New Car Financing And Scams

[gregb]

Recent job requirements mean I am in the unfortunate position of buying a new car. My wife works and so do I. If I was Thai, this would have been easy. As it stands, I'm farang, and I'm kee neow. This makes it difficult.

It started off simply enough. I want 10% down and 5 years. "No problem", says the salesman. 5k deposit and we're off. Then the bad news starts coming. Krung Thai bank says no, because I'm farang. They want a Thai guarantor for my wife, because they say her salary alone doesn't justify the loan. I tell them to go stuff it. Give me my 5k back and I'll go buy a Toyota instead. They're not about to do that of course...

Next offer comes. They raise the purchase price of the car from 818,900 to 899,900 baht. They then tell Tisco I'm paying 20% down, and tell me I'll have to pay 17k baht more, but the interest rate will be lower. They do this because they say they'll discount back the 83,000 baht they raised the price back to me on the down payment, and the math just works out that way. Presumably the absorb the 7% VAT on this 83,000 also, so this is obviously a non optimal solution for them.

Question #1: Anyone else ever seen the dealers do this before? Anything I should watch out for when I get the final paperwork?

So I go yesterday to talk to the scam artist....oops, I mean finance consultant from Tisco. They tried to sneak in a 12,599 baht fee for "loan protection". I tell them to stuff it, I don't want it. They tell me that it is up to me, but they won't do the loan without it, because if my wife dies then I can simply leave the country and not pay. Then why do they need me as a guarantor at all? I thought that was the whole point of loan insurance? Anyway, after they say they won't take it off, I tell them to forget and I'll go home and think about it.

The car salesman then steps in and says we can lower the interest rate from 3.45% to 3.15%. Obviously his commission is evaporating with this step, but I was leaving otherwise. I told him he was scum for not telling me about this ALP before. He says "I didn't know." Yeah....right. So now the reduction in interest almost covers this ridiculous extra fee. My payments go up by about 60 baht over what I expected from conversations on the phone, but just to get the thing done I agree. I was willing to do it before, and 60 baht per month shouldn't really kill the deal.

So now, they're heading off to do the paper work, and we'll see.

Question #2: Is this ALP really REQUIRED from every loan company when my wife buys a car with a farang husband? They told me if I was Thai they wouldn't require this.

I haven't actually signed anything yet, I'm just letting them decide whether they can approve the loan or not under the present terms. Is there any finance company out there that is fair and reasonable? I've been working at the same company for 6 years, and am not going anywhere. The whole "farang can run away" thing seems kind of stupid in this case. So can a Thai if they really want to.

Any advice or recommendations appreciated.

[Jareddiving]

Not even gonna argue here

[torrenova]

I think this is a world of hurt which we avoided by going through everything before paying them a cent.

[Thaiboxer]

Car salespeople in the USA are no different; there's a good reason why they're called "sharks". They just love to circle around their prey (you) and move in for the attack when they can. These sharks don't draw blood, but they'll bleed you dry financially if they can.

[stevemiddie]

Sounds about the same as UK dealers.

[krystian]

not for me,, when they asked me a 5k deposit i handed it and gave them the requirements they asked for,, after an hour the financer called me up and asked if I had a Thai guarantor and I said yes ,, they asked for his contact number and did some background Investigation on me and my guarantor,, after 4 days,,,, the financer called me and the car was ready for pick up and I excused myself from work and ran to the shop to pick up my Civic.. ,,, just had a little problem with the insurance though,, the sales person told me it would not be more than 15k when I got there she said I had to pay for 18k for the insurance,, which was not a big problem...

Edited March 17, 2008 by krystian

[Moonfruit]

No problems at all with Toyota leasing. Very straight forward and above board, and the salesman was great.

Unfortunately though, he has now left the dealership where i bought the car, so 3 months later am still stuck with red plates. Trying to get the dealership to sort it out is proving a nightmare. In fact, im off down there with the car this morning to play the angry farang.

[gregb]

The saga continues....

Haven't reported back, but thought I would because it just gets more and more interesting.

Last I reported, Tisco had decided to arrange this loan, but the finance rep tried to pull a scam saying we needed Asset Liability Protection or they wouldn't do the loan. When Tisco called to verify our information, a new, much less pushy and polite lady, said she had never heard of this policy, and that Tisco doesn't factor this into the formula for whether to grant the loan or not.

Short answer is, you *DO NOT* need liability protection. It is completely at their discretion. The finance snake...I mean individual...was simply trying to make a buck. We politely told him to go jump in a lake, and still had the loan approved. Imagine that.

So, we finally took delivery of our brand new Mazda 3 yesterday, signed our contract which said the following:

Selling price: 889,900

Down Payment: 179,980

Loan Amount: 719,920

Interest Rate: 3.15%

Months: 60

Payment: 13,696

Now, for those of you who aren't mathematically inclined, I'll just tell you that these numbers don't add up. We already took delivery yesterday, have driven it a bit, and just received a call from Mazda. They tell us that we need to pay 13,889 baht per month instead.

What the !@CK was my first reaction. How can you raise the price AFTER we bought the car?

Again, the numbers in the contract don't make sense, so now we are left with what to do. If this is legal under Thai law, then any dealer can scam the customer just by making up bogus numbers on the contract to make the monthly payment look low, and then call them the next day and tell them the monthly payment was wrong. We also have a carbon receipt for the down payment, which shows the selling price as 899,900 baht. This is what they are claiming the real selling price really was.

So the problem with the sales contract is:

It lists a selling price that doesn't add up to the down payment plus the loan payment.

It lists a monthly payment and interest rate that doesn't add up to the loan amount.

So, my question is:

What is the legal situation? I have a signed contract from both parties which lists mathematically impossible numbers. Which numbers are the overriding factor in this instance? More than the 200 baht per month extra, I already feel like I need a shower working with these guys. I thought with delivery of the car, the sleaziness was over, but I guess not.

Anyone seen a situation like this before?

Thanks.

[Thaiboxer]

Looks like the sharks are having a feeding frenzy! Perhaps you can threaten them with legal action if they don't stop. I've never heard of anybody being asked to pay more after all the paperwork is done. This situation is another reason I would never want to finance a car unless we had to; either pay cash or settle for a secondhand vehicle.

[Meerkat]

The discrepancy between the selling price when you paid the deposit (899,900) and on the actual sales contract (10k cheaper) seems odd - maybe even an honest mistake. I have absolutely no idea when it comes to Thai law as to whether your signing of the sales contract overrides the fact that you initially paid the deposit on the basis of buying the car at 899,900.

As to the payments on the loan, Mazda's finance company seems to be correct in that the payment should be 13,889 (well actually 13,888.46 by my reckoning). You do understand that car finance in this country is done on a non-amortising basis ie you pay interest throughout the tenor of the loan on the entire intitial principal, rather than only on the amount outstanding?

I'm sorry to hear anyone who feels hard done by in situations like these, but I'm surprised that you'd sign a sales contract that by your own admission differs from the original deposit contract, especially as you dispute the original loan payment schedule.

[Gary A]

13,888.46 is the payment for financing 719,920 over five years. You are correct. Math is not a strong point for the Thais. If you question anything, you will get the standard answer. That's the way we do it in Thailand even though they can't explain the deal.