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Leasing-products-cars

Sudibyo M. Wiradji
Contributor
Jakarta

Offering flexible
alternatives in
obtaining funding

When you ask someone about the best alternative, other than
banks, to obtain funds to purchase a car, you will probably be
told to try a leasing company.

Leasing means renting something from multifinance companies
either in the form of office equipment or heavy machinery. In
most cases, the person taking out the lease is given the option
of owning the goods when the leasing term is completed.

However, in Indonesia, the word "leasing", has a different
meaning. It also refers to consumer financing services offered by
nonbank financing companies or multifinance companies.

Well, let's just forget about the term. The most important
thing for us as customers, is to find a good bargain whenever we
need the services of such companies.

At present there are a lot of multifinance companies in the
country. Although most of them are based in Jakarta, there are a
number of branches in major cities.

PT ORIX Indonesia Finance (ORIF), for example, provides
direct finance leases and operating leases for a wide array of
items, including office automation (AO). Dipo Star Finance (DSF)
is another company offering similar services, with its main
business field focused on leasing, consumer finance and
factoring.

Several multifinance companies focus on providing loans for
car purchases such as PT Otto Multiartha Financial Services and
PT Astra Sedaya Finance (ASF), also known as Astra Credit Company
(ACC).

Multifinance companies mostly target corporate buyers although
individuals who have a tax registration number (NPWP) can also
benefit from their services.

Like banks, multifinance companies offer installment terms of
between one year to three years to repay their loans. For
corporate clients, such repayment terms are quite helpful
particularly in maintaining their cash flow at a healthy
position.

Most multifinance companies provide finance for the purchase
of automobiles for companies or individuals, with the average
down payment of between 25 percent and 30 percent of the sale
price. The car can be paid for in installments, with a lease rent
term between 12 months to 36 months.

For certain multifinance companies, they offer a fixed
interest rate of between 11 percent and 12 percent per year,
compared to 23 percent per year set by most banks.

Unlike banks, multifinance companies generally offer more
flexibility in providing their financial services.

Multifinance companies mostly apply a simple and quick process
that takes relatively shorter time. For instance, approval on a
financing lease for an automobile usually takes two to three
days.

"In addition, leasing companies offer competitive flat
interest rates and flexible financing," said PT Otto Multiartha's
marketing manager Franky Natawijaya.

ASF/ACC were established to boost the sales of automobiles
produced by Astra through loan financing schemes.

"ACC sees significant increases in the demand for motorized
vehicles from consumers in parallel with the sale of motorized
vehicles," the company's corporate communication head Ariadi
Rahardjo said.

The company has over 500,000 customers. It has financed the
purchase of new automobiles produced by Astra and used cars of
different brands. "The loans channeled for the purchase of
automobiles produced by Astra accounts for 30.9 percent, valued
at over Rp 5 trillion," he said.

The company, with 27 branches in 24 cities, also provides
financial services for the purchase of used cars from individuals
and not from dealers.

Supported by PT Astra International Tbk. and GE
Capital, the company has received an ISO 9001 certificate.

At Otto Multiartha, customers can obtain finance to purchase
new cars of different brands produced in Indonesia and built-up
(CPU) cars imported by authorized agents.

"Our leasing business focuses on retail. We provide financial
services for the individual customer," said Franky.

The company sets a fixed interest rate of 11 percent, with
the maximum installment term of three years. The down payment is
25 percent of the sale price.

"As long as the required documents are complete, it
takes between one and two days to get the car," he said.

PT Otto Multiartha financed the purchases of 16,000 vehicles
in 2000 and 20,000 vehicles in 2001. The company expects to
finance purchases of 24,000 vehicles this year.