How does a Thai afford to purchase a new car

[smoooth2]

In my quest to understand a little more about what makes Thailand "tick" , I'm totally confused as to how a normal working class Thai man can afford to purchase a brand new vehicle costing anywhere from 600,000 to 1,500,000 baht.

I've discussed this with several Thai's, and the info I get is a load of mumbo jumbo goobledygook.

The maths involved just don't make sense ... to my Western logic anyway. The conversations always end with me scratching my head and thinking "that can't be right ... surely ... ?"

Obviously, I don't understand the Thai banking and auto finance system. I acknowledge that.

Can someone explain how a guy earning perhaps 100,000 baht gross annually, can get the ok for such a big finance commitment.

Even with 0% interest deals, it still seems like a totally unaffordable equation to me.

[olavhome]

Maybe they have 33% cash and old car. Then bank dont care, they have safety in car and take it back and sell if dont pay. Short downpayment, max 5 years make normally car sufficient safety. Also many pay for cars before eat, great show off :-)

[nookiebear]

You are forgetting the fact of the guarantor...this is the 1st place the HP company will go to!

[davu]

We have a family here with two big SUVs in the yard that use corrugated iron for windows.

[JasonB]

Smooth,Thai ways,or any other ways,have NOTHING to do with it ,2+2 always equals 4 no one can get around that.As Nookie said guarantor and at least 25%  Deposit.In my dopey SIL's case 3 guarantors,believe it or not.I have often said to my wife " do the Aunties really understand what a guarantee is,and what will,undoubtedly happen down the track"?
I myself get laughed at,behind my back of cause,If I don't buy something NOW,and wait say,a month for my next interest payment to come from Australia,and then pay cash for whatever.....clearly I don't care enough about "face" hohum....

[urleft]

Just over a year ago there was a GVT program to encourage car buying with a big rebate on cars.  A lot of thais went out on a limb and bought. 

I also understand that there are very special loans for Thai Teachers.  I have heard that is very low interest and long time to pay.  However, that is just gossip I have heard. 

[Nobby]

Just over a year ago there was a GVT program to encourage car buying with a big rebate on cars.  A lot of thais went out on a limb and bought. 

I also understand that there are very special loans for Thai Teachers.  I have heard that is very low interest and long time to pay. However, that is just gossip I have heard.

I believe you are right, urleft

[JasonB]

You are right Urleft,my wife was a teacher before we decided to get married,and they do get "special" bank rates,and up to 7 years to pay.not the usual 5 year thing.The banks figure they are in very secure employment,but it doesn't negate the fact that the payments are sometimes,90% or more of their monthly salaries.

[nookiebear]

Just over a year ago there was a GVT program to encourage car buying with a big rebate on cars.  A lot of thais went out on a limb and bought. 

I also understand that there are very special loans for Thai Teachers.  I have heard that is very low interest and long time to pay.  However, that is just gossip I have heard. 

Wasn't only cars .......pick-ups up to a ceiling of 1 million baht were also included

[smoooth2]

Thanks for the interesting replies guys ... but we are all dancing around the maypole here. Nobody has yet nailed an answer to my original post.

How does a Thai guy afford to finance 600,000 - 1,500,000 baht car on minimal annual wage.

Yes ... guarantors make getting finance easier, but a guarantor does not make the finance any more affordable. (except maybe the interest rate will be a tad lower) The borrower still has to service a huge monthly debt.

Yes ... a 25% or 33% cash deposit makes the deal so much sweeter for a finance company. But ... realistically ... how many Thai's will be able to save 150,000 - 200,000 baht for a cash deposit ? That much money is 2 years total wages !!

Could you save 2 years total wages back home for a cash deposit on ANY proposed purchase ? Not likely.

(That's for a cheapie car ... imagine trying to save 350,000 baht cash deposit for a pickup !!)

Even if the family chipped in and paid the cash deposit, the remaining finance over 5 years repayments is astronomical, even with 0% interest. If interest is applied, the repayment situation becomes totally unrealistic.

Having said all the above ... 1000's of Thai's are buying new cars & pickups every day around the country, presumeably on finance deals. How the heck do they do it ?

Perhaps if someone knows a family member or friend who has recently financed a vehicle, and is prepared to share the financial details of the sale with the BE Forum ... that would be very useful. At least then we would have some figures to dissect and discuss.

Until then, I suspect we are all still pretty much in the dark and just surmising

[Starman]

You are right Urleft,my wife was a teacher before we decided to get married,and they do get "special" bank rates,and up to 7 years to pay.not the usual 5 year thing.The banks figure they are in very secure employment,but it doesn't negate the fact that the payments are sometimes,90% or more of their monthly salaries.

Thai teachers don't, generally, borrow from high street banks.

There is a teachers saving and borrowing scheme. Teachers with money invest in the scheme. Other teachers borrow from the scheme. All payments are taken at source. IE deductions are taken from the teachers salary. They can borrow upto their monthly salary. They can also choose not to make any payments at all, and use their retirement bonus as full payment. A good bonus for a long serving teacher would be in the region of 1 million.

Interest rates are quite good too. I am not sure about the borrowing rates but, the last that I knew, the investment rates were 4% short term and 6% long term.

If you know of any government teachers you can ask them to introduce you to the scheme. You can then invest. The only draw back, maybe, is the the investment has to be in a Thai name

[olavhome]

[
Perhaps if someone knows a family member or friend who has recently financed a vehicle, and is prepared to share the financial details of the sale with the BE Forum ... that would be very useful. At least then we would have some figures to dissect and discuss.

Until then, I suspect we are all still pretty much in the dark and just surmising


[/quote]
Maybe they have young daughter hoping to marry falang or take short holiday to sin city 
Or, If young couple, wife do herself. Some thais have (for us falang) strange thinking of morals 

[toffo]

The family all chip in every month is its used by all
It's abit like the Germans.. When they get a mortgage the children take over the payments and so on and so on .. I've saw homes inGermany where you have the Grand parents inthe ground floor with 2 or 3 generations on the 2nd 3rd and 4thfloors..

[gotlost]

[
Perhaps if someone knows a family member or friend who has recently financed a vehicle, and is prepared to share the financial details of the sale with the BE Forum ... that would be very useful. At least then we would have some figures to dissect and discuss.

Until then, I suspect we are all still pretty much in the dark and just surmising

Maybe they have young daughter hoping to marry falang or take short holiday to sin city 
Or, If young couple, wife do herself. Some thais have (for us falang) strange thinking of morals 
[/quote]


Get  the idea..             http://www.thaivisa.com/forum/topic/719646-good-girlfriend-car/

[smoooth2]

Let's not lose the plot here guys by getting sidetracked about potential farang involvement.

This thread is about exploring the mystery of how Thai's alone afford their vehicle purchases.