Updated: October 2026
Meta description: Compare new and used car costs, loan rates, monthly instalments, resale value, inspections, and what to check before you sign.
A used car is cheaper to buy because the first owner takes the biggest loss in value. Across 101 popular models, a three-year-old car is worth 66% of its original price on average.
The first owner pays for that 34% loss, and the buyer of a three-year-old car doesn't. Most banks charge a higher rate on a used car loan, and most used cars come without a warranty. CIMB, for example, lists an indicative EIR of 6.75% on a new national car and 8.15% on a used one. RinggitPlus compares new and used car loan rates from Malaysian banks, so you can see the rate and total repayment for each before you decide.
What A New And A Used Car Cost
Take a new car at RM80,000 and a three-year-old version of the same model with an asking price of RM55,000. Each has a 10% down payment. The 66% average puts the three-year-old version at RM52,800, so the RM55,000 asking price is RM2,200 above it. The flat rates are examples, with the used car rate set 1 percentage point above the new car rate.
With a flat rate, the bank charges interest on the full loan amount for the whole tenure, even after you've paid part of it back. That makes the flat rate look lower than the rate you really pay. The EIR (effective interest rate) is the yearly cost of your loan worked out on what you still owe, so it's the rate to compare.
| Cost | New car | Used car |
| Purchase price | RM80,000 | RM55,000 |
| 10% down payment | RM8,000 | RM5,500 |
| Loan amount | RM72,000 | RM49,500 |
| Illustrative Effective Interest Rate (EIR) | 4.33% p.a. | 6.18% p.a. |
| Flat rate for the same loan | 2.30% p.a. | 3.30% p.a. |
| Loan tenure | 7 years | 5 years |
| Monthly instalment | RM995 | RM961 |
| Total interest paid | RM11,592 | RM8,168 |
| Total loan repayment | RM83,592 | RM57,668 |
In this example, the used car costs RM25,000 less, and the loan is RM22,500 smaller. A seven-year used car loan at the same 3.30% flat rate would cost RM725 a month and RM11,435 in interest. That's RM270 a month less than the new car.A longer loan tenure means a lower monthly instalment but more interest. Choose the shortest tenure your budget can handle.
BNM's guide to the Hire-Purchase (Amendment) Act 2026 says hire purchase providers will use the EIR instead of a flat rate. In its example, a 3% flat rate over nine years equals a 5.5% EIR. Banks are due to finish switching by 31 December 2026, the domestic trade minister said in September. Other hire purchase providers have until 31 March 2027. Until your bank switches, its ads may still show a flat rate.
Check current rates on our new car loan comparison and used car loan comparison. The rates on our comparison pages are the ones the banks give us, and some are still quoted the old flat way, so ask the bank for the EIR.
How New And Used Cars Compare
| Features | New car | Used car |
| Loan rate (EIR, indicative) | BSN MyAuto from 4.11% p.a. | Higher than for a new car at most banks, and it rises as the car gets older |
| Down payment | Typically 10% | Typically 10% or higher |
| Depreciation | Fastest in years 1 to 3 | The first owner already paid for most of it |
| Warranty | Yes, manufacturer's warranty | Generally none |
| Ownership transfer inspection (B5, explained below) | Not required | Required before ownership transfer |
| Loan tenure | Up to 9 years | Depends on the bank and the car's age. Public Bank allows up to 9 years for a car up to 5 years old, and up to 7 years for a car of 5 to 8 years old |
| Servicing costs | Some carmakers include free labour, such as five years on the 2026 Proton X90 | Labour and parts are yours to pay |
| Risk of hidden defects | Low, and covered by warranty | Yes. The B5 checks the car's identity, window tint, and whether it was welded from two cars, so ask a mechanic to check the engine, gearbox, and brakes |
New Car Warranty And Resale Risk
A new car comes with a manufacturer's warranty, so the carmaker covers eligible repairs while it lasts.
A new car also loses value fastest in its first years. On the RM80,000 car in the cost example, the 66% average means it's worth RM52,800 after three years.
With the cost example's 10% down payment and seven-year loan, you'd still owe RM43,800 (rounded) after three years. With no down payment and a nine-year loan at the same 2.30% flat rate, you'd still owe RM56,700. That's RM3,900 more than the car is worth. You'd have to pay the difference yourself before the bank lets you sell it. A loan with no down payment means 100% financing, which only some packages offer, such as those for fresh graduates.
If you buy new, plan to keep the car for at least seven years. A bigger down payment also helps, because you owe less than the car is worth from the start.
What You Get Buying Used
Most brands quote an on-the-road price, which is the car's price plus road tax and registration fees, but not insurance. The Perodua Myvi 1.5 H costs RM54,610 before fees. Road tax (RM90), registration (RM150), and plate fees (RM50) bring the on-the-road price in Kuala Lumpur to RM54,900. A three-year-old Myvi keeps 78% of its original price, which is RM42,800, or RM12,100 less than a new one.
A higher rate on a smaller loan can still cost less in total. In the cost example, the used car's EIR is higher (6.18% against 4.33%). Its interest is still lower (RM8,168 against RM11,592), because the loan is smaller and shorter.
Which Cars Keep Their Value
Paultan's ranking of 101 models, updated September 2026, uses data from ISM Insurance Services Malaysia and MyCarInfo. A three-year-old Perodua Alza keeps 83% of its original price and the Bezza 82%. The Myvi and Toyota Veloz keep 78%, against the 66% average. The Volvo S90 keeps 40% and the Mercedes-Benz S580e 48%, among the eight models that lose value fastest. The eight also include three electric cars, the Neta V (44%), BYD Atto 3 (47%), and BYD Dolphin (51%).
An RM80,000 car that keeps 83% is worth RM66,400 after three years, and one that keeps 40% is worth RM32,000. That's RM34,400 more lost in value, so a car that loses value fast is a better buy used.
How Much The Bank Will Lend
The Hire-Purchase Act 1967 requires a deposit of at least one-tenth of the cash price. That's why banks lend up to 90% of a new car's price. The deposit can be cash, a trade-in car, or both. Maybank, for example, lends up to 90% for a new car and 85% for a used car, over up to nine years.
Public Bank lends up to 90% on cars up to 10 years old, but only up to 75% on cars 10 to 12 years. The loan also gets shorter as the car gets older. A six- or seven-year-old car might look cheap in the listing, but the shorter loan and repairs can reduce your savings.
Some banks offer 100% financing on graduate packages, so you pay no down payment. Bank Islam's Vehicle Financing-i GradONE is a Murabahah product, which is an Islamic sale contract. It lends up to 100% instead of the standard 90%. GradONE is open to graduates aged 20 to 30 with at least a diploma. They must work for a government body or an employer on Bank Islam's list. The bank pays the full price, so your loan is larger and you pay profit on the full amount. RinggitPlus lists these packages on its graduate car loan page.
The B5 (MV15) Inspection
A used car has to pass the B5 inspection, also called MV15, before ownership can move to you. The government appointed PUSPAKOM to inspect vehicles. The Ministry of Transport has also appointed other centres to do the B5, so you may not need to use PUSPAKOM.
The B5 matches the registration, chassis, and engine numbers to the car's documents, measures window tint, and examines the car for cutting and joining. That last check catches kereta potong, which are cars made by welding together parts from two or more written-off vehicles. They look normal from the outside, but PUSPAKOM calls them unlawful vehicles.
Either of you can book the inspection, so agree on who pays. At PUSPAKOM, it costs RM30 plus an RM5 booking fee. The transport minister has said the fees are the same at every centre. The report is valid for 120 days. If the car fails, the transfer can't go ahead, so make sure your sale agreement says you get your booking deposit back.
If you're buying with a loan, the bank needs a second report, the B7 hire purchase inspection. The law says you have to declare any defects it finds. The B7 includes the same identity check and window tint test, and adds the body, undercarriage, suspension, wheel alignment, brakes, exhaust emissions, and the speedometer. It costs RM60, and you book it with PUSPAKOM even if you do the B5 at another centre.
Neither inspection fully checks how the car runs. Ask a mechanic to look at the engine, gearbox, and brakes before you agree to buy. Try to be there during the inspection. If the seller wants to handle it without you, or tells you to skip it, that's a sign of a problem.
Who Owns The Car While You Pay It Off
The bank owns the car until you make your final payment. Selling the car in a way that cheats the bank can be an offence under section 38 of the Hire-Purchase Act 1967. The Vehicle Ownership Certificate (VOC) is the official ownership record. It replaced the old paper registration card from 2016, but people still call it the grant or geran.
Under the old system, most car loans used a flat rate. Lenders using the Rule of 78 counted more of the interest in the early months. If you settled early, BNM says you still owed more than you would on a reducing balance loan. CIMB's goodwill discount FAQ describes the rebate as smaller.
The Hire-Purchase (Amendment) Act 2026 came into force on 1 June 2026. The Act ends flat-rate pricing and the Rule of 78 for new hire purchase agreements. Lenders must move to EIR on a reducing balance, so they work out interest each month on what you still owe. As your balance drops, you pay less interest.
A loan signed before your bank switches stays on the old method, even if you sign after 1 June 2026. If you want to settle early, you and your bank can agree to work out the settlement amount the new way. The bank has to offer the new method first. The rest of the loan stays as you signed it. Ask your bank which method your loan uses. The Association of Banks in Malaysia's March list of target dates shows the month each bank aimed to switch.
What To Check Before You Sign
Quotes From Banks
Get quotes from two or three banks before you go to a showroom. Dealers work with panel banks, which are banks they have an agreement with. A quote in your hand gives you something to negotiate with. Compare car loan rates and check the EIR on each quote, not the flat rate.
The B5 Report And Service History
Check that the car has passed the B5 before you pay the balance. Ask the seller for the service history.
Credit Reports
Get your own CCRIS report from Bank Negara Malaysia before you apply for the loan. The report is free on the eCCRIS portal, and it shows your repayment history at all banks. The guide to getting your CCRIS report explains how to register and what banks see.
Private credit reporting agencies such as Credit Bureau Malaysia, CTOS, and Experian have their own reports about you. Credit Bureau Malaysia charges for its MyScore report. CTOS gives you two free basic reports a year that don't include CCRIS records or the CTOS Score. Its reports include court cases, bankruptcy, and business records, which CCRIS doesn't have. Experian's basic report is also free, but its report with a score and CCRIS records costs money. Check your reports for old missed payments before you apply.
The Loan Agreement
Read the loan agreement before you sign, including the early settlement clause. Our guide to what to check before you sign a car loan lists the other things to look for. If your loan uses the new reducing balance method, paying it off early saves you interest. If it's an older Rule of 78 loan, ask your bank about its goodwill discount for early settlement. CIMB, for example, offers it if your account isn't more than 90 days behind, under legal action, or being restructured.
Insurance
Arrange your car insurance before you drive the car away. Your No-Claim Discount (NCD) lowers your premium. It grows each year you don't make a claim, up to 55% off after five claim-free years. The NCD belongs to you, not the car. You can transfer it from your current car to the new one if both are in your name.
Which One Suits You
A new car makes more sense if:
- You plan to keep it for at least seven years
- You want a warranty covering early repairs at no cost
- You can pay the monthly instalments comfortably
A used car makes more sense if:
- You can't comfortably pay a new car's monthly instalments
- The model you want loses value quickly, so the used price is much lower
- You're buying something popular and reliable with spare parts that are easy to find
Keep some savings for repairs in the first year, because most used cars have no warranty.
Before you decide, use the calculator on the car loan comparison page to work out your monthly instalment. Follow the 20/7/20 rule. Put down at least 20%, borrow for no more than seven years, and spend no more than 20% of your take-home pay on the instalment. The cost example above uses the 10% minimum down payment. With 20% down on the same RM80,000 new car, the loan is RM64,000. Over seven years at the same 2.30% flat rate, the monthly instalment is RM885.
Fuel, car insurance, road tax, and servicing aren't part of those limits. The What Car Can You Afford article shows how to match a car to your salary.
Frequently Asked Questions
Can I get a car loan if I've never taken one before?
Yes, but having no credit history works against you, because banks can't judge how reliably you repay. Banks prefer permanent jobs, so contract or part-time work makes approval harder. A credit card you pay on time builds a record, and a higher down payment helps. Compare the dealer's offers with a quote from your own bank. If you're a fresh graduate, ask about graduate car loan packages.
What happens if the bank rejects my application?
Common reasons include a debt service ratio that's too high, a poor repayment record on CCRIS, or income below the bank's minimum. A high debt service ratio means your existing loans and credit card payments already take up too much of your income. If one bank rejects you, another may not. Before you apply again, pay any overdue amounts and consider a larger down payment to reduce the loan.
Is there an Islamic version of a car loan?
Yes. Most Malaysian banks offer Islamic car financing under structures such as Al-Ijarah Thumma Al-Bay' (AITAB) and Murabahah. The bank earns a profit rate instead of charging interest. The monthly payments and loan period work much like a conventional hire purchase, but the contract follows Syariah principles. Bank Islam's Vehicle Financing-i, for example, used the Rule of 78, and new customers now move to a reducing balance. Ask how your profit is calculated and what rebate you get if you settle early.
