As an asset, the value of a car will continue to decrease over time. Therefore, owning a car certainly requires good financial management.
Of course, a car will add the value of your net worth, because a car can be categorized both as an investment asset or useful asset.
When the car is used for personal purposes or daily mobility, its status will become a useful asset.
It’s different if your car is used to earn money such as transporting passengers, transporting merchandise, or being traded to showrooms or customers, then a car becomes an investment asset.
As is known, there will be costs that must be incurred by car owners for their cars. The following are financial planning tips from Lifepal.co.id for car owners.
Prepare an emergency fund for your car
Ideally, one should provide an emergency fund equivalent to at least 3 to 6 times the monthly expenses. Why?
Because an emergency fund will be useful to cover living expenses when the person concerned loses income. So, what is the emergency fund for a car?
The older the car, the more frequent the replacement of parts it will need. Replacement of spare parts during periodic service obviously raises unexpected costs that must be paid.
For example, car batteries that have been expired, clutch linings, brakes, spark plugs, oil, and filters that must be replaced in a matter of kilometers.
Not to mention, car owners are also vulnerable to the risk of a flat tire in the middle of the trip, either due to insufficient air pressure or due to other causes.
Therefore, it is quite important to allocate funds for these needs. It’s okay to save at least 1% to 5% of your monthly income for a car emergency fund. Just keep the funds in a savings account for easy access.
Protect Your Car
Basically, insurance is an agreement between the insurer and the insured, which provides compensation for the risk of loss, damage, death, or loss of expected profits, which may be suffered due to an unexpected event. The only thing that can protect you from the financial risk of damage or loss of your car is car insurance.
In general, car insurance consists of all risk and total loss only (TLO). All risks will bear any risks that occur, including abrasions on the original body in accordance with applicable regulations.
While TLO bears the risks when your car is lost, or suffers total damage up to 75% of the actual car price.
TLO premiums tends to be cheaper than all risks. However, the selection must be adjusted to the potential risks that will be experienced by the car owner.
Make sure to take a car installment that fits your income
For those of you who are buying a car in installments, you may not know whether your monthly car installment is too large or not.
How could we know? By calculating the Debt Service Ratio (DSR). DSR shows the total debt installments that we have compared to monthly income, not only car payments, but also credit card installments, and other credit if any.
To calculate the DSR value, you can compare the total amount of your installments with your monthly income. If the amount of car installments and other debts is still below 35% of your income, then the installment amount is still reasonable.
But if it’s excessive, it means you have to rearrange your debt payments, either by extending the loan tenor or by paying off other debts outside of high-interest car loans.
You can use the Kalkulator Angsuran Kredit Flat Lifepal to find out what the most suitable installment tenor is for you. Try so that the amount of installments you pay each month does not exceed 35% of your income.
Those are some financial planning tips for car owners. Especially for those of you who buy a car on credit, of course you will be given car insurance from a trusted credit or multi-finance institution. For those of you who want to get information about the best motor vehicle protection, you can contact ABDA Insurance at (021) 280 90111 or via ABDA Insurance’s WhatsApp Business at 0817 001 0022. You can also visit Lifepal to be able to purchase ABDA Motor Vehicle Insurance online.