Carmall.com - First of all, buying a car is a big decision. Just as big, but to a lesser extent, is how you buy it. If paying in cash is not an option, most of your problems will be solved. For most of us, getting a loan will be the only option we have. But there are so many financing companies offering pretty much the same attractive offers, which in the end comes down to you having to choose one. To begin with, here are the variables to choosing the right one.

Fixed or floating?

The interest rate variable essentially defines a loan, any loan. I'm sure you'll agree with us that the less you are burdened by the interest, the greater life will be. But what are your options regarding interest rates. Well for starters, most financing companies in Indonesia, whether intermediaries such as banks, or pure financing companies, offer fixed interest rates regarding car loans. But there's also the floating interest rate.


A fixed interest rate car loan will typically say something like 6.25% p. a. (per annum) during a credit term of 3 years. This means that someone who takes up the loan will be required to pay a yearly additional 6.25% of the principal after down payment.


Floating interest rates? Well, they float. Mainly relative to the interest rate of Bank Indonesia Certificate (Sertifikat Bank Indonesia/SBI) determined by our central bank, the Bank Indonesia, banks and financing companies will adjust their own interest rates to maintain a certain profit margin, or in financial terms, the spread. Consequently, a car loan of this type could have its interest rate fluctuate. A little bit of uncertainty that could go either way.

Balloon installments/payments

There's also something called balloon installments/payments. It's quite new here, but are nevertheless starting to be offered. One of the reputable financing companies currently promoting a car loan with this scheme is BCA Finance. Balloon installments can be described as a credit plan that will have the debtor pay accumulated sums or installments that are primarily made of the principal during the later period of the credit term. The earlier series of the installments itself are primarily interest with minimal amount of the principal. Also, the installments to pay during the later stages of the loan will usually be larger. Hence, this scheme will more likely benefit those with irregular or seasonal sources of income.