BoT Launches Auto Loan Debt Program
People explore the cars at an auto show in Bangkok. (Photo: Arnun Chonmahatrakool)
The Bank of Thailand has implemented a new auto loan debt mediation program, aimed at helping 100,000 borrowers with debt relief during the pandemic.
The central bank and auto creditors plan to offer the program until July 31.
Many auto loan borrowers are struggling to repay their debt due to the ongoing pandemic.
The scheme covers three groups. The first group is that of borrowers whose debt is not classified as non-performing loan and whose cars have not been foreclosed.
The cars of the second group were seized, but the cars were not auctioned.
The third group has seen their cars auctioned off and they still have a debt burden, said central bank deputy governor for Oversight Group 2 Thanyanit Niyomkarn.
The total outstanding auto loans covering both banks and non-banks amount to 2.5 trillion baht on 6.6 million auto loan accounts.
12 auto credit service providers join the mediation program, accounting for 65% of total auto loans outstanding in the country.
The central bank expects some 100,000 auto loan accounts or 38 billion baht of outstanding auto loans to participate in the program.
On average, a borrower’s debt burden is around 380,000 baht, the bank said.
“A lot of these borrowers are making a living, and most of them have been affected by the pandemic,” she said.
“This mediation program is another way to help people affected by the pandemic. “
Ms Thanyanit said the central bank, working with regulators, is considering adjusting some car auction rules to ensure fair treatment for auto loan borrowers.
The Bank of Thailand has also held talks with auto loan providers to offer a debt discount to borrowers after the car auctions, she said.
The debt discount would be offered to borrowers with a good payment record and limited debt after a car auction on a case-by-case basis, Ms Thanyanit said.
The central bank also offers a debt mediation program for credit card and personal loan products from February to June.
Some 700,000 credit card and personal loan accounts have joined the program, of which 150,000 have completed loan reconciliation.
The good response to this debt reconciliation program led the central bank to extend the program to auto loans, she said.
“The central bank is considering expanding the debt mediation program to include mortgages, but it needs more time to study the feasibility due to the greater complexity and number of regulatory agencies for them. secured home loan products, ”Ms. Thanyanit said.