LTV Easing May Spur Vehicle Loans Next Year

By Editorial Team 20/09/2019
Summary

Besides cutting the BI 7-day Reverse Repo Rate (BI7DRR) by 25 basis points to 5.25 percent, the Bank Indonesia Board of Governors' Meeting (RDG-BI) also eased Macro-prudential regulations to encourage bank lending and credit demands from business players. This easing includes regulating the Macroprudential Intermediation Ratio (RIM), lowering Loan to Value/Financing to Value (LTV/FTV) ratio by five percent for loans or property financing, and cutting down payments for motor vehicles by 5 - 10 percent. This relaxation takes effect from December 2, 2019.

It is the second time BI eased the down payment for motor vehicles. Previously, the central bank through Bank Indonesia Regulation (PBI) No. 20/08/PBI/2018 set a minimum down payment by 20 percent for motorcycles and 25 percent for vehicles with three or more wheels. With the latest easing, the down payment for all vehicles would be 15 percent. Meanwhile, BI also cut the down payment for vehicles used in the productive sector to 10 percent.

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