Why little or no consumer credit in Thailand?

[Brunolem]

While it is possible to buy a big ticket item, such as a car, on credit in Thailand, it is not possible to do so when it comes to buy much cheaper items, such as a fridge or a TV.

 

Some shops pretend to offer a payment at 0% interest over 10 months or so, but this a fake credit which is offered to the very few Thai people who have a credit card...fake because the whole amount is immediately deducted from their credit card.

 

Most consumer products are usually sold on credit almost everywhere, otherwise they wouldn't leave the shelves so quickly...who, even the West, can afford to pay cash for a 60" flat screen and a new iphone every other year?

 

So, what happen in Thailand, is that people get their credit in some other way, generally by borrowing the money at a very high interest rate.

 

Instead of allowing these practices, wouldn't it be better to see the major retailers jump in the 20th century and start implementing consumer credit?

[KittenKong]

Probably because the words "lend" and "give" seem to have the same meaning here.

[allane]

To name only two, Central and The Mall have their own in-house credit cards.  I wouldn't offer credit to anyone in Thailand. Would you?

 

[CharlieH]

From my observation the Thais card/method of choice is AEON, easily obtained and they pay no attention whatsoever to "interest rates" they are more concerned with just getting the item.

Ever seen the queues at the end of each month to pay at these places.....unbelievable.

[Brunolem]

43 minutes ago, allane said:

To name only two, Central and The Mall have their own in-house credit cards.  I wouldn't offer credit to anyone in Thailand. Would you?

 

Well, if they are ready to give a half a million to a million baht credit to buy a car, why not give it for a ten thousand baht flat screen?

 

And there are millions of Thais buying their cars on credit, not to mention the motorbikes...

[KittenKong]

1 hour ago, Brunolem said:

Well, if they are ready to give a half a million to a million baht credit to buy a car, why not give it for a ten thousand baht flat screen?

Car loans are secured by the blue book of the car. Loans for domestic appliances generally have no security.

[FritsSikkink]

There is a lot of bad credit around and they don't want to have to run around the country to get their money. 

[happysoul]

Every region has their credit retailers. Here's one from the north. The first picture is in Chiang Mai city from their main stock. And 2nd is a small shop in a village that sells their home appliances. They sell every thing from motorbike to fan with gas stoves, fridge... If they don't have in the shop, they'll order from main dealer and receive within 2 days. They also sell mostly on credit even for a 900 bht fan.

 

I've seen these kind of shops everywhere in rural Thailand.

 

No need of credit cards...

[milwaukeeboy]

Because this is a good thing. No buying things on credit brings the prices down to the level where savers can afford them.

[zig]

>>Some shops pretend to offer a payment at 0% interest over 10 months or so, but this a fake credit which is offered to the very few Thai people who have a credit card...fake because the whole amount is immediately deducted from their credit card.

 

Well, it is deducted immediately from your card's limit, however you indeed can pay the amount in ten monthly installments and no interest is charged, as long as you pay in time. 

[kingstonkid]

The solution is very simple If you want a big tv to save the money for it.

 

The ticket items that you talk about are not that expensive and most people can pay cash.  The other means is to go to the bank or deal with dealers like Central Do home or Home Pro all the big ; chains offer credit.  They also offer high interest.

 

Too many people in this country use credit and forget or decide not to pay it back.

 

I agree with previous OPS if someone asked me for a loan I would say ok when they geve me something of similar value as collateral

 

[bbz404]

As mentioned by a previous poster, the 0% credits are a real thing and I love them. The amount is fully deducted from your credit limit, but you pay in installments. And I for one am happy seeing low monthly installments at 0% interest.

In general, it's quite easy to get a Thai Credit Card if you're legit (you say only a few have them, however, where I work, even employees earning from 25k up have at least 3 different credit cards) and the limit on it is increased gradually quite quickly if you keep up your payments. Now, if you choose to actually use the credit (instead of reimbursing the full amount due) then you see your consumer credit at the Bank of Thailand capped rate of I believe 18% p.a.

What more do you expect?

 

FYI, my credit limit was raised within 6 months from applying from initially 2 months gross salary to 5.5 months gross salary, which is insane to be honest. All with Citibank and I do not maintain a bank account with them.

[Cake Monster]

Little or no Consumer Credit in Thailand.

Credit = Burnt fingers here

[Searat7]

Many Thai people seem loaded with credit card debt already. Although they have a credit bureau here, the banks have in many cases extended too much to credit to people without properly considering their ability to service the debt (at 20% interest). 

[Acharn]

8 hours ago, CharlieH said:

From my observation the Thais card/method of choice is AEON, easily obtained and they pay no attention whatsoever to "interest rates" they are more concerned with just getting the item.

Ever seen the queues at the end of each month to pay at these places.....unbelievable.

At the Big C department store we use there is a bank of ATMs. One of them is a machine for making payments to AEON. There's always a line at it. My late wife had an AEON account. I agree that most people who use a credit card do not pay attention to interest rates. I think this is as true in the U.S. and England as it is here. I wonder how much exposure the OP has had to Thailand. In my experience credit is widely available, even aside from the neighborhood loan sharks who charge 20% a month.

[CharlieH]

2 minutes ago, Acharn said:

At the Big C department store we use there is a bank of ATMs. One of them is a machine for making payments to AEON. There's always a line at it. My late wife had an AEON account. I agree that most people who use a credit card do not pay attention to interest rates. I think this is as true in the U.S. and England as it is here. I wonder how much exposure the OP has had to Thailand. In my experience credit is widely available, even aside from the neighborhood loan sharks who charge 20% a month.

Correct.

Lets not forget the extortionate % at the pawn shops too ! People handing in Gold. 

[Brunolem]

4 minutes ago, Acharn said:

 I wonder how much exposure the OP has had to Thailand. In my experience credit is widely available, even aside from the neighborhood loan sharks who charge 20% a month.

Quite a lot of exposure, and I indirectly mentioned the loan sharks credit in my opening post.

 

My point is not about getting credit in general, but getting it directly from the seller.

 

If Honda or Yamaha sell motorbikes on credit, a lot of them actually, why does Home Pro, for example, doesn't do the same for washing machines or flat screens?

 

Why let the population deal with dubious characters instead of using the classic system in place in most countries? 

 

If someone is ready to pay 20% to an outside lender, he will be more than happy to pay only 10% directly to Home Pro, or any other major retailer...

[HHTel]

For a country that has no consumer credit as the OP states, consumer debt is at an all time high.  Why is that?

[Shiver]

5 hours ago, milwaukeeboy said:

Because this is a good thing. No buying things on credit brings the prices down to the level where savers can afford them.

When you buy a bigger ticket item and ask for their best price because you're buying cash, and they won't or can't discount, you realise it's not a bike or car shop you're in at all, but a credit house by another name.

 

 

[Shiver]

4 hours ago, zig said:

>>Some shops pretend to offer a payment at 0% interest over 10 months or so, but this a fake credit which is offered to the very few Thai people who have a credit card...fake because the whole amount is immediately deducted from their credit card.

 

Well, it is deducted immediately from your card's limit, however you indeed can pay the amount in ten monthly installments and no interest is charged, as long as you pay in time. 

I've had the experience a couple of times when buying from China for delivery here, that they will accept credit cards, and I tell them I don't have a credit card, but I do have a debit card, and they refuse.  What's that all about?  Everything is stacked in their favour (no risk of chargeback, cash on the nail just the same).

[connda]

11 hours ago, Brunolem said:

While it is possible to buy a big ticket item, such as a car, on credit in Thailand, it is not possible to do so when it comes to buy much cheaper items, such as a fridge or a TV.

They are doing you a huge favor.  You should ask yourself: "Why do I want to be in debt?"
Live within your means.  In the long run you'll be happier. 

[Pib]

10 hours ago, Brunolem said:

Well, if they are ready to give a half a million to a million baht credit to buy a car, why not give it for a ten thousand baht flat screen?

 

And there are millions of Thais buying their cars on credit, not to mention the motorbikes...

 

9 hours ago, KittenKong said:

Car loans are secured by the blue book of the car. Loans for domestic appliances generally have no security.

 

And many times on a car loan there is also a guarantor like a family member or friend on top of the car itself as collateral. 

Edited September 10, 2018 by Pib

[Brunolem]

1 hour ago, connda said:

They are doing you a huge favor.  You should ask yourself: "Why do I want to be in debt?"
Live within your means.  In the long run you'll be happier. 

Sure, but this is not my point.

 

Generally speaking, if you don't give easy and regulated access to something people want, they find ways to get it anyway!

 

The alcohol prohibition in the 1920s or the prohibition of some drugs these days have shown again and again that someone will already be here to supply what's supposedly not available.

 

In the case of credit, it is the loan sharks who supply the money and prosper on the back of the poor who don't have access to regulated credit , because most big retailers don't offer it, as they do in other countries.

 

I am not debating the pros and cons of credit, but only the way it is accessible.

[Mark1066]

21 hours ago, HHTel said:

For a country that has no consumer credit as the OP states, consumer debt is at an all time high.  Why is that?

It isn't at an all time high. It has come down 7 out of the last 8 quarters.

[Pib]

8 minutes ago, Mark1066 said:

It isn't at an all time high. It has come down 7 out of the last 8 quarters.

Not according to these charts....it's steadily heading north.

 

 

[Mark1066]

[Mark1066]

5 minutes ago, Pib said:

Not according to these charts....it's steadily heading north.

 

 

It's the debt to GDP ratio you should be looking at, not the bare figures. Of course credit will increase as an economy expands.

[rickudon]

Rubbish to the OP. 

 

The one thing i (and the wife) couldn't get credit for was a car. My wife never has any trouble buying fridge-freezers, fans, beds and many other things without any cash or cards - they just need an address. (alas!)

[HHTel]

Quote

Thailand's household debt accounted for 78.0 % of the country's Nominal GDP in Dec 2017, compared with the ratio of 79.3 % in the previous year. Thailand's household debt to GDP ratio is updated yearly, available from Dec 2003 to Dec 2017. The data reached an all-time high of 80.8 % in Dec 2015 and a record low of 42.2 % in Dec 2003. CEIC calculates Household Debt as % of Nominal GDP from quarterly Household Debt and annual Nominal GDP. The Bank of Thailand provides Household Debt in local currency. National Economic and Social Development Board provides Nominal GDP in local currency. Loans are used due to the lack of Flow of Funds statistics.

In the latest reports, Thailand's Household Debt reached 386.0 USD bn in Mar 2018. Money Supply M2 in Thailand increased 5.3 % YoY in Jun 2018. Thailand's Foreign Exchange Reserves was measured at 198.4 USD bn in Jun 2018. The Foreign Exchange Reserves equaled 9.8 Months of Import in Jun 2018. Thailand's Domestic Credit reached 604.7 USD bn in May 2018, representing an increased of 4.8 % YoY. The country's Non Performing Loans Ratio stood at 2.9 % in Jun 2018, compared with the ratio of 2.9 % in the previous quarter.

You are correct in that it's not an all time high.  That happened in 2015.  However it's still very high at 78% of GDP and no real signs of it coming down by much.  78% is not far off the 80% shown in 2015.

[Mark1066]

4 minutes ago, HHTel said:

You are correct in that it's not an all time high.  That happened in 2015.  However it's still very high at 78% of GDP and no real signs of it coming down by much.  78% is not far off the 80% shown in 2015.

It's 68% according to my sources and whether we take your figure or mine as correct, that compares to 78.7% in the USA and 86.7% in the UK so I'm not sure why Westerners on this forum feel they are on some sort of moral high ground when it comes to consumer debt?

Edited September 11, 2018 by Mark1066