People browse used car offers at a car show held in Bitec. (Photo: Somchai Poomlard)
The Standing Joint Committee on Trade, Industry and Banking (JSCCIB) called on the government to increase the maximum interest rate for loans for used cars and motorcycles to encourage leasing companies to lend to low-income people.
Recently, the Consumer Protection Bureau proposed a maximum rate of 15% per annum for all types of vehicle loan products, including new car loans, used car loans, and motorcycle loans. .
However, the private sector believes that low interest rates for auto loans will impact smaller leasing companies, especially local businesses, making it more difficult for car buyers to access finance. .
Low interest rates could impact auto industry supply chains, Supant Mongkolsuthee, president of the Federation of Thai Industries, said at a JSCCIB meeting yesterday.
As a result, he said the committee plans to ask the government to raise the interest rate ceiling on used car loans to 20% per year and motorcycle loans to 36% per year. The group has no problem with the maximum rate for new car loans at 15%.
âSince motorcycle loan borrowers are in the low income segment and most of them have no financial status, a maximum low interest rate of 15% will make small leasing companies local. reluctant to lend to this segment, âSupant said. . “This could cause borrowers to opt for loan sharks, who have higher interest rates.”
The 36% interest rate cap proposed by the JSCCIB for motorcycle loans is in line with the nature and risk of the business, he said. On average, the loss rate for motorcycle loans is around 37%, Supant said.
The suggested increase in the maximum interest rate for motorcycle loans would provide low-income borrowers with an opportunity to access finance, especially amid an economic recovery, he said. This includes borrowers who apply for motorcycle loans for a living, for example by being food delivery drivers.
For 2022, the JSCCIB forecasts Thai GDP growth in the range of 3-4.5%, compared to its estimate of 0.5-1.5% growth this year. After the country reopened on November 1, the economy gradually recovered as part of a K-shaped recovery, the committee said.
Exports are a key factor in supporting the Thai economy next year, with an expected growth rate of 3-5% in 2022 and 13-15% this year. Domestic consumption is expected to improve next year alongside increased public confidence, thanks to the country’s progress in immunization with 95 million doses administered, representing around 70% of the total population.