Hire-purchase loan providers want official government confirmation that they can sell repossessed vehicles under the government's first-car purchase scheme.
Under the scheme, buyers must own the car for five years, during which time they cannot transfer the car's ownership to anyone.
However, they can apply for an excise-tax refund of up to Bt100,000 after only one year of ownership.
This has raised concerns that in case of fault within the five years, especially after the first year, lenders may not be allowed sell the repossessed car. This would be a burden on lenders. They need the Excise Department to make a formal confirmation that they can sell seized cars within five years.
Chalit Silsrikul, executive vice president of Tisco Bank, said yesterday that if the Excise Department insists lenders can sell repossessed cars before the five years, the risk could be lessened.
Chalit is also vice president of the Thai Hire Purchase Association, which last week talked with the Excise Department to solve the problem of defaults within the five years of ownership.
The department has yet to verify formally that lenders can sell a repossessed car once buyers fail to pay their loan instalments for three straight months, before the five years are up, he said.
The association also asked the department to draft a form for ownership transfer to lenders in case of default. The department said it has to forward the draft form to the Office of the Attorney-General for consideration.
Pending a ruling by the attorney-general, applicants for auto loans at Tisco Bank will have to be asked about whether they are first-time car buyers. The bank will also tell customers about the transfer right to car ownership in case of default. The Excise Department should indicate which buyers are qualified for the scheme so lenders can screen borrowers.
Tisco, however, has not tightened up conditions for first-time car buyers who want an auto loan, he added.
Ayudhya Capital Auto Lease, or Krungsri Auto, also is not setting strict conditions for borrowers, as the current conditions can monitor credit risk.
Pairote Cheunkrut, managing director of Krungsri Auto, said the company is worried because if its repossesses a car, it cannot sell it to new buyers within five years, which is a risk for lenders.
"We have no need to adjust the conditions for vehicle buyers of the scheme. If the buyers want hire-purchase loans at Krungsri, they will have to meet the same conditions as general customers," he said.
Narong Srichukrin, executive vice president of Siam Commercial Bank, said the conditions for hire-purchase borrowers would not be any different from general buyers. If applicants' qualifications meet the bank's conditions, they can get a loan to buy a vehicle.
The first-time car scheme took effect on September 16 and runs to the end of next year.