Thai Bank Credit Now Readily Available

[george]

Bank credit now readily available

BANGKOK: -- It has probably never been easier to obtain extra money to cover those unexpected expenses

Thai people have never been able to access personal credit as easily as they can today. You can see outlets providing personal loans almost everywhere all the time at banks, department stores, BTS stations and even on the footpath of many main roads.

It is also easy to apply for a personal loan, a clear loan that needs no guarantor or loan collateral.

Moreover, there is no minimum monthly income requirement for personal loan borrowers. However, those who want to apply for credit cards are required to have a minimum monthly income of at least Bt15,000.

However, while the Bank of Thailand fixed the interest rate charge on credit card loans at a maximum of 18 per cent, there is no limit for interest rate charges on personal loan borrowers.

Thus, personal loan interest rates are generally higher than credit card loan rates at around 20-26 per cent per annum. This is considered high compared with the 8 to 10 per cent for mortgage loans.

Despite their high interest rates, personal loan products have so far been attractive for consumers. Many of them have had their dreams come true because of personal loans.

The current strong competition in the personal loan market has benefited consumers significantly as they can enjoy many choices offered with attractive promotion campaigns including products, prices, services and gifts.

There are currently three groups of personal loan providers: non-bank institutions, Thai banks and foreign banks. The non-bank companies focus more on price strategy, generally offering lower rates than the other two groups.

Krungthai Card (KTC) is the most aggressive in this business. The company has five products for personal loans, four of which were newly launched last month: KTC I Cash Short Term, Motorcycle Loan, Home Renovation, and KTC I Cash for Your English. Its existing product is the KTC personal loan.

Its four new products offer interest rates around 12-27 per cent per annum, while the KTC personal loan has an interest rate of 21-27 per cent per year, although the company will this month cut its minimum rate to 17 per cent.

Applicants for the KTC personal loan must have a minimum monthly income of Bt20,000 for all its products, while customers are also charged a loan arrangement fee of Bt500 to Bt2,000.

The newcomer to personal loan provision is Capital OK, a subsidiary of Shin Corp, which recently launched its first product called OK Cash. This product is reserved only for Advanced Info Service customers, focusing on around 20,000 clients nationwide. They are “premium customers” who have been with AIS for at least three to five years. They must also have a good record of payment and would be provided Bt10,000 to Bt100,000 in credit lines on demand. In July, another personal loan product designed for general customers will be introduced.

The newcomer stirred the market by offering interest rates at 0.79 per cent per month plus 0.5 per cent entry fee, combining to 9.98 per cent per annum.

Commercial banks that offer personal loans include the Bank of Ayudhya, which offers the Krungsri C-Loan and the Krungsri P-Loan. Both have similar requirements of net income of Bt10,000 monthly, the applicant’s age of at least 21 years, with at least one present job. The credit limit is set in the range of Bt50,000 to Bt1,000,000 or a maximum five times net monthly income. Krungsri P-Loan applicants must have a payroll account with the bank and will get a lower rate charge of MRR+8 per cent compared with MRR+9 per cent for other loans. (The bank MRR is now 6.25 per cent).

Separately, Kasikornbank’s personal loan product, Kbank Express Loan, offers credit lines from Bt30,000 up to a maximum of Bt500,000 or up to five times monthly income. The interest rate is charged at 15 per cent annually (on instalments) or approximately 0.7 per cent a month (on the fixed rate). The bank provides a choice of instalment periods from four to 36 months.

The “service” fee, including the loan arrangement fee, is set at 2 per cent of the credit line, or a minimum of Bt2,000, while the late payment fee will be assessed at 8 per cent of the monthly payment due. The premature loan settlement fee is set at 5 per cent of the total outstanding balance.

Hybrid and foreign banks offer different promotions.

Bank of Asia’s Asia I Cash provides a credit line up to Bt1.5 million or three times annual income. The instalment period varies from six to 60 months. The bank’s personal loan charges an annual interest rate of 17.25 to 18.25 per cent; it charges a processing fee of Bt1,500 and a late payment fee of Bt200 per time per month; while default late fees stand at 27.50 per cent. Moreover, the bank has set an early settlement fee of 2 per cent of the total credit line.

The bank also offers a promotion for customers who apply for this product this month. Once customers fill in the application form and provide complete documentation, they will get a “Smily Mobile Sensor” valued Bt280 for free. Once the application is approved, the applicant will get a three-in-one lamp valued at Bt1,200, for free.

Ready Credit, a personal loan product of Citibank, also provides various privileges such as a zero rate for the first two monthly bills, and no annual fees. Customers will also be offered premium products including clock-radios valued at Bt1,000, a travel suitcase valued at Bt3,800 or a mobile CD player valued at Bt10,000, for free. However, whether customers receive the premium products depends on their spending. The rate for Ready Credit stands at between 27 and 39 per cent per year.

--The Nation 2004-06-14

[astral]

Private loan rates are around 10% PER MONTH.

[Dutchy]

Thus, personal loan interest rates are generally higher than credit card loan rates at around 20-26 per cent per annum. This is considered high compared with the 8 to 10 per cent for mortgage loans.

In the Thailand America Free Trade Area talks Thailand stated it didn't want to give American banks full freedom in Thailand; this makes sense considering the outrageous interest rates the Thai banks charge. There is a real risk that foreign banks would charge less and the Thai people would benefit from that, we wouldn't want that to happen in Thailand...

Dutchy

[chingy_]

in America young adult are being teach to be careful about loan,credit card, personal loan and etc...it seen to work well now aday, as for thailand the process is just starting, soon they will learn enouf.