The most bizarre loan process. Happen to anyone else?

[Phuketboy]

In Thailand in the past I have always paid upfront for items (cars, businesses, home etc), this being good, it also means neither myself or my partner have a credit rating here in Thailand. As we wanted a new car for my partner, we decided we would do on finance and pay it off quickly as possible making early payments so at least she could get a good rating. Picked out a car at Honda, put 25% down and gave them bank statements, company documents, house book and even last years financials for the company etc. The finance guy came out to have a look at the company and the associated businesses. He said he needed to do this because some people will open a company or business but do nothing, or it's no longer there (Totally understand).

Anyway, after 2 days they called my partner and told her because she is in Phuket and her home is Khon Kaen she would need a co-signer (guarantor) I asked if I could sign and they told me no because I was not Thai. They also said that it would be easier if she applied in her home of Khon Kaen. This made absolutely no sense to me what-so-ever. It doesn't matter where you apply from, all finance papers get sent to Honda Financial Services in Bangkok for approval. It's the same company, same division and the same people doing the approval. When asked if I put another 10% down (35%) would that make a difference?, They said no, she would still need a co-signiture. I can pay for the car outright, but the point here was I want her to have a credit rating.

Has anyone else come across this situation? Does it really make a difference if someone is in Pattaya, Bangkok, Nong Khai, Chaiaphum, Udon Thani, Phuket etc etc? It's the same country. Are they just making it difficult for people? All our Thai friends have said the same happened to them whenever they get a loan. They say it's easier if they go home and apply. Never heard of anything like this.

[Soutpeel]

I suspect its to do with what's on her "house book", ie address is Khon Kaen and she is living in Phkuet

I vaguely remember my Mrs having to to do something with her "house book" when she applied for a mortgage, I went guarantor on, as she is from down south and the we live up near Pattaya. and she had to do something for the bank regarding this and had to get something changed, however I was still accepted as guarantor there was no issue on that front

As to why you couldn't stand guarantor in this instance I suspect...."neither myself or my partner have a credit rating here in Thailand" is the answer

​I know when I stood guarantor on the mortgage...i had to give them 12 months payslips / letter from the company saying I was permanently employed and my WP

wouldn't it have been easier to buy the car thorough the company ?

Edited August 28, 2015 by Soutpeel

[NickJ]

Check into being allowed to make early payments as well. Paying a loan off early just means you add up all the monthly payments as if the loan had come to full term. Maybe not in. all cases but check .

[stubuzz]

I had the same problem. Get your wife to change/register her id card at the local amphur. Problem solved no co signature required then.

[Pib]

Check into being allowed to make early payments as well. Paying a loan off early just means you add up all the monthly payments as if the loan had come to full term. Maybe not in. all cases but check .

Definitely check into that. I have a young inlaw who bought a new car, wanted to pay it off in full early but with the nature of this loan it would not result in reduction of total interest due...she would still have to pay the same total interest whether taking another few years to pay it off or pay it off tomorrow.... so she is not going to pay it off early....instead, she'll just let her money earn internet in the bank.

[uksomchai]

From my experience this is not unusual asking for a guarantor when out of the district you are registered at and paying off the loan early has no financial benefits at all and will do nothing to increase your credit score. paying the full term on time will though

[Goldieinkathu]

It's normal, if she's not registered in a house book in Phuket she can't get any credit here without a local guarantor.

I think that also applies to purchases of household goods not just cars.

[Heng]

Check into being allowed to make early payments as well. Paying a loan off early just means you add up all the monthly payments as if the loan had come to full term. Maybe not in. all cases but check .

Definitely check into that. I have a young inlaw who bought a new car, wanted to pay it off in full early but with the nature of this loan it would not result in reduction of total interest due...she would still have to pay the same total interest whether taking another few years to pay it off or pay it off tomorrow.... so she is not going to pay it off early....instead, she'll just let her money earn internet in the bank.

Right on the money. Car loans are not calculated like home loans/mortgages (where you can save on interest by early pay off). Car loans are more like borrowing money from Paulie on the Sopranos.

[Phuketboy]

Thanks guys. I understand paying off early won't save on interest, that wasn't the point. We simply wanted to pay it off early so that we didn't have it, but at the same time giving her a credit rating. Even if we put all the money in a separate account and they direct debit this each month and maybe only take the loan over 12 or 24 months. We just want a rating.

One person suggested buying through the company. We could, however this would not give her a credit rating because a company is regarded as a separate entity. As for changing the address on the house her id card and house book, I will get her to do this. I honestly never thought it mattered where in Thailand you live when getting loans, as it's still the same country. It seems really backwards.

Anyway, thank you for all the advice, looks like I need her to change a few things for the future.

[Soutpeel]

One person suggested buying through the company. We could, however this would not give her a credit rating because a company is regarded as a separate entity.

I understand that a Ltd company is seen as a person, that's why I was confused as to why you were showing them company books and accounts, as they would be assessing credit worthiness of the individual not the company. Its your GF applying for the loan, not the company

[soisanuk]

My partner purchased a Honda City from Honda in Pattaya several years ago - paid 50% down and financed the rest through Tisco Bank (at that time a finance company) - no guarantor required and my partner is in housebook from Chaiyaphum province. When the loan was paid off, my partner received a letter from Tisco say pre-approved for 600,000 baht - we sold the City and bought a Honda Civic (8 years ago - again, no guarantor required). Two years ago we bought a second vehicle - a Mitsubishi double cab Triton pickup here in Pattaya. We told the dealer we wanted to finance through Tisco as partner had had credit through them. No problems, 25% down payment was required, the balance was financed - again no guarantor required. We continue to live in Pattaya and there was never an issue with partner's housebook being in Chaiyaphum.

[thaipo7]

The first line of your first response was spot on. I had a house built 5 years ago and was going to pay cash. Then my wife and I went to Bangkok Bank to see what it would be like to borrow money. I was 62 at the time. We were told that I was too old to borrow money. With a statement like that, i would have a law suit in the US. We just laughed because we were going to pay cash anyway.

[SOTIRIOS]

...do you want to add 'thinking' and 'reasoning' to the process.....???

[kinmaew]

Stop doing things for her. She needs to do it for herself otherwise you will spend your life this way.

[fxe1200]

Check into being allowed to make early payments as well. Paying a loan off early just means you add up all the monthly payments as if the loan had come to full term. Maybe not in. all cases but check .

....and after this you calculate the effective interest rate you have paid!!!

Edited August 29, 2015 by fxe1200

[NanLaew]

Thanks guys. I understand paying off early won't save on interest, that wasn't the point. We simply wanted to pay it off early so that we didn't have it, but at the same time giving her a credit rating. Even if we put all the money in a separate account and they direct debit this each month and maybe only take the loan over 12 or 24 months. We just want a rating.

One person suggested buying through the company. We could, however this would not give her a credit rating because a company is regarded as a separate entity. As for changing the address on the house her id card and house book, I will get her to do this. I honestly never thought it mattered where in Thailand you live when getting loans, as it's still the same country. It seems really backwards.

Anyway, thank you for all the advice, looks like I need her to change a few things for the future.

I would recommend leaving her registration in Kohn Kaen and shopping for a car up there; a Honda in Phuket is the same as a Honda in Kohn Kaen. You may even get them to deliver to Phuket. That way you have flexibility over other things that are location-critical in the future. I think that is better than both of you having all your eggs in the Phuket basket just because you want a car and credit for your partner in Phuket right now.

The wife and I each bought our first cars in Udon several years before moving to Pattaya and when I recently traded-up, I got the deal I wanted while visiting back in Udon. When my wife tried to trade-up in Pattaya, the financing was declined. We will probably pop 'up north' and get her new wheels sorted out when I get back from work. The dealer up there has already said they can deliver to Pattaya.

Another point to note regarding credit history. In my experience, when it comes to cars, even if you are buying the same brand from the same dealer and using the same finance company as before, it doesn't lend any weight to the new loan approval that you have happily fulfilled your previous credit obligation. You won't be able to make any deals on lower down-payments or better overall terms. However, if you trade-up BEFORE the current financing expires, there's a a better chance of making a better deal.

The credit industry like pretty much everything else in Thailand, is different.

[masuk]

Check into being allowed to make early payments as well. Paying a loan off early just means you add up all the monthly payments as if the loan had come to full term. Maybe not in. all cases but check .

Definitely check into that. I have a young inlaw who bought a new car, wanted to pay it off in full early but with the nature of this loan it would not result in reduction of total interest due...she would still have to pay the same total interest whether taking another few years to pay it off or pay it off tomorrow.... so she is not going to pay it off early....instead, she'll just let her money earn internet in the bank.

I've just come across the same thing. Seems totally crazy. They're charging my friend a real full-on loan shark interest rate, and if he pays this off early, with my help, the total pay-out is still the same.

Little wonder there are some very rich people here.

[vaultdweller0013]

Thanks guys. I understand paying off early won't save on interest, that wasn't the point. We simply wanted to pay it off early so that we didn't have it, but at the same time giving her a credit rating. Even if we put all the money in a separate account and they direct debit this each month and maybe only take the loan over 12 or 24 months. We just want a rating.

One person suggested buying through the company. We could, however this would not give her a credit rating because a company is regarded as a separate entity. As for changing the address on the house her id card and house book, I will get her to do this. I honestly never thought it mattered where in Thailand you live when getting loans, as it's still the same country. It seems really backwards.

Anyway, thank you for all the advice, looks like I need her to change a few things for the future.

If all you are interested in is a credit rating (more properly a bureau credit history), just get a credit card instead. For added bonus points, use the card every month, but keep the balance under about 20-30% of the credit limit. Pay off in full each month so you end up paying no interest. Get both the credit card and the car loan if you want even more bonus points. (I mean "bonus points" figuratively; although in some cases it may be literal as well.)

As for the address, there could be several reasons. One in specific for cars is that they can move and be hard to track down and reposess in the case of a default, so having documentation that someone is tied to a single area can make that easier. It could also do with verification of information. They may want to verify your residence (per the reposession point), and the Phucket team may not have the ability to get this done in Khon Kaen. Another is that it is an indication of stability -- if you intended to stay in Phucket, why wouldn't you move your address there? Having it in Khon Kaen could mean they once you get the car loan, you are going to shut down the business and move back to Khon Kaen. Or, it could also just be an old policy that really isn't needed anymore.

[JaiLai]

I had the same problem. Get your wife to change/register her id card at the local amphur. Problem solved no co signature required then.

I thought the address on ID card and Tabian Baan had to be the same?

And also driving license?

[akentryan]

TIT. My bank just sent me a Thai Visa card with a 200K llimit. I own no property, everything was in my wife's name, and have never borrowed money in Thalland. Constantly amazed at what goes on here. A bit off topic but just a comment on what banks do and don't do.

[lj cm]

Better to get the loan in her Bank.

When it's paid off, she will have a good credit rating and the Bank will offer her Credit Card and other loans.

[phinick]

My wife (and I) just bought a new Mitsubishi and financed through SCB. A very strange experience. I have a fair amount of money and a Social Security pension of over 60,000 baht, but since I am over 60 I could not be on the loan. They will only loan to under 60 with a work permit. I probably make more money than many people with a work permit who could lose their job. My money is guaranteed by my government.

The kicker is that they wanted 6 months of my bank statements, but I cannot be on the loan. I can only make the payments.

Good thing I have a good relationship with my wife. I recently built her a large new home and now a car and nothing is in my name.

[lj cm]

My wife (and I) just bought a new Mitsubishi and financed through SCB. A very strange experience. I have a fair amount of money and a Social Security pension of over 60,000 baht, but since I am over 60 I could not be on the loan. They will only loan to under 60 with a work permit. I probably make more money than many people with a work permit who could lose their job. My money is guaranteed by my government.

The kicker is that they wanted 6 months of my bank statements, but I cannot be on the loan. I can only make the payments.

Good thing I have a good relationship with my wife. I recently built her a large new home and now a car and nothing is in my name.

Welcome in the Club!.

But; when SCB offer her a Credit Card, you can get a spouse Card, so it's not all bad.

Edited August 29, 2015 by lj cm

[magnacarta]

regarding all the experts on here I take with a pinch of salt.When I first came here to live I wanted to buy a pickup.I was told I could not.I had no retirement visa work permit etc.I ordered my pickup from Mits,specifying I wanted in my name,they said ok.When I went to pick it up and paying cash it was in my wifes name.I said forget it,you told me/sold me in my name.! day later the truck was in my name,still is 13 years later.Personal experience is worth more than some keyboard experts on jere.I can quote many things from teaching to driving without a Thai licence.Find out for yourself,then if you <deleted> it is down to you.

[misterphil]

"Are they just making it difficult for people?"

Yes, you hit the nail on the head there. Tell them it doesn't matter and go somewhere else.

My wife got our Toyota on finance in Pattaya when she's from Saraburi. I was her guarantor on a visa exempt too. Just showed both our bank books and 30% down.

[Phuketboy]

The loan or credit card through the banks is a good idea/option. I really just hate owing money and preferred not to borrow, however, having a good credit score is handy if anything should happen where it is ever needed. Car is sorted, I just gave them more money down and got a Thai friend to sign as guarantor. Thanks again

Edited August 29, 2015 by Phuketboy

[Pheat123]

My wife (and I) just bought a new Mitsubishi and financed through SCB. A very strange experience. I have a fair amount of money and a Social Security pension of over 60,000 baht, but since I am over 60 I could not be on the loan. They will only loan to under 60 with a work permit. I probably make more money than many people with a work permit who could lose their job. My money is guaranteed by my government.

The kicker is that they wanted 6 months of my bank statements, but I cannot be on the loan. I can only make the payments.

Good thing I have a good relationship with my wife. I recently built her a large new home and now a car and nothing is in my name.

Yep

Just keep on buying stuff for your wife

If you want to continue the good relationship

[Heng]

Not related to the OP, but IMO they need to make the hoops a lot more involved and difficult considering the private debt issues people have here. Of course... all that would happen is that folks would run straight to the pawn shops and underground money lenders in even greater numbers than what they are already doing.

[sometimewoodworker]

A point that most people don't know or understand is that the majority of Thai loans do not really work in the same way as the rest of the world.

The rest of the world has loan + interest, so when the loan gets payed down the interest goes down.

Thailand has loan + arrangement fee (the fee is called interest but isn't really) so since the fee is for the loan it makes no difference when you pay (monthly or in a lump sum) you pay the same total

[fletchsmile]

Can't comment on the different province aspect.

What I can say is that a few years back when I tried to buy a Honda car on Finance it proved a difficult experience. They kept asking for different documents and adding bits to the process, up to the point where I just paid cash.

Cheers

Fletch