Do you have plans to buy a car in Hong Kong? Some people may feel the need for it.

The truth is, you can easily get around through the public transportation system – which is actually one of the safest and most efficient in the world. You have a lot of options from taxis, rail, bus, or tram. You can even use the ferry to get to the different islands around Hong Kong. Thanks to the Octopus Card, you can choose to ride any of these without difficulty.

While the public transport may be the best in the world, having your own car is still quite convenient – especially when you have a child. You can choose to go anywhere you want and no rain or other weather disturbances will make it hard for you to get to your destination.

This is probably the sentiment of the car owners in Hong Kong. According to the data from the Transport Department, the number of new registrations in the region is steadily growing from 2011 to 2015. For the first quarter of 2016, it is slowing a bit and in some months, the new registrations are lower than the same period the previous year. But that does not remove that fact that car ownership is still rising in the region.

And just like home ownership, people here buy a car by borrowing money. If you have your eyes set on becoming a car owner, you need to make two important decisions before you proceed.

Want To Buy A Car In Hong Kong? Answer These Two Questions First

Should you borrow a car loan or a personal loan?

The first question that you need to answer is the type of loan that you will borrow. Will you get a car loan or a personal loan?

The immediate thought is probably to borrow a car loan to help you finance your car purchase. This is not entirely true.

The price of cars in Hong Kong may not be cheap but it is affordable enough that you do not have to get a car loan. You can get a personal loan that is big enough to allow you to buy a car.

But what is the difference between the two?

A personal loan is generally an unsecured loan that you can borrow. The basis for the loan amount and the interest rate will depend on your income and your credit score. The higher the income, the more you can borrow.

In fact, Citibank allows you to borrow up to 10x of your monthly income. And if your credit score is high, you can also expect to be given a low-interest rate on your loan. The great thing about a personal loan is you can use it on a lot of things.

If you can qualify for it, you can get a loan that is bigger than the price of the car. That way, you can buy a car and use what is left for other expenses – like that first road trip that will help you break in your new vehicle.

A car loan, on the other hand, is specific to buying vehicles. Some definitions say that this is a kind of secured personal loan. This loan will require you to provide a deposit – and a sizeable one at that.

This will benefit you in the long run because your monthly payments will be smaller. And since this is a secured loan, you can enjoy low-interest rates. That is because your failure to pay back the loan will cause you to lose your car.

Both of these loans can be used to help you buy a car. Choose the one the suits your finances best. If you have a deposit and you want a lower monthly payment or interest, you can opt to borrow a car loan. If you do not have a deposit but your income can make you qualified to borrow enough for a car purchase, then go for the latter.


Should you buy a used or new car?

The next question that you need to ask yourself is what car will you buy. We are not talking about the brand of car.  We are talking about its condition. Will you buy a new car or a used one?

According to the data published on Best Selling Cars Blog, new vehicle sales in Hong Kong is going down in June of this year. Does this mean used car sales a going up? It is not really clear. But to help you decide, here are the pros and cons of buying a new or used car.

On buying a new car.

A new car is definitely more expensive – both the price and insurance premiums. However, since it was not used before, you do not have to worry about high maintenance costs. You still have to be cautious about any malfunctions in the system.

Factory defects can happen after all. But the car dealer should have no problems replacing it for you. It should still be part of the warranty. It is also possible for you to get it just the way you intended.

From the tint, power windows, colour, and other details – you can choose to accord with your preference. New cars are also more fuel efficient – so your car ownership costs will not be too high.

On buying a used car.

No doubt, a used car will be cheaper to buy. Although it is older, the insurance will also be cheaper. That is how car insurances work. The depreciation will not be as great as a new car. Vehicle depreciation tends to slow down as it ages. But what you save on the selling price might cost you in terms of maintenance.

After all, someone else already drove the car before you. It is hard to determine how the car was used. Sometimes, our driving habits aggravate the wear and tear of the vehicle. When it comes to warranties, if you buy from a car dealership that offers a pre-owned certification, it usually comes with a warranty.

These are the cars that may be used but are still in very good condition. Of course, a used car comes as is. If you want modifications so it looks just like you want it, you have to spend for that later on.

After answering this questions, it should be easier for you to make smart decisions when you buy a car in Hong Kong. Just remember that this is a purchase that will depreciate in value. If you really have to borrow money to buy a car, make sure it will not cripple you financially. Selling the car will not really give you much profit – in the same way, that a real estate property will.

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