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Note : Please forgive me for my bad English and feel free to anyone to correct mistakes.

Background : I am working as a Software Engineer is Sri Lanka. My monthly salary is about $400 and may increase to $800-900$ with three years. There is no additional income. For living I need around 300$ per month.

Prices of cars in my country [Update : Vehicles are too expensive because of government taxes, it is too high. For some cars it is more than 500%] :

  • Toyota Corolla 2017 : Around $60,000
  • Toyota Car (build in 1995-2000) : Around $15,000
  • Indian Car like Alto : Around $15,000
  • Toyota/ Nissan car (Build in 1980-1990) : Around $7500

So even to buy a 20 years old Japanese car or Indian Alto the price is nearly 35 times of my current salary.

But generally most of people like me (Like bankers, engineers) have cars. I don't know how they afford it.

I also at some point in time looking to buy a land and build house.

At the same time I really like a Car and it can save most of my time and it will really useful.

But my question is, getting a loan in young age (My age is 25) to buy a car (non-investment) ... Is it a right decision or will create issues financially in future?

Update : I have forget to mention that I have already 3000$ saving and if it is needed I can reduce my living cost to 200$ per month (It is hard, but possible).

I am the Most Stupid Person
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2 Answers2

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Generally Car loans should be for shortest possibly duration ... accepted practise is 3 years to 7 years. So if you take a car loan for say 5 years, USD 15,000. The EMI payable is around USD 360.

This is clearly beyond your budget now. Most car loans need you to pay 20 to 25% of total value and the loan is only for remaining value. Clearly you don't have that cash.

It is best for initial few years if you build savings towards car down-payment and only buy when you can afford.

But generally most of people like me (Like bankers, engineers) have cars. I don't know how they afford it.

This is an incorrect comparison. They may have different salary, or may have been funded by their parents, or they maybe unwise financially.

Dheer
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Others can answer to such a loan on your salary (doubtful), but I want to look into some of the assumptions leading into the question.

But generally most of people like me (Like bankers, engineers) have cars. I don't know how they afford it.

Do they all earn $400/month? The very fact that you expect your wage to increase to $800-$900/month indicates you recognize you're being paid very low for your profession (I presume you're junior)?

According to payscale $900/month is about median for devs in your country - which means 50% of devs are earning more than that! As such they are more able to buy a car. Of course @Dheer is right - don't buy based on what you think other people can afford.

Toyota Car (build in 1995-2000) : Around $15,000

Are you sure cars are that expensive? I work as a developer in America (more than 10x your salary) and yet would be looking at nicer cars for $5k~$10k. How does this compare to a bike, scooter, motorbike, taxi, uber/rideshare, rental car, public transportation etc?

NPSF3000
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