It is a common sight to see used car dealers with rows and rows of cars at their compound. If you are thinking of buying a car, whether it is for personal or work use, you might at some point considered buying a used one.
Why would you consider this?
Car ownership in Malaysia is generally very simple and straightforward. Basically, what you need is to find the car you like, put on a downpayment, get a loan and if that is approved, you can drive the car home. But is it really that easy? Let us break it down to you. Similarly to the application for anything else, as long as you have the proper documentation with you, it should be a breeze. But let’s first weigh the reasons why you should buy a used car.
- It’s cheaper – If you compare the same models, used cars are cheaper than new ones. But that would also mean that you are subjected to the wear and tear of the vehicle. Be sure to choose carefully.
- More variety – Used cars give you more options as some dealers import them from overseas. As such, you might be able to find models that are not locally available.
As the Buyer
To buy a used car, you can do so through various platforms. This include:
- C2C sites like Mudah, Carousell or Carlist. When you check out the ads here, they are mostly listed by private sellers while there are a lot of used car dealers too. Be sure to ask in detail before deciding.
- Used car dealers – You can find them along main roads which is quite common. All you need to do is to walk into these outlets, speak to the staff and consider your options. In fact, you can also ask them to find a certain model if you have something in mind.
- Direct Negotiation – You can buy a used car from someone you know or through a common friend.
- Car boot sales – You can buy a used car from car boot sales that take place at certain days. There is one around PJ New Town each Sunday where private owners drive their cars there for sale. You can practically see the real vehicle, discuss the price with the owner and make a deal.
- Car Auctions – Each month, there are car auctions being held by banks to sell of cars that owners are unable to pay their loans.
What do you need?
To buy the used cars, you will need to have the following:
- A healthy credit rating. This is so that you will have no problem getting a loan from the bank. In most cases, buyers do not pay the full amount in cash (unless it is only a few thousand ringgit). If you are buying a car that is RM15,000 and above, you would be applying for a loan. To get a loan, you must not have any problems with bankruptcy and such.
- A steady income – If you are a salaried worker, you will need to have proof that you have a monthly income (to show that you can service the loan). If you own a business, you have to show evidence that you have enough to pay back the loan.
- Downpayment – In most cases, the bank will require you to have a downpayment. This is usually 10% of the total vehicle price. You would need to have this amount which is a pre-requisite before you apply for the loan.
- Documents – All the above must come with proper documentation such as your payslips, EA form, Income Tax declaration, etc.
As the Seller
If you intend to sell off your used car, the process is different from buying. Ideally, you should have paid off the car, which means you are the fully legitimate owner of the car. In doing so, you can sell it at any price you desire (according to the market rate). You need to ensure that you have all your documents ready before you can sell your car to a buyer. This could be a private buyer or a used car dealer. Among them, you need to be aware of the following:
Used car dealer
This process can be quite straightforward. All you need is to have your Car Registration Card (pink in colour) and that would be sufficient. Visit any of the dealers and tell them you want to sell your car. They will then make an evaluation of the price. If that is agreed, they will then process the purchase. There are 2 major ways this is done.
- Paid upfront – They will pay you the amount agreed. However, they will not change the ownership until the car is sold to another buyer. This is to ensure that the car has minimal owners.
- Consignment – They will let you sign a letter of undertaking where they will only pay you the amount when the car is sold. This should only be done in caution as it might be risky and it might take too long which causes the price to fluctuate.
If you are selling your car to an individual, like a friend or through your own, then you need to process everything yourself. This means that the buyer will need to apply for the loan before the car exchange hands. Basically, what this means is that:
- You both agree on a price. The buyer will then approach a bank to get the loan. This amount must be approved by the bank as they will not allow you to price the car too high. The bank will have a standard valuation system to gauge the price of your vehicle.
- Once the loan is approved, you will submit your Car Registraiton Card to the bank. As the loan is active, the bank is the current owner of the car and not the buyer.
- You then wait for the amount to be credited into your account by the bank. After that, you can surrender the car and all related items like car keys, spare keys, owner’s manual to the new buyer.