Having a debt or credit is like a double-edged sword, where if planned properly, the necessities of life and financial plans can be realized. Conversely, if it is not based on wise decisions and the ability to manage finances, then debit or credit can make life difficult. Talking about credit, BFI friends need to know the two types of credit below.
Productive credit is a credit or loan that aims to produce something, both income and assets. Examples of productive loans include working capital loans (KMK), business loans, and homeownership loans (KPR).
For example, the debtor applies for a loan or credit to open a chicken noodle business with a motor vehicle BPKB guarantee of Rp. 15 million with a tenor or loan period of 4 years, where the debtor must pay installments and interest every month for 48 months. Based on the estimation, the debtor can get a profit ranging from IDR 2.5-9 million. From the profits obtained, the debtor can pay installments on productive credit from the profits and the remaining profits can be used for other things.
For more complete productive credit information, see the following article.
Next is consumer credit, which is credit or money loans that are not intended for needs or activities that produce but only desires. Applying for a loan with consumptive intent cannot provide any profit opportunities or results. In addition, when compared to investment loans, consumer loans have a higher interest rate because the risk generated is also quite large. This is supported by data from the Indonesian Banking Statistics released by the OJK in September 2016. From these data, it can be concluded that the consumer credit interest rate is at 13.72%. Meanwhile, investment credit and working capitals were 11.36% and 11.62%, respectively.
Example of Consumer Credit
Then, what are the costs or activities that can be considered consumer credit or debt? For more details, read the info below until the end.
Cost of education
An example of consumer credit is the cost of education. Not infrequently people make loans for educational costs that are useful for the future. However, the cost of education is still said to be consumptive credit.
Next is home renovation. Home renovations are said to be consumptive loans because they are usually based on the desire of the homeowner to beautify his residence. However, home renovations can generate more value if the occupants of the house intend to sell it. Houses with sturdy and good conditions usually have a higher selling value.
Next is buying furniture, furniture is an object that has usability and aesthetic value in every home. However, furniture has a service life that makes the furniture no longer have value if the item is damaged.
Applying for a loan with the aim of holding a reception or for wedding purposes also includes consumer credit because it cannot generate money in the future and is based only on interests and desires.
Buying Expensive Food
Buying food that is too expensive or often ordering food via online motorcycle taxi services using the pay-later feature is also a consumptive credit where you will not get results and have to spend money in the future and pay the interest that is from the service.
Buying the Latest Gadgets and Gadgets
Vehicles and gadgets are two objects that experience depreciation or a decrease in assets due to age or duration of use. This causes the prices of these two goods to decrease over time. Buying the latest vehicle or the latest mobile phone in installments is an example of consumer credit that is commonly used by the public and should be avoided. However, the installment of the vehicle can still be said to be profitable if it is used for business operations.
How to Avoid Consumptive Credit
Basically, having consumer credit doesn't hurt as long as it's paid on time. It aims to prevent you from having a bad credit score and credit record. To avoid consumptive credit and be more efficient, here are some ways you can do it.
Making a Budget
The first way is to make a budget from the income you have. If you intend to buy something, you should avoid going into debt and buy goods according to the remaining money you have.
Live a Simple Lifestyle
Next is to live a simple lifestyle. Besides being able to avoid consumptive behavior, a simple lifestyle can increase gratitude, train you to manage finances and be responsible for the money you have, and reduce the risk of stress.
Get used to saving
In addition, you can also get used to saving to avoid credit debt. You can save first before buying something. Also plan the items you want to buy according to their function and designation. Avoid buying things because of aesthetics or just eye-catching.
That's some information about BFI Finance's consumptive credit. So, from the explanation above, do you prefer to take consumptive debt or not? All choices depend on your BFI friend! If you choose to take consumer debt, make sure to pay it on time and manage your finances wisely so that your credit doesn't get worse.
You can apply for a loan for various purposes ranging from productive and consumptive at BFI Finance with BPKB guarantees for cars, and motorbikes, to house certificates. For product information and submissions, click the following link.