BI Rate Hike Could Make New Car and Motorcycle Instalments More Expensive
The Indonesian Financing Association (APPI) assesses that the increase in Bank Indonesia’s benchmark interest rate (BI Rate) could potentially drive up new financing interest rates or multifinance instalments, especially for motor vehicle purchases. However, the increase will not affect customers who currently have ongoing financing contracts.
APPI Chairman Suwandi Wiratno stated that his party understands BI’s move to raise the benchmark rate again amid pressure on the rupiah exchange rate. According to him, this policy is necessary to maintain economic stability and keep domestic financial instruments attractive to investors.
He explained that the continuing weakening of the rupiah is one of the main reasons for the BI Rate hike. According to him, raising interest rates is a commonly used instrument to maintain exchange rate equilibrium while increasing the attractiveness of domestic financial asset yields.
Suwandi stressed that the BI Rate increase will not change the instalment amounts for customers who already have financing contracts. This is because the interest rate on existing financing continues to refer to the previously agreed contract.
“For customers already on financing, there will be no changes up or down in the interest rate,” Suwandi told CNBC Indonesia.
Nevertheless, he acknowledged that the BI Rate hike could potentially increase the cost of funds for financing companies. This occurs because about 70% of multifinance funding sources come from bank loans, which can adjust interest rates in line with benchmark rate increases.
If banks raise loan interest rates to financing companies, multifinance firms are likely to pass on these adjustments to new consumers. Consequently, the financing interest rates offered to prospective debtors could be higher than before.
Beyond the interest rate factor, Suwandi also highlighted the potential for vehicle price increases due to the weakening rupiah. According to him, cars and motorcycles that still depend on imported components risk price adjustments if the exchange rate continues to weaken.
“The impact is not on ongoing financing, but on future ones. Later, it will be linked to purchasing power and repayment ability,” he stated.
In a separate statement, Agusman, Chief Executive for Financing Institutions, Venture Capital Companies, Microfinance Institutions and Other Financial Services Institutions at the Financial Services Authority (OJK), said the BI Rate hike could potentially affect bond issuance by multifinance companies, among other things because it can increase the cost of funds.
These conditions could encourage multifinance companies to be more cautious in issuing bonds.
In addressing these conditions, multifinance companies need to strengthen interest rate risk management, including through diversification of funding sources and strengthening funding efficiency.
The interest rate increase could also affect debtors’ repayment capacity, particularly for floating-rate financing schemes, which could impact non-performing loan levels. Therefore, multifinance companies need to take necessary risk mitigation measures.
“To maintain financing quality, multifinance companies need to strengthen debtor feasibility analysis, conduct intensive portfolio monitoring, and implement adequate risk mitigation,” Agusman stated in written responses.
For information, multifinance funding sources in April 2026 were still dominated by banks, with a value of Rp282.06 trillion or 74.52% of the total multifinance industry funding sources.