How much income should I buy a car in installments?

Many car buyers on installment payments have their cars confiscated by banks because they can’t pay interest on time, or are forced to sell their cars because they can’t stand the cost of “raising” the car.

Thanks to installment car loan packages, people can easily own a car. However, many car owners have their cars confiscated by banks because they can’t pay interest on time, or are forced to sell their cars because they can’t stand the cost of “raising” the car.

Experts believe that an income of 30 million VND/month or more is enough to buy and use a car

Not enough VND 30 million/month, “don’t dream”!

Mr. Nguyen Van Nam (residing in Nam Tu Liem district, Hanoi) has just bought a car Hyundai Kona the price of 720 million dong by installment payment through a loan package from Shinhan Bank. Nam borrowed 500 million VND, interest rate 7.5%/year fixed for 10 years.

After 3 months of buying a car, recalculating, Mr. Nam panicked because the expenses for the car were too large compared to the family’s income (about 30 million VND/month).

“Every month, the cost of paying principal and interest to the bank is about 8 million VND. In addition, there are other items such as gasoline 4 million VND/month, parking 1 million VND/month, tolls for each business trip, vehicle maintenance, etc. The total cost related to the car is about 15 million VND/month.” , Mr. Nam said.

In addition to expenses for family activities, according to Mr. Nam, his family has to save money every month to cover living expenses and has almost no savings.

Talking to Traffic Newspaper, the leader of a bank branch in Hanoi said that, except for those with abundant financial resources, with the current cost of living, people must have a fixed income of about 30 million VND/month or more to be able to own a car and guarantee repayment.

According to this position, basically, the fees for “raising” the car are divided into two main groups, including fixed and non-fixed usage costs.

In which, fixed costs include: Compulsory insurance, material insurance premium (depending on the policy of each insurance company but fluctuates 1.5% of the vehicle value); Registration fee, road maintenance fee, monthly parking fee (from 1-1.5 million VND if living in an apartment). Non-fixed costs include petrol, tolls, parking outside, periodic maintenance, fines if unfortunately traffic violations …

According to Mr. Vu Hong Chinh, Dealer Director Mitsubishi An Dan (Long Bien, Hanoi), car loan customers with installment payments will usually take from 6 to 8 million VND/month to pay for the loan, plus the car operating cost from 5-7 million VND/month. month. Thus, the cost of “raising” the borrower’s car in monthly installments is from 11 to 15 million VND.

“Along with paying for household expenses, with an income of about 30 million VND, you can borrow to buy a car in installments,” Chinh said.

Easy to borrow, easy to risk

Mr. Vu Hong Chinh also said that customers who buy cars on installments at Mitsubishi An Dan dealer account for 60% of total customers per year. Even though they can afford to buy a car to pay directly, many customers still buy cars on installments to save money to invest in other jobs. The reason is that bank profits are often lower than business profits.

Currently, most banks have a maximum loan rate of 70-80% of the car value, the maximum loan period is usually 8 years, but there are also banks that lend up to 10 years. Loan application is easy, almost any customer can get a loan, except for customers with bad debt.

Mr. Chinh said that car loan packages from banks have now made it easier for people to access and own cars, thereby promoting the development of the auto market and increasing sales.

However, in reality, many customers have a headache because of the costs incurred to “raise” a car after a short time of use. Even many people have to sell their cars to reduce costs, or can’t pay their monthly loans and have the car repossessed by the bank.

The leader of a bank branch in Hanoi said that car loans are currently facing many risks because many customers have unstable incomes and cannot secure loans.

Automotive expert Nguyen Minh Dong said that in European countries, car loan packages have a bank interest rate of only 1-2% with a loan rate of 80-100% of the car value, for a period of time. from 10 to 30 years. Low interest rates and extended loan periods make it easy for customers to own a car, stimulating demand, and contributing to the development of the auto market.

“In Vietnam, lending interest rates of banks are quite high and fluctuate erratically, making it difficult for people to calculate the costs to pay, causing many risks,” said Mr. Dong.