here that we don’t recommend taking the 9-year loan option.

The shorter 5-year loan tenure is a wiser choice.

Sure, you would be paying a bit more than the 9-year tenure with a monthly repayment that ranges from RM 1,860 (Innova 2.0 E) to RM 2,170 (Innova 2.0 X), but there are benefits to this.

To put it simply, 9-year loans aren’t recommended because of the higher interests. Opt for a 9-year tenure and you’re paying between RM 20,520 to RM 23,840 in interests alone. Meanwhile, getting the shorter 5-year loan means you’re only paying between RM 11,400 to RM 13,240 in interests – considerably less than the 9-year tenure.

The next issue with 9-year loans is that since the tenure is so long, the value of your car is depreciating faster than your ability to pay off the loan. Yes, even the king of resale value won’t save you from this.

There’s also the unfortunate situation where you could be forced to sell the car or claim total loss from your insurance. You would have to top up more money before you can settle the loan because the outstanding balance is more than your car’s market value.

Do keep this in mind before agreeing on a 9-year loan.