'Longer repayments won't solve high car price woes'
Guna Otak Sikit: International Trade and Industry Minister Mustapa Mohamed is trying to defend the indefensible, or rather to give some pathetic excuse to defend the high prices of cars in Malaysia.
Many Malaysians know the high prices is due to the exorbitant taxes, especially when the ex-PM tried to set up a hopeless car manufacturing industry. How can an industry advance when it is perpetually hooked on subsidy?
Malaysians are paying a heavy price for a stupid and grandiose decision of an egoist ex-PM.
Anonymous#007: I remember very clearly when the exorbitant taxes and costs for 'mandatory accessories' were introduced for cars, the government asked distributors not to break down their total selling price (presumably to avoid public backlash).
However, what I would like to say here is that the government should never have allowed buyers to borrow to pay the 'taxes' simply because the rakyat are now burdened with paying the tax for the next nine years, while the government spends the taxes today.
Wise Up: In the 70s, the usual repayment period was three years. It gradually went up to five, seven and it's now a staggering nine years.
Malaysians are whacked by three things. First, car prices have risen over the years and with the government taxes at almost 100 percent, the costs have ballooned.
Second, after three or four years, car owners are beset with the galloping maintenance cost on top of the monthly instalment.
Third, our salaries have stagnated or rising too slowly, no thanks to the erroneous Consumer Price Index (CPI) as the benchmark for pay increment. The minister is not using his thinking cap.
Ipoh2: Longer repayment period means that banks will earn more interest because hire purchase interest is calculated on a fixed scale at the start of the loan, instead of reducing amount like for houses.
It also means that borrowers are unable to buy houses since they don't have enough money to repay another loan.
The most unfortunate thing is that cars have become an indispensable means of transport because public transport is unavailable or inadequate for most people.
Also unfortunate is that many people think that cars are assets. Car are really liabilities because their value reduce drastically from day one.
Onyourtoes: Lengthening the repayment period, as in cars and houses, is an indication that the prices of cars and houses are too high, income too low, or both.
As pointed out by PKR strategic director Rafizi Ramli, it is wrong to just lengthen the repayment period to reduce the "burden" when in actual fact it would lead to more interest payment.
On the contrary, I believe in government taxation and excise duties, too, if they are reasonable and if the revenue generated is put to good use.
The most important thing is to look at car prices in terms of number of months of salary, more so when public transportation is so undeveloped.
Because of the distortion and imperfection of car market in Malaysia today, I believe the high prices is not just due to high taxation alone. I think car manufacturers, importers and distributors are also making excessive profits.
Mickey: Asking Malaysians to pay for longer terms and to use "flex-loans" (which means you pay less at first and even more later, as your pay increases) is tempting the rakyat to enter into a form of financial slavery. Go get them, Rafizi!
Anonymous_3f4b: Lowering car prices is not the solution to our transport woes. Creating, maintaining and improving the public transport system in line with the world"s best should be the main objective.
In the long term, the existence of a reliable and efficient public transport system will spin off more economic benefits to a larger sector of the public rather than an industry of low price cars which will only enrich a few besides being not environmentally friendly.
Oscar Kilo: Give us market prices for cars and market prices for petrol! I want cheap cars and expensive petrol. Then I will have the choice of how to spend my money.
I can buy a car at the same price as my Thai neighbours. And if I drive, I pay for expensive petrol. If I don't drive, I don't pay for expensive petrol.
This will really encourage me to take public transport.
Swipenter: What kind of logic is Mustapa trying to spin? The longer the finance period, the worst it is for the purchasers and eventually the financiers. It may give the car buyer the illusion of his/her ability to buy a car on hire purchase.
What the purchasers don't know or don't understand is that for the initial first four years of repayment goes mainly to servicing the interest portion of the loan assuming you take a full loan for nine-year period.
And what is the value of the car then after four years? Sixty percent of the original purchase price or even less. Don't be surprised that your outstanding loan amount even after deducting interest rebate is more than the value of your car after four years of repayment.
And if the bank repossesses your car for a loan default, they would have to take a haircut. That is why one of the highest number of people being declared as bankrupts by banks are hire purchase loan defaulters.
The root cause is the high price of cars due to high taxes imposed against its intrinsic value.
Angry_Voter: Excuse me for asking, but has there ever been a time when problems were solved by this government?