1. Import & Export of Indonesia are picking up pace after the Global pandemic in 2020; Japan being the major contributor in the imports
Indonesia’s entire automotive industry is centered around Bekasi, Karawang & Purwakarta regions in West Java, located near the capital city, Jakarta where the demand for cars is relatively on a higher spectrum as well as an area with a well- developed infrastructure. Moreover, a number of big players in the car market of Indonesia such as Toyota & Daihatsu that captures almost 60% of market share in automobiles have invested in industrial estates as well as car & component manufacturing plants in Jakarta, making it the ‘Detroit of Indonesia.
2. Online Auto Finance Aggregator Platforms is an emerging market in the country which is expected to simplify the loan acquisition process drastically
Aggregator platforms such as Cermati and Broom can collaborate with Banks, Captives, NBFCs, Fintech Lenders & other peer to peer lending platforms in order to provide the end user multiple financing options that ultimately leads to a more transparent & streamlined vehicle-buying process eliminating obstacles such as insufficient information & hectic loan disbursal.
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3. Financing of auto vehicles by NBFCs in Indonesia is expected to rise as a result of new emerging technologies, ease in the process & longer loan tenure
In the past 5-10 years, Indonesia is witnessing a new wave of Digital enhancement with several new fin-tech platforms for aggregation, peer-to-peer lending entering into the market. The industry will be witnessing a steady growth that will impact the market scenario in a positive way with NBFCs leading the financing element of the market. Moreover, a decline in the trust amongst people when financing loans from banks can prove to be beneficial to NBFCs. This is mainly due to an ease in financing process, lower granting benefits & other additional benefits.
4. New Car Loans, Used Car Loans, Lease buyouts, and Refinancing are 4 major options of financing available in Indonesia for automobile sector
- New Car Loan: New Car Loan is a loan for new cars. Customer can generally borrow up to 70% or 80% of the value of the carthey are trying to purchase, according to guidelines set by the Financial Authority of Indonesia.
- Used Car Loan: Similar to the new car loan system, in this case, the interest rates were around quite high for the last quarter of 2021.
- Lease Buyouts: For lease buyouts, the car dealer plays the role of a middleman to secure a loanfrom the bank on the customer’s behalf.
- Refinancing: Refinancing is basically the replacement of an existing debt obligation (automotive loan) with another debt obligation (automotive loan) under a different term and interest rate. Refinancing loans are also provided by stakeholders like Banks, NBFCs, and Captives
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