Despite the high cost of a car, Malaysians seem to be leaning towards owning a private car as the number of Malaysians using their own car continues to increase year over year. It has been projected that car owners will increase 1.4 times to 31 million by 2030!

If you are looking to buy a car, it would be wise to do your research on how much does a car exactly cost, namely the true cost of car ownership. The cost of car ownership is not as simple as paying for your car loan, but it also involves the cost of day-to-day running of your car as well as maintaining it to ensure its roadworthiness. Let’s take a closer look at the different costs of car ownership!



Trip cost

The trip costs enable a car to make trips on the road. In Malaysia, the fuel price is set to a nationwide standard price by virtue of subsidisation by the government. Car owners have to pay tolls if they choose to travel on tolled roads to avoid severe traffic congestion, especially in KL and Selangor. Furthermore, drivers are charged for parking space in most cities/towns either by the local authorities or privately-owned parking lot operators!


Legal cost

The Road Transport Department (RTD) is the regulatory body for road transportations. It is responsible for the issuance of driving license (Competence Driving License, or also known as CDL) and motor vehicle license (Lesen Kenderaan Motor, or also known as LKM). Both CDL and LKM are subject to a renewal process after a specified period (bi-annually or annually), only if both the driver and vehicle are clear from any legal charges! This is the fixed cost portion of the legal cost of owning a car.

On top of the obligatory license renewal charges, additional variable costs are expected if you commit traffic or parking violations. Tickets for both types of offenses are normally issued by the traffic police (RMP15), RTDs or local authorities’ enforcement officers. So be sure to be a good road user and/ or driver to avoid this variable cost!


Risk cost

The risk cost means the cost of insurance that car owners have to bear every year according to the scheme offered by the insurer. The cost of insurance will be determined primarily from the current value of a car (insured value), and this cost will decrease as the car value depreciates over the ownership years. On top of that, the cost will be further reduced if one is eligible for No Claims Discount (NCD) over each policy renewal. To accumulate and maintain this NCD, you have to ensure that you are free from road accidents that require an insurance pay out, which will reset your NCD to zero. This can be a significant cost that could have been avoided!

We have discussed costs that have to be incurred and costs that could have been avoided by being a good driver. We will take a look at maintaining our car’s road-worthiness, which forms the other significant part of car ownership in our next article!