Interest on Sales Tax for used car

[Srinakarin]

Hi all,

 

I've never bought a car before so I am very much in the dark on this.

 

I've been offered financing from a bank on a used car that is 4 years old.

The monthly payment calculations given to me don't match with those provided by online calculators inputted with the same figures.   It seems that the discrepancy is coming from the 7% sales tax added onto the loan calculation.

 

I have contacted the bank and said that I want to pay the sales tax upfront so that it is not added into the loan amount.

 

They've said that since it is a used car, by law the sales tax has to be paid over the duration of the loan term and not paid upfront. My only question is this:

 

Is this legal requirement, or is it company policy being used to increase the interest?

 

Many thanks for anyone who can clarify this

 

 

[BEVUP]

20 minutes ago, Srinakarin said:

company policy being used to increase the interest?

I reckon this is your answer

 

I bought a new car - 50 deposit & the rest through the Dealer finance

 

So out of the monthly payment it goes like this

 

% Capital % Interest & Vat 

 

My interest was 2.5 %, but when I used ANZ (Australia) loan calculator it worked out to be 5% according to monthly payments

[stevenl]

26 minutes ago, BEVUP said:

I reckon this is your answer

 

I bought a new car - 50 deposit & the rest through the Dealer finance

 

So out of the monthly payment it goes like this

 

% Capital % Interest & Vat 

 

My interest was 2.5 %, but when I used ANZ (Australia) loan calculator it worked out to be 5% according to monthly payments

Yes, the interest percentage is always much higher than it looks like.

 

For a new car there should be no interest on sales tax, for a second hand car there should.

[Srinakarin]

Thank you both.

 

It turns out that the online calculator for Krungsri auto finance factors in the sales tax whereas other institutions calculators don't.

 

I guess the reason for that could be to make the calculation look more attractive and then they can lure you in.

 

Anyhow, the 3.79% seems to be a good rate currently over a 6 year term

 

 

[stevenl]

1 hour ago, Srinakarin said:

Thank you both.

 

It turns out that the online calculator for Krungsri auto finance factors in the sales tax whereas other institutions calculators don't.

 

I guess the reason for that could be to make the calculation look more attractive and then they can lure you in.

 

Anyhow, the 3.79% seems to be a good rate currently over a 6 year term

 

 

Take into account that the 3.79% will be charged over the full amount for the full loan duration, therefor ending up much higher in APR terms.

[jackdd]

On 9/13/2018 at 8:16 AM, Srinakarin said:

Thank you both.

 

It turns out that the online calculator for Krungsri auto finance factors in the sales tax whereas other institutions calculators don't.

 

I guess the reason for that could be to make the calculation look more attractive and then they can lure you in.

 

Anyhow, the 3.79% seems to be a good rate currently over a 6 year term 

 

 

The real effective interest rate will be about double of what they tell you. One should never buy on finance anywhere, but especially not in Thailand, they just <deleted> you