Strategy for Buying a Car with a Minimum Wage Salary
21 February, 2024
The salaries received by most workers in Indonesia vary greatly. According to data from a survey released by Salary Explorer in 2023, the average employee salary in Indonesia reaches IDR 3,070,000 per month. This figure is still below the UMP, or Regional Minimum Wage (UMR), for Jakarta for the same year, which is set at IDR 4,901,798. This shows that many workers still struggle to meet their financial needs, including owning a private car.
For workers with a salary equal to the Jakarta Regional Minimum Wage (UMR) or the surrounding area, owning a car is a big achievement. A wise strategy is needed to ensure that car purchases are affordable and within budget. This is a question, especially for the young generation, who are still productive and planning to have their first car.
How do you work around your budget to keep it affordable without sacrificing the quality and features you want? Check out these tips for those of you who earn a minimum wage and want to own or pay for your first car in installments.
1. Save Part of Your Monthly Salary
Setting aside a portion of your monthly salary for car savings is a wise first step. Determine a realistic and consistent amount every month. One effective way is to set aside at least 30 percent of your salary every month for car savings. This step ensures the consistent accumulation of funds.
For example, set a savings target with a minimum wage of IDR 1 million per month. Focus on mandatory needs and reduce non-essential expenses, such as hanging out in cafes or purchasing unnecessary items. With the discipline of saving, you can have sufficient initial funds to make a down payment or pay off part of the cost of buying a car.
2. Choose a Car According to Your Needs
Determining a car that suits your needs and financial capabilities is an important decision on your journey to owning your dream car. Focusing on the features and specifications that are really necessary is a wise step to narrow down the choice of cars that fit your budget and minimize unnecessary expenses.
Apart from considering your personal needs, you also need to look at the current offers on the market. For example, Wuling Alvez, a car with a price of $300 million, offers an attractive combination of features, style, and efficiency.
Alvez is not just a vehicle but also an expression of a lifestyle for creative and productive young people. Today’s SUV, which means “All at Once” with the concept of Style and Innovation in One SUV, combines a sleek, stylish exterior and interior appearance.
Wuling Alvez presents an increasingly classy impression with synthetic leather seats. Then, the interior has a premium soft-touch panel design and soft-touch door trim. The electric sunroof feature is also present to pamper passengers’ eyes in the car cabin. For those of you who are looking for a car at an affordable price, Alvez could be an attractive choice to accompany your daily commute.
3. Car Installment Plan Simulation
Before planning to apply for a car loan, it is recommended to carry out a simulation first. This simulation helps you determine the price of the car on the market, the monthly installment amount of no more than 30%, and the down payment that is appropriate to your financial condition.
For example, with a UMR salary of IDR 5 million, it would be best to set aside between IDR 900,000 and IDR 1.5 million per month. For example, you plan to buy a Wuling Alvez SE car for IDR 214 million. With an installment interest rate of 8% per year and an installment period of 10 years and a down payment (DP) of 45%, the monthly installments you have to pay are around IDR 1.4 million, which is still within reasonable limits.
Another tip is to look for promotions that offer down payment discounts or cash back to reduce the total down payment. However, keep in mind that this calculation does not include additional costs such as insurance and administration. It is best to carry out further verification and consultation with the leasing company or bank to obtain accurate calculations in accordance with applicable conditions and policies.
4. Choose a Longer Credit Tenor
If you have decided to buy a car on credit, it is advisable to choose a longer installment tenor, especially if you earn a salary of around IDR 5 million per month. Although there are concerns regarding interest that may be higher on longer tenors, this can actually help balance your daily finances.
Car installment terms usually range from 12 months (1 year) to 60 months (5 years). If your income is within the minimum wage, you should choose the longest tenor, namely 60 months or 5 years.
From the car loan plan simulation above, a 10-year tenor is shown as an example. It should be noted that choosing an installment tenor of 10-years may result in lower monthly installments, but may result in the total costs to be paid being higher due to the accumulation of greater interest. In addition, the risk of car depreciation can affect the resale value of the car.
5. Get to Know Financial Capabilities
Apart from a house, a car is also a dream for some people. Well, even millennials who earn the minimum wage can own a car. As reported by Detik, according to a financial planner from Tatadana Consulting, Tejasari Asad, a person with a salary of around IDR 4.5 million can still buy a car, although the choices are limited. With a salary of IDR 4.5 million, someone can buy a car for IDR 100 million and pay for it in installments over 5 years.
Likewise, financial planner Andy Nugroho from Advisors Alliance Group Indonesia explained that with a Jakarta UMR salary of, for example, IDR 5 million (rounded up), you can get a car for around IDR 300 million. By utilizing maximum installments of 30%, the installments that can be paid reach around IDR 1.5 million. Even though there are limited choices, having a car with a Jakarta UMR salary is not impossible.
Alvez, as a car priced at IDR 300 million, offers a driving experience that is suitable for the millennial generation, or Gen Z, who are still productive. With its advanced features and stylish design, Alvez gives a sporty impression. Alvez’s efficient engines and latest technology provide a balance between performance and economical fuel consumption, making it a wise choice for young people who want to look stylish but efficient in their daily mobility.
6. Avoid or Settle Other Debts First
Buying a car for a minimum wage can be quite a challenge. Reducing monthly expenses to savings or paying car installments can be a difficult task. Therefore, it is very important to avoid taking on debt or starting new debt while in the process of paying off a car.
Forcing yourself to keep paying installments can lead to financial difficulties, including the risk of the car being withdrawn by leasing. Therefore, it is advisable to avoid debt, especially large amounts.
7. Looking for Additional Work
So that the plan to buy a car with a minimum wage salary can be realized more quickly, looking for additional work to increase your income is a step that can be taken. This additional income can come from various sources, such as side businesses, freelance work, or selling unused items. This step is considered effective as a way to save to buy a car with limited income.
However, before looking for additional income, make sure that your main job is not disturbed and can still be carried out well. Avoid situations where additional income makes you tired or distracts you from your main job.
Choose a side job that suits your skills and doesn’t require too much time, so you can stay focused on your main job and achieve your goal of saving to buy your dream car.
8. Save THR and Annual Bonus
Getting a Religious Holiday Allowance or annual bonus from the company is really fun. Even so, be wise when managing the extra money. Instead of spending it instantly, it’s best to save your Religious Holiday Allowance and annual bonus to save for your dream car. Additionally, consider investing the money to gain future profits.
Before saving or investing, make sure you have a mature financial plan. Determine the amount of money that will be allocated for saving or investing so that you can protect yourself from the temptation to use the money for less essential needs.
Buying a dream car is the dream of many people, including those who earn a minimum wage. Making this dream come true requires determination and a strong intention to save and prepare yourself financially. By applying these tips and good financial preparation, it will be easier for you to realize your dream of owning a dream car at a productive age.
