Loan money for a second hand car without VAT

[IBIB]

Me and my wide (Thai) would like to buy a second hand car

We thought we would loan about 50% out of the price (roughly 400k baht)

Talking with dealerships they all say that the interest for car financing is about 3% per year but all also mention (when we ask) that the amount will be also subject to VAT of 7% (for the loaned money only)

In total it makes the loan interest 10% which is obviously much more expensive than paying all in cash

 

Is there a way to loan partial part of a car's price without paying such a high rate? Maybe directly via bank or something else?

 

Thanks

[stubuzz]

58 minutes ago, IBIB said:

Talking with dealerships they all say that the interest for car financing is about 3% per year but all also mention (when we ask) that the amount will be also subject to VAT of 7% (for the loaned money only)

Loans for second hand cars are expensive. Interest is added up front, so expect to pay at least 30% on the loan amount. Also, they will hit you up for insurance for the first year.

[DrJack54]

Buy a car for half the current plan and pay cash.

Eyes bigger than belly comes to mind. 

[nigelforbes]

No, is the short answer!

 

The longer answer is that dealerships receive incentives from the finance company for generating loan business so you will need to understand that when it comes to price negotiations.

 

Secondly, banks have MLR or Minimum Loan Rate, and, MRR or Minimum Retail Rate. MRR is the minimum rate they will charge their prime, most credit worthy customers. Everyone else pays MRR+. based on credit worthiness, credit history and the loan details. If for example, the bank base rate is 1.5%, MLR is likely to be 7% of even higher, the average car loan rate taken this way is likely to be 12% or more.

 

 

 

[stratocaster]

Just looked at the conditions from a used car loan company on 800,000 baht car. Maximum deposit they accept is 30% or 239,000 baht. Outstanding balance over 4 years, repayment is 13,516 baht per month. Over 7 years 9,100 baht month. Strangely it depends on the cost of the car as to the repayment terms imposed.

[Kwasaki]

If your budget is 800,000 buy new. 

Plenty of private cars for sale 400,000 will get you a decent one, go Honda or Toyota.

 

Edited January 9, 2023 by Kwasaki

[Liverpool Lou]

10 hours ago, IBIB said:

Talking with dealerships they all say that the interest for car financing is about 3% per year but all also mention (when we ask) that the amount will be also subject to VAT of 7% (for the loaned money only)

Complete tosh, VAT is not payable on finance companies' interest rates.

[IBIB]

10 hours ago, Liverpool Lou said:

Complete tosh, VAT is not payable on finance companies' interest rates.

I didnt understand what do you mean

If you mean that when I loan money for a second hand car from a finance company I dont have to pay VAT 7% on the loaned amount please elaborate if you can.

As far as I understand now from dealerships / talking to people / other people's comments here it is the law

Thanks

[stubuzz]

https://www.kasikornbank.com/EN/personal/autoloan/Pages/used-car.aspx

 

From above

 

*Calculation is an estimate only.

**Monthly installment calculation is inclusive of value-added tax (VAT).

***The above calculations are intended to inform customers of the monthly installment payment, conditions, down payment and interest rate. Figures may be subject to change in accordance with KLeasing criteria and conditions.

 

[vinny41]

 Value Added Tax (VAT) 7%: Second-hand cars are subject to an additional 7% VAT, but if they are purchased from the general public or directly from the owner, they are not subject to this tax. (But there will be a charge for the transfer of ownership) if purchased from a used car tent Most prices do not include tax.

 https://www.kasikornbank.com/th/kwealth/Pages/a149-car-loan-secondhand.aspx#:~:text=3.2 ภาษีมูลค่าเพิ่ม (VAT) 7%,หรือผ่อนสินเชื่อ ก็จะ

[vinny41]

Buying a used car for the first time! How to buy without paying taxes with methods for calculating tax when car installments

https://www.punpro.com/p/used-car-tax-explained

[steve187]

20 hours ago, stratocaster said:

Just looked at the conditions from a used car loan company on 800,000 baht car. Maximum deposit they accept is 30% or 239,000 baht. Outstanding balance over 4 years, repayment is 13,516 baht per month. Over 7 years 9,100 baht month. Strangely it depends on the cost of the car as to the repayment terms imposed.

seems a good deal, 88,000 interest, having seen cars advertised with a lot more interest

 

Edited January 9, 2023 by steve187

[nigelforbes]

Beware hidden charges and fees on loans, registration etc. Also, understand the penalties for being even a little bit late with a payment.

[JBChiangRai]

6 hours ago, vinny41 said:

 Value Added Tax (VAT) 7%: Second-hand cars are subject to an additional 7% VAT, but if they are purchased from the general public or directly from the owner, they are not subject to this tax. (But there will be a charge for the transfer of ownership) if purchased from a used car tent Most prices do not include tax.

 https://www.kasikornbank.com/th/kwealth/Pages/a149-car-loan-secondhand.aspx#:~:text=3.2 ภาษีมูลค่าเพิ่ม (VAT) 7%,หรือผ่อนสินเชื่อ ก็จะ

This is true, the tents have to charge 7% VAT on a 2nd hand car, however, if you finance it or negotiate, they may choose to lower the price and charge you a net figure.  Often, they will refuse a cash deal but they make a lot of commission on the finance.

[Liverpool Lou]

.

Edited January 10, 2023 by Liverpool Lou

[eisfeld]

VAT has nothing to do with loans. You can't mix that with the interest. If they add 7% (per year?!) to the 3% then that's just tricking you. I don't think you'll get a true 3% interest loan for a car. They are usually way way higher 10%+ and not worth it.

 

VAT applies to the sale price of the car if sold by a company no matter if you used your own cash or borrowed from someone. Usually VAT is not charged when buying something from a private individual.

[IBIB]

Thanks everyone. After your input and some more investigation we made with other dealerships we decided to not go with the loan. I guess it is not as good as we initially thought

 

Thanks!