TBank offers car-title loans

Under the programme launched in 2011 by the Yingluck Shinawatra government, first-time car buyers enjoyed a tax rebate. Buyers got the first lot of 10,000 vehicles that October. But one of the obligations of the programme was that buyers had to keep their cars for at least five years, or return their Bt100,000 rebate to the taxman.
As a top auto lender, TBank provided much of the financing to buyers under the scheme. And now, some of them have found themselves in a financial bind, so TBank is allowing them to use their car titles as collateral for short-term loans, Teerachart Chiracharasporn, head of products and marketing for the bank’s automotive-lending unit, said.
Several other lenders offer this product for car owners, favouring those who paid off their initial loans, but if they are still making payments, they are charged similar interest rates as regular borrowers.
TBank offers loans of up to 100 per cent of the vehicle’s appraised value to first-car buyers who use their vehicles to refinance, with an interest rate of 3.18 per cent per annum, lower than the 3.5-3.75 per cent normally charged in the auto-refinance market.
The 3.18-per-cent rate is in general offered for loans on vehicles of model years 2014-2016, but the bank is offering the |same rate to 2011 models as well, Teerachart said.
“The first-car buyers are quite high-quality borrowers because the bank has tracked their repayment records since 2012. We designed this programme as we know some of the first-car buyers purchased them with cash, and some will be unlocked from the five-year-ownership obligation this year.”
TBank provided 20 per cent of the loans offered to 1.26 million buyers under first car scheme, and its car-title-loan move is expected to attract some of the people who took delivery of the of first 10,000 cars, he said.
The current car-title-loan portfolio at TBank is Bt30 billion.
Teerachart said there were fewer auto loans in the first two months of this year than in the same period last year, and the lower demand had led several lenders and carmakers to offer special promotions at the 37th Bangkok International Motor Show that kicked off last week.
TBank in cooperation with Mitsubishi is offering zero-interest four-year loans and fuel coupons to buyers at the event, he said.
Anuwat Luengtaweekul, TBank’s chief financial officer, said the economic slowdown was a key factor putting pressure on purchasing power, and it would not be easy to get the auto-loan segment back in top gear.
However, even though the volume of loans has declined, the bank has stayed profitable because the current low interest rates are conducive to auto lending, he said.