Bank International Indonesia Finance Center, the auto-financing arm of Bank International Indonesia, expressed confidence that it will meet its target to boost outstanding loans to Rp 9 trillion ($943 million) next year, up 33 percent from an estimated Rp 6 trillion in 2011, even after the government tightened rules for car buyers.
The Finance Ministry introduced the regulation in mid-June, requiring car buyers to make a minimum down payment of 25 percent of the sale price for loans from financing companies, and 30 percent if the loan is from a bank.
Previously, there were no rules, and sellers often required about 15 percent for down payments. The regulation was introduced to prevent an increase of non-performing loans for vehicle purchases. About 70 percent of car purchases in Indonesia are financed by loans.
“[The rule] had no [negative] impact on our business. It will improve it,” said Alexander, BII Finance Center president director.
Alexander said that the average down payment in the company after the rule was implemented was 34 percent, up from an average of 30 percent beforehand.
The average, he said, reflected the company’s target market, which is the middle class.
“We are focusing on financing the purchases of new cars,” Alexander said, adding that 93 percent of the cars financed through the organization are new.
He said that BII Finance Center wants to disburse Rp 5 trillion in new loans this year for 40,000 cars. The target is likely to be reached because from January through August, the company already disbursed Rp 4 trillion.
The Association of Indonesian Automotive Manufacturers on Sept. 7 restored its original projection of car sales in the country, which was one million for this year.
That was up from the sale of 875,000 units last year. The estimate was temporarily lowered because of the regulation.