Circular Letter of the Financial Services Authority Number 19/SEOJK.05/2015 Concerning the Amount of Down Payment for Motor Vehicle Financing for Financing Companies

To:
The Board of Directors of Financing Companies

COPY

CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 19/SEOJK.05/2015

CONCERNING

THE AMOUNT OF DOWN PAYMENT
FOR MOTOR VEHICLE FINANCING
FOR FINANCING COMPANIES

In relation to the mandate of Article 17 paragraph (3) of the Financial Services Authority Regulation Number 29/POJK.05/2014 concerning the Conduct of Business by Financing Companies (State Gazette of the Republic of Indonesia Year 2014 Number 364, Supplement to the State Gazette of the Republic of Indonesia Number 5638), it is necessary to regulate changes in the amount of down payment for motor vehicle financing for financing companies in this Circular Letter of the Financial Services Authority as follows:

I. GENERAL PROVISIONS

In this Circular Letter of the Financial Services Authority, the following terms are meant:

1. Financing Company is a business entity that conducts financing activities for the procurement of goods and/or services.

2. Investment Financing is financing for the procurement of capital goods and associated services required for business/investment activities, rehabilitation, modernization, expansion, or relocation of business/investment premises, provided to the debtor for a period longer than 2 (two) years.

3. Multi-purpose Financing is financing for the procurement of goods and/or services required by the debtor for use/consumption and not for business purposes (productive activities) within the agreed period.

4. Purchase with Installment Payment is a financing activity in the form of procurement of goods and/or services purchased by the debtor from the provider of goods or services with installment payments.

5. Down Payment for Motor Vehicle Financing is an upfront or down payment in cash, the source of which comes from the debtor (self-financing), in the context of procuring a motor vehicle using the Purchase with Installment Payment method.

6. Debtor is a business entity or individual who receives financing for the procurement of goods and/or services from a Financing Company.

7. Quality of Problematic Financing Receivables (Non Performing Financing), hereinafter abbreviated as NPF, is financing receivables consisting of financing receivables with less active, doubtful, and bad quality for motor vehicle financing using the Purchase with Installment Payment method, without considering the provision for loan loss reserves.

8. Ratio of Problematic Financing Receivables (Non Performing Financing), hereinafter referred to as NPF Ratio, is the comparison between NPF and total financing receivables for motor vehicles using the Purchase with Installment Payment method.

II. AMOUNT OF DOWN PAYMENT FOR MOTOR VEHICLE FINANCING FOR FINANCING COMPANIES

1. Financing Companies having an NPF Ratio value lower than or equal to 5% (five percent) are required to apply the down payment amount regulations for Motor Vehicle Financing to Debtors as follows:

a. for two- or three-wheeled motor vehicles, at least 15% (fifteen percent) of the selling price of the relevant vehicle;

b. for four-wheeled or more motor vehicles used for Investment Financing (productive purpose), at least 15% (fifteen percent) of the selling price of the relevant vehicle; or

c. for four-wheeled or more motor vehicles used for Multi-purpose Financing (non-productive purpose), at least 20% (twenty percent) of the selling price of the relevant vehicle.

2. Financing Companies having an NPF Ratio value higher than 5% (five percent) are required to apply the down payment amount regulations for Motor Vehicle Financing to Debtors as follows:

a. for two- or three-wheeled motor vehicles, at least 20% (twenty percent) of the selling price of the relevant vehicle;

b. for four-wheeled or more motor vehicles used for Investment Financing (productive purpose), at least 20% (twenty percent) of the selling price of the relevant vehicle; or

c. for four-wheeled or more motor vehicles used for Multi-purpose Financing (non-productive purpose), at least 25% (twenty-five percent) of the selling price of the relevant vehicle.

III. IMPLEMENTATION PERIOD OF DOWN PAYMENT AMOUNT FOR MOTOR VEHICLE FINANCING

1. The application of the Down Payment amount for Motor Vehicle Financing as referred to in Roman numeral II is calculated based on monthly reports as of June 30 and December 31.

2. The application of the Down Payment amount for Motor Vehicle Financing as referred to in item 1 shall take effect on August 1 or February 1 for the following 6 (six) month period.

Example:
If the monthly report of a Financing Company as of June 30, 2015 has an NPF Ratio value higher than 5% (five percent), then that Financing Company applies the down payment amount regulations for Motor Vehicle Financing as referred to in Roman numeral II item 2. The application of the Down Payment amount for Motor Vehicle Financing mentioned takes effect starting from August 1, 2015 until January 31, 2016.

If the monthly report of the Financing Company as of December 31, 2015 shows that the NPF Ratio of said Financing Company is still higher than 5% (five percent), then that Financing Company continues to apply the down payment amount regulations for Motor Vehicle Financing as referred to in Roman numeral II item 2. The application of the Down Payment amount for Motor Vehicle Financing mentioned takes effect starting from February 1, 2016 until July 31, 2016.

If the monthly report of the Financing Company as of June 30, 2016 shows that the NPF Ratio of said Financing Company is already lower than 5% (five percent), then that Financing Company may apply the down payment amount regulations for Motor Vehicle Financing as referred to in Roman numeral II item 1. The application of the Down Payment amount for Motor Vehicle Financing mentioned takes effect starting from August 1, 2016 until January 31, 2017.

IV. PROCEDURE FOR CALCULATING THE DOWN PAYMENT AMOUNT FOR MOTOR VEHICLE FINANCING

1. The calculation of the Down Payment amount for Motor Vehicle Financing is performed against the selling price of the vehicle after deducting price discounts (discount) and other deductions.

Example:
Motor price: Rp10,000,000.00
Price discounts (discount) and other deductions given: Rp500,000.00 Selling price of vehicle: Rp10,000,000.00 – Rp500,000.00 = Rp9,500,000.00 Down Payment for Motor Vehicle Financing that must be charged and paid in a single cash payment is 15% x Rp9,500,000.00 = Rp1,425,000.00

2. The calculation of the Down Payment amount for Motor Vehicle Financing as referred to in item 1 does not include the first installment, survey fees, provisos, insurance, guarantees, fiduciary rights, notary fees, or other costs.

Example 1 (insurance costs, guarantees, or other costs paid in cash by the Debtor):
Motor price: Rp10,000,000.00
Price discounts (discount) and other deductions given: Rp500,000.00 Insurance costs, guarantees, or other costs paid by the Debtor in cash: Rp1,000,000.00 Selling price of vehicle: Rp10,000,000.00 – Rp500,000.00 = Rp9,500,000.00 Down Payment for Motor Vehicle Financing that must be charged and paid in a single cash payment is 15% x Rp9,500,000.00 = Rp1,425,000.00 Costs paid by the Debtor in a single cash payment (insurance costs, guarantees, or other costs paid in cash by the Debtor) = down payment (Rp1,425,000.00) + insurance costs, guarantees, or other costs (Rp1,000,000.00) = Rp2,425,000.00 Total financing by the Financing Company to the Debtor = selling price of vehicle (Rp9,500,000.00) – down payment (Rp1,425,000.00) = Rp8,075,000.00

Example 2 (insurance costs, guarantees, or other costs not paid in cash (installment) by the Debtor):
Motor price: Rp10,000,000.00
Price discounts (discount) and other deductions given: Rp500,000.00 Insurance costs, guarantees, or other costs: Rp1,000,000.00 Selling price of vehicle: Rp10,000,000.00 – Rp500,000.00 = Rp9,500,000.00 Down Payment for Motor Vehicle Financing that must be charged is 15% x Rp9,500,000.00 = Rp1,425,000.00 Costs paid by the Debtor if insurance costs, guarantees, or other costs are not paid in cash by the Debtor or are paid in installments = down payment (Rp1,425,000.00) Total financing by the Financing Company to the Debtor = insurance costs, guarantees, or other costs (Rp1,000,000.00) + motor vehicle financing price (Rp8,075,000.00) = Rp9,075,000.00

V. COMPLIANCE ENFORCEMENT AND SANCTIONS

Financing Companies that do not meet the down payment amount regulations for Motor Vehicle Financing as referred to in this Circular Letter of the Financial Services Authority are subject to the provisions as referred to in Article 61 and Article 63 of the Financial Services Authority Regulation Number 29/POJK.05/2014 concerning the Conduct of Business by Financing Companies.

VI. CLOSING

The provisions in this Circular Letter of the Financial Services Authority shall take effect on the date of determination.

To ensure that everyone knows this, it is ordered to announce this Circular Letter of the Financial Services Authority by placing it in the State Gazette of the Republic of Indonesia.

Determined in Jakarta on June 30, 2015

EXECUTIVE HEAD OF INSURANCE SUPERVISOR,
PENSION FUNDS,
FINANCING INSTITUTIONS,
AND OTHER FINANCIAL SERVICE INSTITUTIONS
FINANCIAL SERVICES AUTHORITY,
Signed,
FIRDAUS DJAELANI

STATE GAZETTE YEAR NUMBER

Copy matches the original
Director of Law I
Department of Law,
Signed,
Sudarmaji