0% Motorcycle Credit Advances Can Be a Financial Problem
Motorcycles are the most affordable vehicles for most Indonesians. At present some motorbike sellers offer motorbike loans with very low down payments, starting from Rp.1,000,000, Rp.500,000 and some even having 0 percent down payment (aka the origin of the contents of the file, can take the motorbike home). What are the advantages and disadvantages of taking 0 percent motorcycle credit?
The following is a simple simulation that will compare the amount of installments, based on the amount of down payment and the length of the repayment period.
How to read the table above, is with an advance of Rp 650,000 and installments of 10 times, then you need to pay an installment of Rp 1,680,000. If in total, the total cost paid is IDR 650,000 + (10 x IDR 1,680,000) = IDR 17,450,000.
Will the total fall be cheaper if the down payment is bigger? Let’s do a comparison.
- Advance of Rp. 4,000,000 and installments of 10 times, then you need to pay an installment of Rp. 1,301,000. If in total, the total cost paid is IDR 4,000,000 + (10 x IDR 1,301,000) = IDR 17,010,000
- Advance of Rp. 4,000,000 and installments of 34 times, you need to pay an installment of Rp. 535,000. If in total, the total cost paid is IDR 4,000,000 + (34 x IDR 535,000) = IDR 22,190,000.
Based on the simulation above, it can be concluded:
- The smaller the down payment, the greater the total cost to be paid.
- The longer the repayment period, the greater the total cost to be paid.
Should You Avoid Motor Loans with 0% Down Payment?
The answer depends on your financial condition and the function of the motorbike. Credit or debt is basically divided into two types, namely productive loans and consumer loans. As a consideration like this:
- Consumptive Credit : You buy a motorbike for your child to go to school, meaning you will not get additional income on the motorbike. You even have to pay for gasoline, renew your vehicle registration, pay taxes, periodic services and so on. If you use a motorbike for consumptive purposes, you should select the large down payment (DP) and the shortest installment period. But it is recommended that you do not have consumer credit.
- Productive credit : You buy a motorbike for rent or use for online motorcycle taxis. You get income every day from the motorbike. Let’s say you earn Rp. 350,000 per day or Rp. 7,000,000 – Rp. 10,500,000 per month. Then you may choose a motorcycle loan with the lowest down payment and the longest period.
0% Advance for Motorcycle Loans, Is It Legal According to OJK?
The Financial Services Authority (OJK) has conducted a study and regulations will be prepared to cut down the down payment (DP) of motor vehicle financing. Initially a motorcycle loan or a car loan is 15% -20% to 0%. The aim is to increase the purchasing power of the Indonesian people. However, there are applicable terms and conditions, such as the ratio of non-performing loans to finance companies below 5%.
In addition, 0% credit can also be done at online stores. You can use credit card installments. We try to do the same product comparison as the simulation above.
It turns out that by using a credit card and shopping online, we do not need to issue a down payment (aka DP 0%) and installments of Rp. 1,250,000 per month (if the loan period is 12 months). The total cost is Rp 1,250,000 x 12 = Rp. 15,000,000.
Choose according to your financial capabilities and your needs
When choosing a motorcycle loan, choose one that suits your financial abilities and needs. In this case, choose the right scheme, for example, you may use a motorcycle loan with a small down payment and a long period if your debt is productive. Remember to reduce and pay off immediately consumer loans and optimize productive credit.