Riba-Free Car Loan Guide at Toyota Astra Finance Services (TAF)

A Sharia-compliant car loan, or a riba-free loan, has become a popular solution for many people looking to own their dream car while adhering to Islamic trading practices. If you are interested in this option, it is important to first understand the requirements you must meet. Here is a brief guide on how to get a car loan without riba!

Requirements for Applying for a Riba-Free Car Loan

As with other types of loans, the requirements for applying for a riba-free car loan will vary depending on the financial institution you choose. At Toyota Astra Finance (TAF), the documents you need to submit when applying for a car loan are:

• Original Customer ID (KTP) / Indonesian Permanent Residency Permit (KITAP) / Indonesian Temporary Residence Permit  (KITAS) with signature

• Original Spouse’s ID (KTP) / Indonesian Permanent Residency Permit (KITAP)/ Indonesian Temporary Residence Permit  (KITAS)

• ID in the name of the vehicle registration certificate (STNK), if required

• Guarantor’s ID, if required

• Tax Identification Number (NPWP)

• Family Registration Certificate (Kartu Keluarga)

• Bank statement or payslip for the last three months

In addition to the above documents, you may also need to provide supporting documents if required, such as:

• Vehicle Order Letter (SPK)

• ID card or other information supporting the customer’s identity

• Proof of home ownership or rental agreement

If you have any questions about the required documents for a riba-free car loan, you can contact TAF directly for further clarification.

Also Read: Toyota Car Credit Requirements that You Need to Know in 2024

Benefits of a Riba-Free Car Loan

In addition to complying with Islamic principles, a riba-free car loan offers other advantages, such as fixed installment amounts, a halal source of funds, and the allocation of late fees for positive purposes.

Here are the key benefits of a riba-free car loan:

1. Fixed Installment Amounts

One of the advantages of a Sharia-compliant car loan is the fixed installment amount from the start until the end of the financing period. Unlike conventional schemes, which are affected by fluctuations in the Bank Indonesia interest rate, the installments of a Sharia loan remain unchanged. This provides certainty in your monthly budgeting, making it easier to manage your finances.

2. Halal Source of Funds

A Sharia-compliant car loan ensures that every transaction is halal, so there is no need to worry about the source of the funds. The entire financing process, from contract to settlement, adheres strictly to Sharia principles.

Sharia bank funding comes from various Sharia-compliant instruments, such as equity capital, reserves, retained earnings, and third-party funds obtained through profit-sharing products like wadiah current accounts, mudharabah savings, and mudharabah time deposits. This allows you to own your dream vehicle without concerns over religious aspects of financial transactions.

3. Late Fee Allocation for Positive Causes

One unique aspect of the Sharia car loan scheme is how late payment penalties are managed. Unlike conventional systems, in Islamic banking, late payment penalties can be allocated to social institutions. This policy, sanctioned by the National Sharia Council of the Indonesian Ulama Council (DSN-MUI), aims to encourage customers to be more disciplined in fulfilling their financial obligations.

However, it is important to understand that this allocation only applies to customers who intentionally delay payments despite having the ability to pay. Customers who are late due to circumstances beyond their control, such as natural disasters or economic hardships, will not be penalized.

Tips for Taking a Riba-Free Car Loan

As with any loan, you should carefully consider several factors to ensure that the loan you take does not become a burden. These include choosing a trustworthy institution, calculating costs accurately, and selecting a car in good condition.

Here are the detailed explanations:

1. Choosing a Trustworthy Institution

Before deciding to apply for a Sharia-compliant car loan, it is crucial to carefully select the financial institution. With the increasing number of institutions offering this product, ensure that you conduct thorough research first. Make sure the institution is registered and supervised by the Financial Services Authority (OJK) and the National Sharia Council. This step is essential to minimize the risk of future losses and ensure the security of your transactions.

2. Accurate Cost Calculation

The next tip is to determine costs that match your financial capacity. It is advisable to carefully calculate your total income before deciding to apply for a loan. This way, you can choose a car that not only meets your needs but also does not strain your monthly budget.

3. Choosing a Car in Good Condition

Even if the financial institution is trustworthy, do not overlook inspecting the car thoroughly before deciding to purchase. Conduct a full check from exterior to interior, including the installed features. Ensure the car is in prime condition to avoid additional repair costs in the future.

That is the guide on how to apply for a riba-free car loan. A riba-free car loan has become a top choice for many people who want to acquire their dream car while adhering to Islamic rules. If you are looking to do the same, you can obtain Sharia-compliant car loan services from TAF. First, simulate your Sharia car loan to determine the car and costs that best suit your needs!