ABSTRACT
This study aims at analyzing whether VAT-easing in Indonesia during the pandemic encourages consumers to buy cars on credit or propensity toward indebtedness. Specifically, this study evaluates whether emotional factors, materialism, and financial literacy affect the intention to buy a car on credit when the Indonesian government implements a VAT-easing policy on new cars with specific criteria. A survey has been conducted involving consumers who bought a car during the VAT-easing period in 2021 or intended to buy a new car with the VAT-easing facility. Data was collected using a structured questionnaire. The analysis was performed using the regression method using SPSS. It was revealed that financial planning behavior, materialism, and emotional variables significantly affect propensity toward indebtedness. This research contributes to research on personal finance because there is limited research regarding the tendency to buy cars on credit or indebtedness in Indonesia. This research is regarded as necessary because the regular repayment for the loan accounts is significant to monthly household spending among the Indonesian middle-class group.
