Financing Car

[Boatman37210]

Looking at buying a new car in Bangkok and financing part. Dealer is quoting 2.59% interest for 4 years, but calculates interest by multiplying 2.59% by 4 which gives you 10.36%. He then multiplies 10.36% times the total amount financed and says that is the amount owed for interest. In the US this is an interest rate of around 4.9% per year. Not 2.59%. The way this dealer is calculating interest does not allow for the reduction in principal as you make payments. He is calculating interest for the full amount of the loan for the 4 year period. Is this typically how dealers calculate interest in Thailand?

Also the purchase is done under a lease agreement. The car remains in the name of the company until all payments are made. After all the payments are made the car is transferred into my wife's name for a fee of one to two thousand baht. Again, in the US the car would be immediately titled in my name and a lien filed against the car. The lien protects the company. Again, is the lease arrangement of buying a car normal for Thailand?

Thanks.

[richard_smith237]

You are correct on all counts.

[theoldgit]

And as it's done as a lease agreement they charge VAT on the payments, added over 33,000 Baht to my loan.

[thenervoussurgeon]

And that folks is why i pay cash

[CharlieH]

Never fails to amaze me why people keeping referring to "in the US" or "in the Uk" or wherever, PEOPLE YOU ARE IN THAILAND !!!

Be careful with any loan / lease arrangements for vehicles as they generally lump everything up the front so there is no benefit or anything to be gained if you want to pay off early.

Edited April 30, 2012 by CharlieH

[Boatman37210]

Thanks for everyone's response. I've lived in Thailand for 5 months and still learning the ropes. I'm a retired accountant and the dealers methods were not what I was use to.

CharlieH, thanks for the tip on the early payoff. I asked the sales guy about early payoff and he said we would "get a discount". What goes into the papers and what is said at time of sale could be two different things.

As far as saying "in the US", I say that a lot. To me it basically tells people where you are coming from and why you are asking the question. It's information about yourself and why you are asking the question. If I moved from Tennessee or California to Texas, I would probably say to people in Texas back in Tennessee we did it this way or back in California we did it this way.

One other quick question. I'm assuming I will be signing lease papers that are in Thai. My wife can read them, but there would be a lot she would not understand. She speaks English, but I think not well enough to explain the papers. Any recommendations on how to handle that?

Thanks.

[Nisa]

Thanks for everyone's response. I've lived in Thailand for 5 months and still learning the ropes. I'm a retired accountant and the dealers methods were not what I was use to.

CharlieH, thanks for the tip on the early payoff. I asked the sales guy about early payoff and he said we would "get a discount". What goes into the papers and what is said at time of sale could be two different things.

As far as saying "in the US", I say that a lot. To me it basically tells people where you are coming from and why you are asking the question. It's information about yourself and why you are asking the question. If I moved from Tennessee or California to Texas, I would probably say to people in Texas back in Tennessee we did it this way or back in California we did it this way.

One other quick question. I'm assuming I will be signing lease papers that are in Thai. My wife can read them, but there would be a lot she would not understand. She speaks English, but I think not well enough to explain the papers. Any recommendations on how to handle that?

Thanks.

FYI - If it is a new car you can generally go to the manufacturer website in Thailand and they will give you exact payments too that you can compare to what the dealer is giving you to make sure everything is on the up and up. There isn't a lot of haggling here or options when it comes to financing from the Honda / Toyota type dealer here compared to the US.

[brit1984]

And that folks is why i pay cash

You pay cash to avoid 5% per year interest?... I am sorry that you have such a low opportunity cost of capital

[thenervoussurgeon]

And that folks is why i pay cash

You pay cash to avoid 5% per year interest?... I am sorry that you have such a low opportunity cost of capital

so ,get a loan ,i dont need to ,or want to.

[Gonsalviz]

Never fails to amaze me why people keeping referring to "in the US" or "in the Uk" or wherever, PEOPLE YOU ARE IN THAILAND !!!

Be careful with any loan / lease arrangements for vehicles as they generally lump everything up the front so there is no benefit or anything to be gained if you want to pay off early.

I asked up front and got a reprieve on the interest when I paid it off early. I only took the loan because I was in a hurry and had to get the cash liquid.

[Gonsalviz]

And that folks is why i pay cash

You pay cash to avoid 5% per year interest?... I am sorry that you have such a low opportunity cost of capital

Calculated the Thai way, the interest is much more. About double.

The full loan X 5% for the term of the loan is not the same as 5% on the principle.

[Gonsalviz]

Thanks for everyone's response. I've lived in Thailand for 5 months and still learning the ropes. I'm a retired accountant and the dealers methods were not what I was use to.

CharlieH, thanks for the tip on the early payoff. I asked the sales guy about early payoff and he said we would "get a discount". What goes into the papers and what is said at time of sale could be two different things.

As far as saying "in the US", I say that a lot. To me it basically tells people where you are coming from and why you are asking the question. It's information about yourself and why you are asking the question. If I moved from Tennessee or California to Texas, I would probably say to people in Texas back in Tennessee we did it this way or back in California we did it this way.

One other quick question. I'm assuming I will be signing lease papers that are in Thai. My wife can read them, but there would be a lot she would not understand. She speaks English, but I think not well enough to explain the papers. Any recommendations on how to handle that?

Thanks.

FYI - If it is a new car you can generally go to the manufacturer website in Thailand and they will give you exact payments too that you can compare to what the dealer is giving you to make sure everything is on the up and up. There isn't a lot of haggling here or options when it comes to financing from the Honda / Toyota type dealer here compared to the US.

I was happy to find out that I got heavy floor mats, a bed liner, tinted windows and rain covers for the windows and no added cost. All of that is added on in the US.

[Nisa]

Thanks for everyone's response. I've lived in Thailand for 5 months and still learning the ropes. I'm a retired accountant and the dealers methods were not what I was use to.

CharlieH, thanks for the tip on the early payoff. I asked the sales guy about early payoff and he said we would "get a discount". What goes into the papers and what is said at time of sale could be two different things.

As far as saying "in the US", I say that a lot. To me it basically tells people where you are coming from and why you are asking the question. It's information about yourself and why you are asking the question. If I moved from Tennessee or California to Texas, I would probably say to people in Texas back in Tennessee we did it this way or back in California we did it this way.

One other quick question. I'm assuming I will be signing lease papers that are in Thai. My wife can read them, but there would be a lot she would not understand. She speaks English, but I think not well enough to explain the papers. Any recommendations on how to handle that?

Thanks.

FYI - If it is a new car you can generally go to the manufacturer website in Thailand and they will give you exact payments too that you can compare to what the dealer is giving you to make sure everything is on the up and up. There isn't a lot of haggling here or options when it comes to financing from the Honda / Toyota type dealer here compared to the US.

I was happy to find out that I got heavy floor mats, a bed liner, tinted windows and rain covers for the windows and no added cost. All of that is added on in the US.

It really depends upon the vehicle but in general it is very easy to buy a car at dealer invoice in the US. In Thailand I've noticed with Toyota and especially Honda, there is little to no flexibility on price ... in fact, they remove the sticker from the windows to pretty much discourage talk of pricing (this is illegal in the US). It sounds like you got a good deal, typically floor mats are easy to get thrown in as well as insurance being covered for a short period but in terms of cash discounts, I find it much easier to ask and receive discounts at Department Stores here ... In the US when it comes to cars, it is one of the few places you are expected to haggle and if you don't get some kind of discount, you feel like you've been beaten.

Been a while since I have been to a dealer in either country but this is my experience ... and I've also only been to car dealers in Bangkok. Not sure how it is outside the city.

[Nana]

I bought a brand new car about 9 months ago. Paid 25% (212.250,-baht) up front, and financed the remaining 75% (636.750,-baht) at an interest rate of 4,5% through Thanachart bank. According to my plan I will do 48 payments of 14.520,-baht. Wich makes it an effective interest rate of 4,59%p.a. And the car is put in my name from day one, except the seller is keeping the registration papers until the last payment is done.

This is the fourth car I have bought from the same dealer and financed (and insured) through Tanachart. On the previous car I did the last payment in april last year. The effective interest rate worked out at 2,97%. And the registrationbook was delivered to me at my house later the same day.

If I should have financed my car the way your dealer proposed, I would have payed 15.654,-baht for 48 months, at an effective interest rate of 8,69% p.a. That would have cost me about 54.000,-baht more.

I guess the dealer is either taking you for a ride, or the leasing thing is more expensive. In my experience you will be able to get financing through Thanachart in your wifes name, without a guarantor, if you pay 25% up front. And 40 to 50% if you want it in your own name.

I did the first two cars in my wifes name, and the last two in my own. I only paid 25% up front to get it in my own name, since my payslip and bank statement was used to get the financing on all the cars, and I have never missed a payment.

Cheers

Nana

[TehBen]

I have a question along the same lines as this thread. I would appreciate some help with clarifying my situation please.

Ok, bought a Fiesta at 699000

Downpayment of 69000

Booking fee (including 2000 for the registration) of 5000

Interest rate of 3.8% over 72 months.

What is confusing me is that I am paying 11084 a month in repayments, which doesn't compute (in my brain at least). Is this correct?

TISCO sent me a printout with an initial loan figure of 653,271.03 - But I have no idea where this figure came from. It then goes on to say that I have already paid the downpayment of 45924.30, which again, isn't true. I have receipts for everything I have handed over.

Am I misunderstanding the paperwork?

Even if these numbers are correct, I have noticed that there are very small mistakes with their calculations in the interest repayments.

It begins with stating that on an amount of 607,346.73, 3.8% interest over 6 years equals 138,492.63, which is actually nearly 18 baht over what it actually is. I know this sounds like a pointless amount but a mistake is a mistake.

[damo]

did you include 1 extra day interest to account for the next leap year? Might be your 18 baht there.