BoT launches car loan debt programme

BoT launches car loan debt programme

People explore cars at a motor show in Bangkok. (Photo: Arnun Chonmahatrakool)
People explore cars at a motor show in Bangkok. (Photo: Arnun Chonmahatrakool)

The Bank of Thailand has implemented a new auto loan debt mediation programme, aiming to help 100,000 borrowers ease their debt burden during the pandemic.

The central bank and auto loan creditors plan to offer the scheme until July 31.

Many auto loan borrowers are struggling with debt repayment because of the ongoing pandemic.

The scheme covers three groups. The first group is borrowers whose debt is not classified as a non-performing loan and their cars have not been seized.

The second group has had their cars seized, but the cars have not been sent to auction.

The third group has had their cars sent to auction and they still have a debt burden, said central bank assistant governor for supervision group 2 Thanyanit Niyomkarn.

Total car loans outstanding covering both banks and non-banks tally 2.5 trillion baht from 6.6 million car loan accounts.

There are 12 car loan service providers joining the mediation programme, representing 65% of total auto loans outstanding in the country.

The central bank expects some 100,000 auto loan accounts or 38 billion baht worth of car loans outstanding to participate in the programme.

On average, the debt burden of a borrower is around 380,000 baht, said the bank.

"A lot of these borrowers earn a living, and most of them have been affected by the pandemic," she said.

"This mediation programme is another way to help those affected by the pandemic."

Mrs Thanyanit said the central bank, in collaboration with regulatory bodies, is considering adjusting some car auction rules to ensure fair treatment for car loan borrowers.

The Bank of Thailand has also talked with auto loan providers about offering a debt haircut to borrowers after car auctions, she said.

The debt haircut would be offered to borrowers with a good payment record and a limited amount debt after a car auction, on a case-by-case basis, said Mrs Thanyanit.

The central bank is also offering a debt mediation programme for credit card and personal loan products from February to June.

Some 700,000 accounts for credit cards and personal loans have joined the programme, of which 150,000 have completed the loan reconciliation.

The good response for this debt reconciliation scheme led the central bank to expand the programme to auto loans, she said.

"The central bank is considering expanding the debt mediation programme to mortgages, but it needs more time to study the feasibility because of the greater complexity and more regulatory agencies for secured housing loan products," Mrs Thanyanit said.

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