I see my mistake. Thank you for the time to explain that. When I read "Bunga 1 tahun 3%", I interpreted that as the first year interest. It never crossed my mind they would be advertising a 1 year car loan. On a 4 year car loan "Bunga 4 tahun 4,25%" means that it is 4.25% for every year including year 1. I thought it was like a promotional rate discounted for first year, but they made it up on the later years. Low introductory interest would be a good trick for luring in customers. Offer a super low interest rate for the first year, then progressively larger interest rates in later years so that you have a much higher effective rate than it would appear. "No Interest for the First Year!" Then slap a nice big prepayment penalty and origination fee in the fine print and get a lot of money lending. The rules around interest rate calculations seems so deceptive here, why not allow that too.
Can foreigners get into lending here?
Flavus is correct. The United States typically has no prepayment penalty on mortgages. Prepayment penalties are both federally and state regulated. Between the two, it covers the majority of mortgages in the United States. The few that have prepayment penalties are usually 20% before it is triggered. Most have a set period too, such as only if it is under 1 year.
Almost half of all mortgages in the United States are backed by the Federal Government, where EU mortgages are funded by individual depositors. From a public policy standpoint, no prepayment penalty is in the interest of central banks. The Federal Reserve is a much more powerful central bank. Although the regulations against prepayment penalties may hurt individual banks in certain situations, it gives much greater power to the Central Bank to regulate the currency and economy. Don't worry about the banks. They make money with an upfront origination fee on any loan or refinancing.
Can foreigners get into lending here?
Flavus is correct. The United States typically has no prepayment penalty on mortgages. Prepayment penalties are both federally and state regulated. Between the two, it covers the majority of mortgages in the United States. The few that have prepayment penalties are usually 20% before it is triggered. Most have a set period too, such as only if it is under 1 year.
Almost half of all mortgages in the United States are backed by the Federal Government, where EU mortgages are funded by individual depositors. From a public policy standpoint, no prepayment penalty is in the interest of central banks. The Federal Reserve is a much more powerful central bank. Although the regulations against prepayment penalties may hurt individual banks in certain situations, it gives much greater power to the Central Bank to regulate the currency and economy. Don't worry about the banks. They make money with an upfront origination fee on any loan or refinancing.
