Observe! New Hire-Purchase of Car Law Effective on 10 Jan 2023

Who wants to buy a car shouldn’t miss this! There is a new law about car hire-purchase which will be effective on 10 January 2023. Lower both principal and interest rate. Those who are going to buy a car might love this law. Some might worry about if there is any adjustment for the car under installment, your answer can be found in this article.

Car and motorcycle hire-purchase law

Information about cars you need to know with the new law which will be effective on 10 January 2023. If you are still considering buying a car, here is a good chance. On 10 January 2023, there will be a new law about car and motorcycle hire-purchase which sets the car and motorcycle hire purchase business to lower the principle and interest and calculate the effective interest rate. The formula is to calculate the interest from the balance principal. For example, the principal for the car is 500,000 baht, the interest is 3% which is 15,000 baht. The next time the balance of the principal is 490,000 baht, the interest is 14,700 baht because we calculate 3% of 490,000 baht. This is good for everyone since we have a lower interest rate with the lower of the principal.

In the past, the car and motorcycle hire-purchase business set the interest calculation from the original principal which is not fair for the one whose car is under installment. For example, the principal of a car is 500,000 baht with a 3% interest rate which is 15,000 baht for every month until the car is paid out. Even though the principal is lower every month, the interest is still the same amount.Also, there is some addition to the law as follow;

1. People who want to do hire-purchase of car with the effective rate can be divided in 3 groups:

Used cars or Second-hand cars have an interest rate not exceeding 15% per year
New cars have an interest rate not exceeding 10% per year
Motorcycles have an interest rate not exceeding 23% per year.

2. People who want to close all the remaining car payments before the due date in the contract.

People who do not pay more than one-third of the total amount in the contract receive the discount which is not lower than 60% of the interest on a hire purchase that is not due.
People who pay more than one-third of the total amount but not more than two-thirds of the amount receive the discount which is not lower than 70% of the interest on a hire purchase that is not due.
People who pay more than two-third of the total amount in the contract receive a 100% discount of the interest on a hire purchase that is not due.