Thailand’s household-debt storm taking deadly toll on guarantors

[peter zwart]

5 hours ago, ThailandRyan said:

The guarantor route is the way many Thais go in order to buy a new car and do not have the money to show they qualify.  A friends wife had to do the as the friend would not pay for the car outright and a loan from Krungsri Auto was needed.  The local School director, the friend of the woman's father signed as the guarantor.  The FIL could not sign as he had two cars and a tractor on loan payments.  Of course my friend made the monthly payments so no issues, but just think of those who are not so lucky to have a foreign payment maker in the house.  You may ask, why did not the foreign husband sig as the guarantor and the answer was he is a retiree on a retirement extension of stay and has no WP so the bank would not loan the money for the car with him as the guarantor.

 

Those who take the loan default and the guarantor is on the hook and as you can see the stress is too much.  

 

If you can not qualify for aa loan then the banks really should not be making the loans.

its all in your last sentence. 

[kwak250]

What is always thought was lend someone a few thousand baht and they won't ask for more when hey don't pay you back.

 

Oh no not here they just wait a few months and ask to borrow another 500 baht for food .

 

I usually say I am borrowing money now and then they say ok I will help you pay it back.

Let's go halves on the loan

 

Can't win.

[new2here]

6 hours ago, ThailandRyan said:

The guarantor route is the way many Thais go in order to buy a new car and do not have the money to show they qualify.  A friends wife had to do the as the friend would not pay for the car outright and a loan from Krungsri Auto was needed.  The local School director, the friend of the woman's father signed as the guarantor.  The FIL could not sign as he had two cars and a tractor on loan payments.  Of course my friend made the monthly payments so no issues, but just think of those who are not so lucky to have a foreign payment maker in the house.  You may ask, why did not the foreign husband sig as the guarantor and the answer was he is a retiree on a retirement extension of stay and has no WP so the bank would not loan the money for the car with him as the guarantor.

 

Those who take the loan default and the guarantor is on the hook and as you can see the stress is too much.  

 

If you can not qualify for aa loan then the banks really should not be making the loans.

On the surface of it, I’d totally agree

 

but..

 

given that (as I’ve read online) retail consumer spending accounts for around half plus of the total GDP figure, I don’t know that the economy itself can afford to take a more conservative or tight monetary policy for a sustained period -let alone the banks who ultimately finance a large chunk of that spend.

Sure, ballooning NPLs and the losses that banks and various lenders end up taking isn’t good for the larger credit lending space… but I don’t really see an alternative… Yes, banks could tighten up their underwriting criteria… but again, doing so would also negatively impact consumer spend.. so perhaps increased NPLs is just the “cost” that must be paid to keep the consumer spending, which for TH really is the lynchpin of the economy. 

 

What Id like to see is more consumer education. I’d bet that a fair number of these guarantors didn’t really KNOW how “on-the-hook” they really could be.. yes, they know what guarantor means.. but I think sometimes having it out front-and-center.. that as guarantor, YOU could loose your house, that the banks and the courts could come after YOU and YOUR assets.. 

[geisha]

A very good friend of mine in France asked me for a loan of 5000 € to pay for his daughters piano conservatoire .( true). He sent me 100€ once . I kept asking him , with a yes soon answer. Never again. I really never thought that would happen.  When I first went to Phuket  in the early 80s, a very good Thai friend warned me never to lend money to anyone at all !! 
I agree with a comment above that Covid bankrupted many people, last year I returned to Phuket to see my many friends, the greeting at the airport with everyone in hazmat suits, the multiple rules , regulations and closures were enough to put everyone off coming to Thailand forever. The lines of hungry people sitting in a queue on the pavements was heart breaking. I saw a few shop owners I knew timidly begging . This was the work of Prayut and company., Those people are in debt for life.

[kennw]

4 hours ago, Jimjim1 said:

And they do not respect you for doing it

Respect does not exist the Thai thinking. Is the well empty yet endemic ?. 

[ozimoron]

5 minutes ago, geisha said:

A very good friend of mine in France asked me for a loan of 5000 € to pay for his daughters piano conservatoire .( true). He sent me 100€ once . I kept asking him , with a yes soon answer. Never again. I really never thought that would happen.  When I first went to Phuket  in the early 80s, a very good Thai friend warned me never to lend money to anyone at all !! 
I agree with a comment above that Covid bankrupted many people, last year I returned to Phuket to see my many friends, the greeting at the airport with everyone in hazmat suits, the multiple rules , regulations and closures were enough to put everyone off coming to Thailand forever. The lines of hungry people sitting in a queue on the pavements was heart breaking. I saw a few shop owners I knew timidly begging . This was the work of Prayut and company., Those people are in debt for life.

This was nothing to do with the government. It was the lack of a comprehensive social welfare program. Thailand is still a developing country.

[robsamui]

It all seems to be an ongoing hook to hang the poor and (deliberately) under-educated peasants on. Thailand is the only country I've heard about where banks will lend you the money to buy a house as long as you first lodge the equivalent amount of money with them. Then they will use it to buy the house, charge you interest on the loan, and then allow you to pay in monthly instalments.

 

And before I get hammered - I know that's simplified and not (quite) accurate - but, in essence, it's what it amounts to . . . unless you can find a farang to act as guarantor . . . but, fortunately, I've never had much luck with that.

[RichardColeman]

Problem here is that you can be a guarantor as long as you have a satellite dish on your tin shack 

[Olav Seglem]

Stupid people.

Never guarantee.

Thats the issue with guarantee, the bank (or other) can go to this person if the other dont pay.

Its elementary ......

[ozimoron]

Just now, Olav Seglem said:

Stupid people.

Never guarantee.

Thats the issue with guarantee, the bank (or other) can go to this person if the other dont pay.

Its elementary ......

It's not like this problem doesn't happen in every country.

[The Theory]

2 hours ago, d2b2 said:

problem is a failure of the education system to provide any meaningful financial or ethics education

IMO education will not work here since ego is too big. "I'm right about everything" ruling here. 

[wolf81]

9 hours ago, Pumpuynarak said:

Don't ever guarantor anyone unless they or you are on a guaranteed affordable income (pension springs to mind) but i know thats easily said the reality is very different. I was asked by our bank to guarantor wifey's house purchase, no problem my pension easily covered the monthly repayments. Wifey had no income to meet the repayments, go figure lol

I think in general it's a bad idea to be a guarantor. But it's ok if you have a lot of excess income I guess. Also understandable in case it's your child or wife for example and you know they are responsible people.

 

I wouldn't want to be guarantor for my girlfriend, since I know she's bad at managing money. We got no debt, got a house, got a car. And I provide my girlfriend with 12.000 THB a week. And still every week she manages to spend it all. 

 

And I know of Thai families in the neighbourhood who do have repayments for mortgages or cars and they have multiple children as well and can manage with maybe 20.000 THB per month.

 

Told my girlfriend she could easily save 1000 THB a week. But she says I don't know all the things she needs to buy. For our daughter, for cleaning the house, etc...

 

I do know she spends quite a bit on the lottery. Probably the remainder at the end of every week in hope of striking in big.

 

So a person like that, can never be a guarantor for. Cause can't manage money and spend responsibly.

[Tropposurfer]

No apology for the dark (possibly to some) jarring post:

 

Massed poor. Elite class. Elite class control all the wealth. Some call this Capitalism, but it is really neo-feudalism.

One of the buzz phrases of today is 'trickle down economics'; The fantasy that those who hold great wealth drive will reinvest this in the world to grow and propagate the dissemination of this wealth, of privilege, so all can access security, comfort. This has proven by its own action to expose itself as untrue.

The poor, and those allowed to enjoy just enough wealth (the middle class), act as middle men between the elites and the poor and help propagate the illusion 'the con' that they too can join the elite. Slaving under the illusion of being able to rise above the structure of imprisoned institutionalised slavery and one day will break through and join the elite to the great vast and grand utopia.

Mire yourself in debt, work (or slave) all your days ... 'Pay it to The Man'.

Men work so hard and so long they miss the childhoods of their own children, many, most are strangers to their own children. Men die young from the strain of this 'work'.

Women are too often left to be both mother and father, alone.

 

[sherwood]

Your basic Thai is as dumb as dog terd. Money comes from luck and merit.

Saving is not in their vocalulary and borrowing money is just the same as being lucky.

Why would you give the money back.

[Jonathan Swift]

13 hours ago, ThailandRyan said:

The guarantor route is the way many Thais go in order to buy a new car and do not have the money to show they qualify.  A friends wife had to do the as the friend would not pay for the car outright and a loan from Krungsri Auto was needed.  The local School director, the friend of the woman's father signed as the guarantor.  The FIL could not sign as he had two cars and a tractor on loan payments.  Of course my friend made the monthly payments so no issues, but just think of those who are not so lucky to have a foreign payment maker in the house.  You may ask, why did not the foreign husband sig as the guarantor and the answer was he is a retiree on a retirement extension of stay and has no WP so the bank would not loan the money for the car with him as the guarantor.

 

Those who take the loan default and the guarantor is on the hook and as you can see the stress is too much.  

 

If you can not qualify for aa loan then the banks really should not be making the loans.

And that is the definition of predatory lending. 

[Andycoops]

It boggles my mind that someone with either no income or very little income can be given so much money by so called financial institutions.

 

Out here in the boonies of Isaan nearly all the big houses are owned by teachers, civil servants, policemen etc

 

None of whom earn big saleries.

Needless to say the the accompanying 4 wheels can be seen in the garage, usually a Camry or Fortuner.

 

 Completely bonkers.

[Frankie baby]

No matter which way you lend money, it never comes back in the same manor you lent it?

[Henryford]

18 hours ago, HappyExpat57 said:

I'm curious as to how bad a threat is it for someone to off themselves. I mean, even having your kneecaps broken would be better than suicide.

Yes agreed. As a guarantor is the debt secured against your property? If the guarantor doesn't pay up what can the company do? Any Court action would be better than death.

[kimamey]

23 hours ago, Pumpuynarak said:

Don't ever guarantor anyone unless they or you are on a guaranteed affordable income (pension springs to mind) but i know thats easily said the reality is very different. I was asked by our bank to guarantor wifey's house purchase, no problem my pension easily covered the monthly repayments. Wifey had no income to meet the repayments, go figure lol

Presumably the bank couldn't lend you the money directly so they allow you as guarantor to get round the rules knowing you would be posting the loan anyway. 

Your first point is absolutely right. 

[Dickie Dee]

On 7/24/2023 at 10:00 PM, ThailandRyan said:

The guarantor route is the way many Thais go in order to buy a new car and do not have the money to show they qualify.  A friends wife had to do the as the friend would not pay for the car outright and a loan from Krungsri Auto was needed.  The local School director, the friend of the woman's father signed as the guarantor.  The FIL could not sign as he had two cars and a tractor on loan payments.  Of course my friend made the monthly payments so no issues, but just think of those who are not so lucky to have a foreign payment maker in the house.  You may ask, why did not the foreign husband sig as the guarantor and the answer was he is a retiree on a retirement extension of stay and has no WP so the bank would not loan the money for the car with him as the guarantor.

 

Those who take the loan default and the guarantor is on the hook and as you can see the stress is too much.  

 

If you can not qualify for aa loan then the banks really should not be making the loans.

Ask and thou shall receive, unless you ask me…

[Pumpuynarak]

1 hour ago, kimamey said:

Presumably the bank couldn't lend you the money directly so they allow you as guarantor to get round the rules knowing you would be posting the loan anyway. 

Your first point is absolutely right. 

Yep i had to show them proof of my income by way of my private pension payslips.

[thesetat2013]

Even with the work permit and marriage visa and an 80,000 baht income monthly.  My wife could not use me to guarantee out house loan or car loan. Their rules regarding foreigner share the same attitude most Thais share being that we are not Thai. If it happened in a 1st world country the bank would be sued for very large amounts. No matter what a foreigner does here. Marries Thai and makes family and their lives here. We foreigners will always be treated as a stranger. 

On 7/25/2023 at 11:00 AM, ThailandRyan said:

The guarantor route is the way many Thais go in order to buy a new car and do not have the money to show they qualify.  A friends wife had to do the as the friend would not pay for the car outright and a loan from Krungsri Auto was needed.  The local School director, the friend of the woman's father signed as the guarantor.  The FIL could not sign as he had two cars and a tractor on loan payments.  Of course my friend made the monthly payments so no issues, but just think of those who are not so lucky to have a foreign payment maker in the house.  You may ask, why did not the foreign husband sig as the guarantor and the answer was he is a retiree on a retirement extension of stay and has no WP so the bank would not loan the money for the car with him as the guarantor.

 

Those who take the loan default and the guarantor is on the hook and as you can see the stress is too much.  

 

If you can not qualify for aa loan then the banks really should not be making the loans.

 

[Toby1947]

23 hours ago, Jimjim1 said:

And they do not respect you for doing it

They hate the sight of anyone who is not Thai, and the silly pr×tts still fall for it.