Applying loan for the 2021 Toyota Yaris? Here's the minimum salary required

Just recently, official prices of the 2021 Toyota Yaris have been released. It is priced from RM 70,940 onwards for the base Yaris 1.5 J, before topping out at RM 84,808 for the Yaris 1.5 G. Currently, the Yaris competes against the Honda Jazz, but it will be replaced with the Honda City Hatchback in 2021.

In this article, we will take a closer look and see how much you need to make each month before you should apply for a loan to purchase the Toyota Yaris.

How much do I need to make?

The Toyota Yaris has a starting price of RM 70,940 (on the road, without insurance), meaning that the monthly repayment is roughly RM 710 a month, factoring in a 2.27 percent interest rate with a 9-year loan.

Following the recommended guideline that you should not be paying more than 20 percent of your monthly salary for your car’s repayment; you’ll need to bring home a net salary of at least RM 3,600 a month.

As for the range-topping Yaris 1.5 G, it is priced from RM 84,808, which means that the monthly repayment is roughly RM 850 a month. You’ll need to have a minimum salary of at least RM 4,300 a month for the Yaris 1.5 G.

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.

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

It doesn’t take a financial specialist to tell you this: Don’t take the 9-year loan option. It’s a much wiser choice to opt for the shorter 5-year loan tenure instead.

For comparison, if you opt for a 5-year tenure for the Toyota Yaris, the monthly repayment is roughly RM 1,180. That figure is a tad bit more than the 9-year tenure, but there are benefits, as explained below.

Part of the reason why 9-year loans are not recommended, it’s because of interests. If you went for the 9-year loan option, you’ll be forking out almost RM 13,000 in interests alone. However, if you opted for the shorter 5-year tenure, the interest amount comes down to roughly RM 7,200.

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 each month to maintain a Toyota Yaris