Application of the Principle of Good Faith in Consumer Financing Agreements

Abstract

Increasingly diverse community mobility now results in an increase in the need for transportation equipment, both in terms of quantity and quality, however, on the other hand the available public transportation facilities are far from what is expected. This encourages to be encouraged to have a private facility. Today the development of motorized vehicle use is increasing rapidly. This is because motorized vehicles have advantages compared to public transportation, for example in terms of comfort and safety when on the road. The increase in transportation needs also boosted the growth of Consumer Financing Institutions perceived by consumers as a simpler procedure compared to bank financing institutions. The agreement signed between consumers and the Consumer Financing Institution is a standard agreement, in which consumers have no right to determine the contents of the agreement. This leads to the frequent occurrence of defaults on the part of consumers, because consumers do not understand the contents of the agreement properly. Good faith is an agreement principle that can control the occurrence of agreements that tend to incriminate parties. This paper aims to reveal the role of the principle of good faith in the establishment and implementation of the Consumer Financing Agreement. The study method used is a normative and philosophical study method based on secondary data.