Club president Pracha Chaisuwan said that there is a strong indication that buyers of first cars on hire purchase under the government’s first car scheme are using cash to pay for their cars first rather than paying other debts.
This was seen in the surge of cash withdrawals from teller machines to pay car debts, he said.
He said most credit card holders and car buyers chose to pay the monthly car installment loans first before paying other personal loan because if they defaulted payment for a month, the leasing company will follow them.
In case of defaulting payment for three months, they could lose their cars because leasing firms will seize their cars and auctioned them immediately at very low prices.
There was information that car leasing firms were reluctant to seize their clients’ cars bought under the first-car scheme because of several conditions stipulated under the first-car scheme regulation announced by the government, one of which was a condition that the ownership of the car could not be changed within the first five years.
If the car is sold before the 5-year period ending, cash obtained from the sale will be deducted as excise tax and returned to the state.
This condition prompted leasing companies reluctance to seize the cars because they know that if the seized cars could not be sold immediately, their prices would drop gradually to the extent that after deducting of the excise tax, the remaining cash might not even cover the amount that they have to pay back to car buyers for the seized cars.
As a consequence, non-performing loans under the first-car scheme did not rise as it should be or reflect the true situation, but those in the leasing business knew exactly that it is becoming a worry and could turn huge non-performing loans.
He said that more than half of credit card holders chose to pay their debts at the lowest loan rate, thus making their debts remaining high.
Latest figure of unpaid personal loans in July under the supervision of the central bank showed that total personal loans staying at 284 billion baht from 11.02 million accounts, up 1.07 million accounts from same period last year with total non-performing loan of 8.5 billion baht.