Car upgrades tend to pick up before major holidays. Showroom traffic goes up, promotions get louder, and it’s easy to start noticing newer cars around you. Suddenly, the five-year-old sedan you’ve been driving starts to feel a bit tired ahead of a long balik kampung drive.

The issue is that upgrade decisions are often made on monthly instalments, not the total cost. Trading in your current car for a new SUV can quietly reset you into another nine years of repayments, and the “only RM300 more a month” pitch rarely tells the full story.

Your Current Loan Isn’t As Paid Off As You Think

If you’re driving a five- to seven-year-old car, it’s easy to assume you’ve built up a decent amount of equity by now. After all, you’ve been paying for years. But your loan balance is often higher than expected, and this comes down to how hire purchase financing works in Malaysia.

Bank Negara Malaysia has abolished the Rule of 78 interest calculation for new hire purchase loans. Under the old system, interest was heavily front-loaded, so in the early years, most of your monthly payments went towards interest rather than principal. Loans issued under the new rules spread interest evenly over the tenure.

If your car loan was taken out before this change, you’re likely still on the old Rule of 78 system. By year five of a nine-year loan, you may have paid a substantial amount, but your outstanding balance can still be uncomfortably high.

Say your Honda City is worth RM40,000 on the market, and when you check your settlement amount, it says RM38,000, that means you’ve got  RM2,000 in real equity for a new car downpayment, not exactly the trade-in windfall you were hoping for.

There is a silver lining. Because of the regulatory shift, some banks now offer early settlement rebates or “goodwill discounts” for loans issued under the old system. These aren’t openly advertised, so before trading in, call your bank and specifically ask whether any rebate applies to your loan.

How Zero Downpayment Deals Really Work

Zero downpayment doesn’t mean the cost disappears. It usually means the amount you would have paid upfront is added to a larger loan instead.

When dealers push these offers, they typically inflate the invoice price to justify a higher loan amount. You end up borrowing more than the car is actually worth, which pushes your monthly payment up. Stretch the loan long enough, and you’ll usually be paying a higher interest rate too.

If you have two years left on your current loan, trading up resets the clock entirely. Your debt-free date moves from 2027 to 2034. That’s seven extra years of car payments. This matters even more if you’re planning to buy a home in the next few years. That RM1,218 monthly car payment could knock RM200,000 or more off your eligible home loan. Banks assess your Debt Service Ratio when you apply for a mortgage, and every ringgit tied up in car repayments is a ringgit that can’t go towards housing.

What You Can Improve Without Buying A New Car

Before jumping to a new car, it’s worth asking why you want one in the first place. Most people aren’t dealing with a broken-down vehicle. They want better tech, more comfort, or something that feels fresh. All of that can be addressed without a new loan.

A wireless Apple CarPlay or Android Auto head unit costs around RM1,500 installed and makes your 2019 dashboard feel current. If the ride quality has degraded over the years, worn absorbers and suspension mountings are usually the culprit. Budget around RM2,500 for replacements, and you’ll restore the smooth ride your car had when it was new.

You want your car to look good too, especially if you’re parking next to your cousin’s new SUV at the kampung. A full professional detail with ceramic coating runs about RM1,000, and quality window tint replacement adds another RM1,500. Your sedan will look showroom-fresh without wrecking your finances.

And if boot space is genuinely the issue, a quality roof box and rack system costs around RM2,000. That’s your balik kampung luggage problem solved without trading up to an SUV you’ll be paying off until 2034.

All in, a full refresh comes to about RM8,500. Call it RM10,000 with a buffer for unexpected extras.

When A New Car Is The Better Option 

None of this means you should never buy a new car. Some situations genuinely justify an upgrade, and it’s worth being honest about which category you fall into.

In some cases, repair costs outweigh the value of keeping the car. If your mechanic quotes RM15,000 for a gearbox rebuild or engine work and your car is worth RM25,000, replacement starts to make sense. Repairs that exceed half the car’s value are usually a sign it’s time to move on.

Safety can also justify an upgrade, especially if you’re moving from an older car with minimal safety features to one with modern active safety systems. Features like Autonomous Emergency Braking and multiple airbags can’t be retrofitted to older cars. If you’re upgrading from a basic two-airbag setup to a vehicle with modern safety tech, that’s a reasonable trade-off for many families, especially with young children in the car.

And sometimes your family simply outgrows the car. A sedan seats five; if you regularly transport more than that, an MPV is a necessity, not a luxury. But be honest with yourself, needing occasional extra space for festive travel doesn’t mean you need seven seats year-round. That’s what roof boxes are for.

The Real Cost Comparison

With all of that context, here’s how the two options stack up over nine years:

Option	Monthly Payment	Total Over 9 Years
New SUV — RM100,000, 3.5% p.a. flat rate, 9 years (RM0 upfront)	RM1,218	RM131,500
Keep current car + RM10,000 refresh (RM10,000 upfront)	RM0	RM10,000
Difference		RM121,500

Over nine years, that difference adds up to about RM121,500. That’s money that could stay available for other priorities, instead of being committed to another long car loan.

Choosing Between A New Car And A Refresh

The decision comes down to whether your issues can be solved with upgrades or whether the car no longer meets your needs. If your car is mechanically sound but feels tired, dated, or cramped, a refresh addresses most of the issues for a fraction of the cost. A new car makes sense when you’re facing major repairs, genuine safety concerns, or a family that no longer fits, not when you’re feeling the pressure of festive comparison and dealer marketing.

Keeping your car? Make sure you’re earning cashback on petrol for the balik kampung drive with a petrol credit card. Upgrading anyway? Get car insurance quotes before committing so you’re not overpaying on the new ride.

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