How to Calculate Car Loan Simulation
Currently, there are many credit facilities for purchasing personal vehicles such as cars or motorcycles, which make it easier for us to buy them. In addition, there are also many leasing companies or banks that offer car and motorcycle credit simulations to their prospective customers.
However, it seems that although many leasing companies and banks offer car and motorcycle credit simulations, many people are still confused and do not fully understand how to calculate the car or motorcycle credit simulations.
Initially, the leasing companies or banks will explain clearly starting from the requirements, agreements, to the calculation of credit simulations to prospective buyers. Then, prospective buyers will be asked to determine what type of car they will purchase.
How to Determine the Type of Car
Currently, there are more and more types of cars you can choose from, including brand, color, and size of the car itself. Each offers its own advantages, but choose the type of car whose price is most suitable for your budget and needs.
Each type of credit will affect your financial stability, especially if the credit installment period taken is more than one year. So before you apply for credit, choose the type of car that fits your budget and also consider whether you can afford to pay the installments for that car later.
If you have determined the type of car to be purchased, you can then choose which leasing company or bank will be used as the provider of credit facilities for that car purchase. However, first pay attention to the following information:
1. Leasing or Bank Interest Rates
Usually, financing institutions such as leasing companies or banks have set the interest rates for car loans that must be paid. The interest is usually determined based on the tenor or duration of the car loan you apply for. The longer the duration, the higher the interest rate. For car loans of 1-3 years, the interest rate ranges from 6-8% of the car price.
2. Insurance Rates
Insurance rates for a loan period of 1-3 years usually range from 7.5-9.5% of the car price.
3. Administrative Fees
The administrative fees required when applying for a car loan at a leasing company or bank for a loan duration of 1 year usually range from Rp 350,000. Then Rp 450,000 for 2 years, Rp 550,000 for 3 years, and so on.
4. Car Loan Tenor or Duration
Choose a car loan facility with a long tenor or duration, such as 7 to 8 years. A long duration is useful to help you in installments because it offers lighter down payments and installments.
5. Amount of Down Payment and Installments
Next, you can create a plan or simulation for the car loan that will be implemented. The car loan simulation can involve determining the amount of down payment and installments that will be paid during the loan period.
Car Loan Simulation
• Determining the Down Payment
If the car price is Rp 200 million, and the down payment that has been determined is 20%, then the amount to be paid upfront is Rp 40 million. The down payment rate is usually set by the leasing company or bank. 20% is the common minimum amount usually offered.
The formula for calculating the down payment to be paid is:
Down Payment = 20% x Car Price.
Thus, 20% x Rp 200 million = Rp 40 million.
• Determining the Principal Loan (PL)
Then, calculate the Principal Loan (PL) or the remaining loan that must be paid.
The formula is, PL = Car Price – Down Payment.
Thus, Rp 200 million – Rp 40 million = Rp 160 million.
• Determining the Interest Rate (IR)
After that, don't forget to calculate the interest rate (IR) that must be paid first. The way is to multiply the Principal Loan (PL) by the percentage of the interest rate (IR%) that has been determined based on the tenor or duration (TD) that has been set.
The formula is Interest Rate (IR) = Principal Loan (PL) x IR%.
So, if the duration taken is 3 years, the percentage of the interest rate is 8%.
Rp 160 million x 8% = Rp 12.8 million x 3 years = Rp 38.4 million.
• Determining the Installment Amount
After obtaining the total interest rate that must be paid during the 3-year installment period, the next step is to calculate the amount of installment that must be paid.
The formula is to add the Principal Loan (PL) and Interest Rate (IR) and then divide by the loan duration (TD).
Thus, the monthly installment amount is, (Rp 160 million + Rp 38.4 million) : 3 years (36 months) = Rp 5,551,200.
• Determining Insurance Rates and Administrative Fees
Don't forget to calculate the insurance rates that you have to pay. The formula is 9.5% (Insurance Rate for 3 years) x Car Price = 9.5% x Rp 200 million = Rp 19 million.
Next is the administrative fee. The administrative fee required when applying for a car loan for 3 years usually ranges from Rp 550,000.
So, the total amount you need to prepare for the first payment of your car loan is:
Down Payment + First Month Installment + Insurance Rate + Administrative Fee = Rp 40 million + Rp 5,511,200 + Rp 19 million + Rp 550,000 = Rp 65,061,200.
Administrative Completeness
Lastly, and no less important, are the documents and administrative data. Complete administrative documents are an important part of the car loan application stage. In addition, the completeness of documents and administrative data is also a determining requirement for your loan application to be approved quickly. The documents that must be owned before applying for a car loan are Family Card, ID Card, Salary Slip, Savings Account, Electricity/Telephone/Property Tax Bills, and other supporting documents according to the requirements of the financing institution.
Don't forget to check the documents to be submitted, ensure that the data is the latest and corresponds to your current residence. This is to avoid problems in the future. If these requirements are met, your car loan application will be safe and quickly approved.
That is the way to calculate the car loan simulation. Owning a vehicle is certainly a dream for everyone. Having a personal vehicle means facilitating activities because you can arrange it according to your needs. Happy car shopping!
