REPUBLIKA.CO.ID, JAKARTA - Head of Taxation of Indonesian Automotive Industry Association (Gaikindo), Yong D Sugiarto predicted the increase of benchmark of interest rate of Bank Indonesia (BI) to seven percent would reduce car sales. 

"I'm sure leasing companies will rise their loan interest rates sooner or later, next week or next month," Sugiarto said recently.

Car sales using credit sytem reaches 70 to 80 percent, while rest are paid in cash. The higher the interest rate then less consumers are interested in car purchasing. 

Gaikindo hopes the impact of loan interest rate increase is not too significant. He believes that upper middle class segment of society will not be significantly affected by loan interest rate increase.

One of leasing companies in Indonesia, PT Mandiri Tunas Finance said this company rose its interest rate in September 1, 2013 after earlier the company had just risen its interest rate on August 5, 2013 to five percent flat for three years. 

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