Finance Miscalculations, Thais trying to rip you off or honest mistakes

[The_Munchmaster]

Certainly in Dubai (and I'm sure it'll be the same elsewhere) there is no negotiating. That's the way the finance companies do it and if you don't like it then tough, no finance. After all this isn't a market stall, it's a bank or a finance company. Hence there's no point wasting your time working out what you think is the correct way.

[torrenova]

There is no incorrect way. As soon as you have paid back some capital, the interest rate (being fixed), must be used on the reduced balance outstanding. Their method just puts forward a false 3.4% when the effective APR is 6.4% some 88% higher !

 

I remember one mortgage provider in the UK asking me to pay a months repayment on day one of the mortgage. WTF I asked ? I borrow the money from you for 1 day and you want a whole month's interest ? Go and stick it up your arse I said. They capitulated. Perhaps being in investment banking had something to do with it, or the letter I wrote to their chairman.

 

Not quite in the same position here and if they had asked for 6.4% I would have thought it reasonable. The fact is that I believe it is being used to rob the punter, rather than mask the internal interest rate.

[RobMac]

Of course, having an investment banking background you are well familiar with free markets and your ability to go somewhere else? Or not buy at all?

What are you looking for? Government intervention?

[torrenova]

Of course, having an investment banking background you are well familiar with free markets and your ability to go somewhere else? Or not buy at all?

What are you looking for? Government intervention?

No, just some sense in the matter. When they state that "this is the way it is", I want to know whether they really don't understand (the monkey) or whether thry do understand and are just following the boss' (organ grinder's) orders. I doubt very much whether they could work the figures out or even grasp the concept of depreciating balance. It took ages to explain it to my missus.

 

As I said, 6.4% is not abhorent but my initial voyage of discovery was to see if the leasing company (e.g. Toyota leasing) was giving the garages the correct figures and the garages were profiteering.

 

A trip to Toyota Leasing in Korat coming on me thinks !

 

Don't get me wrong, I would have happily paid 6.4% but don't think I just fell from the sky and accepted whatever crap was put on the table.

[rchapstick]

An alternate theory is that they cannot begin to explain amortization to the Thai consumers, let alone their employees and dealers, so they created the "dumbed down" calculation.

 

I suspect you are tilting at windmills.

[elef]

Not true, this form is used all over the world, not just Dubai as mentioned before, but in most countries all over the world. In Sweden also but here we have a law stating that the bank or finance company must mention the effective interest rate according to torrenovas model + also different sorts of fees. Of course this text is printed with the smallest possible letters and numbers.

[Bangkoktraveler]

And there is also large print and fine prints. Here in the USA one place I do business with claims "0% interest and no payments for one year". Sounds good, but the small print says if you pay the bill of within one year, it is 0% if not paid off in one year, then it is 24%. You forget to make one payment, it goes to something like 34%.

[i.am.tg]

well, most thais know about this, but don't ask me to explain the theory or the law. We all know that with housing loan, when u pay back the capital, your interest reduces, but not for car loan. I think the Dubai example explains it really well.

[torrenova]

OK, to finish this off. I have just sorted out the truck and the loan. I'll post a new thread but simply, Siam Commercial Bank Leasing and the garage know about it but Siam admitted that it is a marketing ploy and the effective rate is actually 6. something percent. So no real drama as I would have accepted that rate, just didn't want anyone getting a fishfull of my baht as a "backhander".

[New Petchburi Pete]

I've never seen an automobile repayment plan in which the monthly payment amount decreased as the total amount owed decreased over the life of the loan.

 

The basic formula is: the total amount financed plus total interest over the loan period at the agreed upon interest rate divided by the number of payments in the agreement will equal the monthly payment. Still, interest rates at Toyota, Honda & Nissan are fairly low. Some of the banks are now offering new car loans as well, such as Bangkok Bank.

 

When you buy new, you absorb some serious depreciation as soon as you drive the car out of the dealership and during the first year. Folks in the used car business tell me that if you are ever considering buying second hand (don't recommend it in LOS unless you know & trust original owner), it's best to get a vehicle that is two years old.

Cars are not cheap in LOS ... just cheaply constructed!