In an effort to have a dream car, a car loan financing solutions are not taken by most people. Even for those who have abundant income and savings though, rarely decide to buy a car in cash. Because by buying a car on credit, then the financial traffic will take place more regularly, especially for those who have enough spending each month.

While on the other hand, fear due to load large enough mortgage interest can be an obstacle for someone to take a car loan. For example, the price of a car Rp 300 million, if paid in installments, the total costs could eventually reach USD 350 million, depending on the interest rates set.

However, the amount of interest expense that must be repaid to be able to have a dream car is not set in stone and can still be circumvented. The installment burden can be lightened by increasing DP of car loan itself. The principle is the larger DP car loan that you pay, then the less the monthly installment that you bear. The explanation is as follows:

DP (Advance) Car Loan

Since the year 2012, precisely on March 15, 2012, Bank Indonesia issued Circular No. 14/10 / DPNP which describes the application of risk management at the bank that does loans (mortgage) and motor vehicle (KKB). Through the circular, Bank Indonesia requires all banking institutions so that every motor vehicle credit (KKB) two wheels worn down payment of at least 25 per cent, while for loans DP car or four-wheeled vehicles at least 30 percent.

There are two main objectives why Bank Indonesia implement it:

● The first is to reduce the level of circulation of vehicles on the road, or in other words to reduce the amount of congestion.

● The second is that the government and Bank Indonesia wants to boost economic growth to remain high in a number of efficiency or reduce the amount of bad loans.

As is known, the credit growth in Indonesia is very high, either because they had no regulations that specify the minimum amount of advances to be paid. On the other hand, the economy is slowing. If the economy is slowing and demand for credit remains high, the result is the risk of non-performing loans will increase. However, Bank Indonesia will not slow down credit growth as a whole, but only arrange loans that are less productive and long-term, ie mortgage loans and vehicle loans.

Simulation Car Loan

In general, how to calculate the amount of monthly installment car loan is the car price minus the down payment, then the result of the reduction in the credit period divided by the number of months and multiplied lending rates. For example, if you take a car loan at a price of Rp 300 million over three years (36 months) with an annual interest rate of 5.69%, the monthly installment after deducting the down payment of 30 percent is:

Down payment: 30% x Rp 300 million = USD 90 million.

The total amount of debt installments: USD 300 million - USD 90 million = USD 210 million.

Because the annual interest rate is 5.69%, meaning over three years of interest multiplied by three, being 17.07%.

Total interest over three years: 17.07% x Rp 210 million = USD 35.847 million, -

Total debt that must be repaid plus interest is USD 245 847 000, -

Thus, the number of installments to be paid every month for a period of 36 months is: USD 245 847 000, - / 36 = Rp 6,829,083, -

But if you pay a down payment larger, say 40% of the price of a car, of course you have to pay the mortgage each month will be lower. The calculation is:

Down payment: 40% x Rp 300 million = USD 120 million.

The amount of debt installments: USD 300 million - USD 120 million = USD 180 million.

Total interest over three years: 17.07% x Rp 180 million = USD 30.726 million, -

Total debt is repaid plus interest is USD 210 726 000, -

So, installment per month for 36 months is: USD 210 726 000, - / 36 = US $ 5.8535 million, -

Such examples of calculations that show the influence of the DP to load a car loan repayments that can be adapted to the abilities. Want to know the amount of the monthly installments of your dream car? Do it in a way that is concise and easily without going through a complicated calculation process via Credit Simulation facilities provided by ACC.