Tips: Home or Car Loan

Two options may come up, especially for a couple – shall we buy a house or a car? If you and your partner are both employed, you will be able to afford this more easily if you apply for credit. Together, you and your spouse are qualified to apply for credit.

The difference in the two investment options:

  • The home:

Houses and cars are certainly different in terms of investment options. Home values will always increase with time. That is why, in addition to land, the house is a profitable investment, especially if you can buy it on credit with fixed interest. However, the average bank has certain rules respectively. Fixed interest will be determined over a particular period which is usually two years and thereafter will be a floating rate. Depending on the economy, the bank has its own rules to determine floating interest rate and you have to be careful not to be caught out when the interest rate changes.

  • The car

All vehicles are investments whose value tends to decrease. That’s why you have to be careful when choosing the auto loan . In addition to the decline in value, you must reserve funds as routine maintenance costs. This has to be done for the good of the vehicle and your own driving safety. Car maintenance costs can be reduced in the first three years, because the new car manufacturer offers such benefits as the warranty period. You only need to spend a small amount eg the purchase of fuel, brake fluid, and so forth.

  • Calculate carefully and thoroughly

Calculate carefully before you decide whether to apply for a car or home loan, for example the duration of the loan. If you specify a term of seven years, you can compare it to other investments.  For a car, its value will obviously be reduced but the home depends on the location of the house itself. That is why you should weigh carefully the location of housing that you seek. The location may be adjacent to an urban train station (commuterline) or Apil electric train for example, which would be a be a major consideration if you and your family live in a big city like Jakarta. However, public transportation such as short-distance trains would be the perfect solution in terms of time and cost incurred.

You might not be able to rely on personal transportation devices such as cars and motorcycles     if the city’s streets are too congested. You need time, effort, and extra costs (parking fees etc)     that enable you to arrive at work or meet appointments on time in urban centres. KreditAja.com     recommend that you shoot the target on credit purchases, adjacent to the station KRL. Do not     forget to consider other equally important factors such as security and public facilities that housing complexes and surrounding areas offer.

  • Cost parameters

KreditAja.com suggest you increase the cost of a cash advance, because in the future that will ease the mortgage or your car. For homes, the government has put limits at least 30 percent of the total price as a down payment. Less is more value for money and the same with the car. Be careful with small instalments, because it could go against you at a later date. The concept of an economic bubble is the reason. Small initial instalments will become much bigger because the interest rate skyrocketed after two years. If you end up unable to pay the mortgage, leasing companies offer a purchase buyback for your car with a value below the market price. Several leasing companies will offer you a new car, with a down payment from the sale of the car. The lure of this is tempting but a bad idea because it could leave you tied in to a credit loan that you can not completely finish.

For the home, you should allocate about 25 percent of the value of cash every month for the duration of the 75 percent credit, to satisfy the mortgage obligation. For example, you have a total income of Rp 10 million per month, amounting to USD 2.5 million over 7.5 years is for mortgage loans per month. The cash flow should you keep stable.

If you find these tips useful, or are interested in any of our services, please visit our website, KreditAja.com.