Is it better to choose a car loan through a bank or in a leasing? What are the disadvantages and advantages of each vehicle credit provider? In this article, we will explore further the pros and cons of each financing.
KMK (Car Ownership Credit)
KMK is a financing facility provided by a credit financing institution especially if the buyer does not have cash to buy the vehicle directly. The system, the agency will pay the dealer a price for the car, then as a buyer, you are responsible for paying the installments every month.
This installment usually has to be paid during the credit tenor, where the time period is different and must be adjusted to the institution. Installments to be paid consist of principal and loan interest. There are many choices of credit financing institutions, the two of which are banks and leasing .
In addition to being a financial institution that facilitates savings and loan transactions, banks also provide ownership credit facilities, one of which is vehicle ownership loans. Ownership loans offered by banks can be used for new or used cars. At the time of submitting an application, the applicant must fulfill several conditions such as:
- Proof of identity (KTP, KK or Marriage Certificate)
- Proof of income (Salary Slip, Work Certificate)
- Tax proof (NPWP)
After the applicant meets these requirements, the bank will then process the application. The application process requires a variety of time, the fastest is one (1) day to the latest, 7 (seven) days.
Once approved, it means that credit is accepted, the applicant gets a vehicle and must fulfill his responsibilities as a borrower by paying monthly installments.
Benefits of Financing through Banks
Here are some of the benefits that you get if you apply for credit through a bank:
- Low interest rates so that your monthly installments will be lighter
- There is an option to pay off part of the debt if you have enough cash so that the remaining bills don’t burden you
Loss of Financing through Banks
If you choose credit financing through a bank, then some of the disadvantages you must face are:
- The submission process is quite complicated, because you need various documents that show your identity and your eligibility to get credit
- Your submission may be rejected, even the bank will conduct various surveys to ensure the accuracy of the data you provide.
Leasing comes from an English word which means to rent out, in financial terms, leasing means a financing activity given by a company ( lessor ) to a customer ( lesse ) in the form of borrowing or procuring capital goods in the form of an agreement with conditions such as:
- Tenants have the obligation to pay rent periodically, generally once a month.
- There is a tenor of rent with a variety of times, such as 1 year, 2 years, 3 years to more than 7 years.
- The company has the choice to buy or deliver the leased capital goods at the end of the agreement period.
Leasing is usually submitted by the applicant which can be in the form of an organization, company or individual, with the items submitted can be vehicles for industrial needs, daily necessities and others obtained from suppliers .
In financing using leasing , you must also include insurance from suppliers or insurance service providers with insurance options such as all-risk , total lost only (TLO) or combined insurance.
In Indonesia, the filing of car ownership using leasing is quite well known and every year, the number of submissions has experienced a significant increase.
Advantages of Leasing Financing
Below are some of the benefits that you can get by choosing leasing as your financial institution:
- The submission process is quite easy with conditions that are not complicated and fast
- Some leasing companies are willing to come to your house to explain their offer
Loss of Leasing Financing
The following are some of the leasing losses compared to credit financing through banks:
- The interest charged to customers is quite high
- There are additional costs such as fiduciary fees, provision fees and insurance costs
- Must have insurance, both TLO and all-risk
Equality of Banks and Leasing
Among the two institutions, there is 1 similarity, namely you need a Down Payment of at least 30% of the selling price of the car, both new and used, which is agreed by both parties. This provision is based on External Circular No. 14/10 / DPNP dated March 15, 2012 concerning the Application of Risk Management to Banks Conducting Home Ownership Loans and Motorized Vehicle Loans.
Adjust With Needs
To choose which financing you should choose, you must return to your individual needs. If you have applied for a loan with the bank and have been refused, it might not hurt to try credit applications through the leasing party.
The important thing is to know clearly all the requirements and conditions in the agreement and pay off your installments on time. How? Are you interested in applying for a loan to buy a car?