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).

  • 1
    If your salary will at least double in 3 years, perhaps you can afford it then. You may just have to wait.
    – TTT
    Aug 10, 2017 at 13:05
  • Your English is pretty good!
    – Rocky
    Aug 10, 2017 at 18:08
  • Those car prices seem awfully expensive. In my particularly expensive area in the US, 15k will get you a 3-year-old Toyota, not a 25-year-old one. [
    – Kevin
    Aug 11, 2017 at 3:27
  • @Rocky Someone has edited most of my mistakes.. :-) Aug 11, 2017 at 3:50
  • @Kevin: If new cars are so expensive that almost no-one can afford them, then most people will want to buy a second had car. That means there are few new cars entering the country, so also few cars that become available on the second hand market, but many buyers. Less sellers, more buyers, that's a double effect shifting the market equilibrium price for second hand cars.
    – MSalters
    Aug 15, 2017 at 17:17

2 Answers 2


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.


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?

  • Can you include a link to the PayScale study? And I was in shock to about the price, until I looked it up and it's true.
    – Michael
    Aug 10, 2017 at 17:31
  • payscale.com/research/LK/Job=Software_Engineer/Salary - now linked.
    – NPSF3000
    Aug 10, 2017 at 18:02
  • Payscale is not accurate for countries like Sri lanka because of very less data. Yes. vehicles are too expensive because of f***ing government taxes. For some cars it is more than 500% tax. Aug 11, 2017 at 3:57
  • @DonkeyKing payscale does seem to verify OP's own input re salaries. The fact that cars are taxed high just means one should look at other options.
    – NPSF3000
    Aug 11, 2017 at 14:10

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