Car and Motorcycle Loan Takeover: What You Need to Know

Car ownership keeps rising, yet many people still choose a motorcycle to reach their destination faster, because its slim body makes it easy to find a way through traffic. Motorcycles are also seen as more nimble on the road, especially when cutting through congestion. Even so, consumption of both cars and motorcycles climbs year after year, which shows that many people need both. A brand-new car or motorcycle takes a lot of money, and many people object to paying in cash. Fortunately, credit financing now makes it easier to get the car or motorcycle you want.

Car and Motorcycle Loan Takeover

You can now use a loan takeover (known in Indonesia as "over kredit") to buy a late-model car or motorcycle. Here are the things you should know about taking over a car or motorcycle loan:

1. Definition

The first thing to know is what a loan takeover actually is. It means passing an unpaid loan on to another party who is willing to pay the remaining installments, and who receives the car or motorcycle that was bought on credit. For example, A buys a car on a 4-year tenor, and after the first year of installments A hands the rest of the loan over to B. B is then responsible for the remaining installments on A's loan.

2. Calculating the Takeover

The next important thing to know is how the takeover is calculated. Because several parties are involved, the calculation has to be done carefully. The figure to pay attention to is the payment that compensates A for the loan. For example, A bought a car whose current price is Rp150 million and passes it on to B with a 4-year tenor, of which 1 year has already been paid. A's monthly installment is Rp4 million and the all-risk insurance costs Rp8 million. The interest is 10%. So Rp150 million is added to the interest, 10% of Rp150 million, which is Rp15 million. Then add the insurance period and premium, ¾ multiplied by Rp8 million, which equals Rp6 million. The total is Rp171 million. This is reduced by the installments that B still has to pay, 36 months multiplied by Rp4 million, which is Rp144 million. The amount that can be paid to A is therefore 171 minus 144, or Rp27 million.

You can use a loan takeover to get a newer car or motorcycle at a lower price. To complete a car loan or motorcycle loan takeover smoothly, it helps to know how it works so that it does not cause problems later.