Photo: Photo by CEphoto, Uwe Aranas / CC-BY-SA-3.0
Buying a car is one of the biggest expenses in the life of the average person. The only thing more costly is getting a house.
For some, owning a car can become a disastrous financial decision, as fuel and maintenance can eat up a severe part of their income. Add payments to the bank and the occasional technical mishap, and you've got a massive issue on your hands.
As The Sun reports, buying a car is the issue that caused a quarter of all bankruptcy cases in Malaysia between 2011 and 2015. We are talking about one in four people who had to file for bankruptcy after they bought a car, and the total number is of 28,374 cases in five years.
Other top reasons linked to insolvency in the country were housing loans, personal loans, and business loans. However, the cases involving the purchase of a vehicle outnumbered the rest of the cases presented above.
The same statistic made by the Insolvency Department of Malaysia revealed that individuals aged between 35 and 44 years old accounted for 35% of these cases, while people aged between 25 and 34 years old made up for 22% of the other bankruptcy cases in the five-year period.
Curiously, Malaysians aged under 25 only represented 1% of the requests for insolvency in the mentioned time frame. We believe that the age range most involved in these cases is unusual, because you would expect people aged over 30 to be more responsible in their financial decisions, while youngsters might not always be able to live within their means.
The Department of Insolvency's statistic did not specify if all the people involved in bankruptcy filings have requested a loan to purchase a car, or if they spent all of their savings on a vehicle and became unable to pay other expenses because of the vehicle.
If bank loans were the cause directly linked to the bankruptcy of individuals who bought a car in Malaysia and filed for insolvency, it would be reasonable for the 35 to 44 year-olds to form a larger segment of these cases.
We believe this because it would be more likely for a bank to approve a loan for this age bracket, as they have steady incomes and are presumed to be more responsible with their money.
What can you learn from this? Well, live within your means and refrain from borrowing money to buy a car if the installments would compose a significant percentage of your revenue.
It is common sense, but many people end up struggling to pay installments because they dream of owning a vehicle, and they cannot afford the associated costs. So always consider the cost of insurance, fuel, and basic maintenance before making a purchase decision.
As The Sun reports, buying a car is the issue that caused a quarter of all bankruptcy cases in Malaysia between 2011 and 2015. We are talking about one in four people who had to file for bankruptcy after they bought a car, and the total number is of 28,374 cases in five years.
Other top reasons linked to insolvency in the country were housing loans, personal loans, and business loans. However, the cases involving the purchase of a vehicle outnumbered the rest of the cases presented above.
The same statistic made by the Insolvency Department of Malaysia revealed that individuals aged between 35 and 44 years old accounted for 35% of these cases, while people aged between 25 and 34 years old made up for 22% of the other bankruptcy cases in the five-year period.
Curiously, Malaysians aged under 25 only represented 1% of the requests for insolvency in the mentioned time frame. We believe that the age range most involved in these cases is unusual, because you would expect people aged over 30 to be more responsible in their financial decisions, while youngsters might not always be able to live within their means.
The Department of Insolvency's statistic did not specify if all the people involved in bankruptcy filings have requested a loan to purchase a car, or if they spent all of their savings on a vehicle and became unable to pay other expenses because of the vehicle.
If bank loans were the cause directly linked to the bankruptcy of individuals who bought a car in Malaysia and filed for insolvency, it would be reasonable for the 35 to 44 year-olds to form a larger segment of these cases.
We believe this because it would be more likely for a bank to approve a loan for this age bracket, as they have steady incomes and are presumed to be more responsible with their money.
What can you learn from this? Well, live within your means and refrain from borrowing money to buy a car if the installments would compose a significant percentage of your revenue.
It is common sense, but many people end up struggling to pay installments because they dream of owning a vehicle, and they cannot afford the associated costs. So always consider the cost of insurance, fuel, and basic maintenance before making a purchase decision.
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