Lenders 'well-guarded' on vehicle loans.

"Before giving loans, we have to prove that the borrowers have the ability to pay us back, which we believe is responsible lending to prevent non-performing loans," Tanyapong Thamavaranukupt, managing director of CFG Services, said yesterday.

CFG Services, a wholly owned subsidiary of Bank of Ayudhya, champions Srisawad Ngern Tid Lor (Money on Wheels) financial products.

Hire purchase is one of the businesses that are in focus at the central bank because lenders have aggressively promoted cash for car products on TV. The commercials are likely to offer credit with easy conditions.

Tanyapong said advertising is one of the marketing activities to attract consumers to use the company’s products and services. However, in practice, there is a credit scoring system to help screen applicants.

The cash for car products are aimed at business operators who require working capital, not individual customers.

CFG’s business growth this year is coming from commercial vehicles, with small businesses as the customers. The company this year targets outstanding loans of Bt6 billion, up 50 per cent from last year.

However, cash for car lending is not overheated because the market is small compared to hire purchases for new cars. Growth in loans for new autos this year was accelerated by the first-car buyer scheme, he added.

Anuchart Deeprasert, senior vice president of Thanachart Bank, said cash for cars is designed for customers needing liquidity and most are business owners.

"Despite the advertising, financial institutions have to analyse the ability of each customer. Risk management is important for banks. We believe we can look after the quality of borrowers," he added.

Cash for car loans are 5-10 per cent of the loan portfolio of Bt300 billion at Thanachart Bank and are growing in popularity because car owners can get cash by using their car registration as collateral.

Thanachart Bank targets its loans from this segment to expand by 8-10 per cent this year.