The Royal Gazette website has published an announcement regarding the committee on contracts.
The regulation concerning the leasing of motor vehicles and motorcycles as a controlled business, issued in 2022, has been further amended by the Consumer Protection Act (Version 2) of 1998, together with Sections 3, 4, and 5 of the Consumer Protection Act, B.E. 2542. These amendments set forth criteria and procedures for determining controlled businesses and the nature of contracts. They will take effect 90 days after being published in the Royal Gazette, starting from October 12, 2022, onwards.
The important point of this announcement is that it sets the requirement for businesses leasing motor vehicles or motorcycles to calculate the Effective Interest Rate (EIR) annually, using the reducing balance or reducing principal and interest method. This means that the interest is calculated based on the remaining principal amount in each installment, not using the traditional flat rate method. This ensures that customers or lessees are not disadvantaged by leasing companies or lessors. It’s similar to the decreasing installment payments in mortgage loans for residential properties, where the installment payments decrease as the principal amount decreases.
There is a following question: Can the interest on vehicles being financed be calculated using the “reducing balance-reducing interest” method? For individuals who have already purchased a car or motorcycle and are currently making installment payments, do they have the right to calculate interest using the reducing balance-reducing interest method before the announcement becomes effective and legally binding?
Normally, contracts made before the law comes into effect will follow the terms of the existing agreements. The new law will apply to new contracts made after the law comes into effect.
However, whether there will be changes to lease-purchase contracts for cars or motorcycles made before the law comes into effect depends on the agreement between the lessee and the seller regarding whether they intend to renegotiate the contract.
All of this is in accordance with the details specified in Clause 7 of the announcement regarding lease-purchase contracts for cars and motorcycles made by businesses with consumers as per the announcement of the Committee on Contract Control for Motor Vehicle and Motorcycle Leasing Business, which was made before the effective date of this announcement. It shall continue to be enforceable going forward.
For the important provisions of this new announcement:
In the event that a lessee wishes to pay the entire lease-purchase amount in one lump sum to close the lease-purchase account without making installment payments according to the lease-purchase agreement, the lessor shall provide a discount to the lessee. This discount calculation shall be based on accounting standards set forth by the Committee on Accounting Standards, as specified by law and professional accounting practice standards. These standards are used as guidelines for accounting practices and legal requirements concerning accounting and other laws.
a. In the case where installment payments have been made for not more than 1 out of 3 installments specified in the lease-purchase agreement, a discount shall be provided at a rate of not less than 60 percent of the outstanding interest on the lease-purchase that has not yet fallen due.
b. In the case where installment payments have been made for not less than 1 out of 3 but not more than 2 out of 3 installments specified in the lease-purchase agreement, a discount shall be provided at a rate of not less than 70 percent of the outstanding interest on the lease-purchase that has not yet fallen due.
c. In the case where installment payments have been made for more than 2 out of 3 installments specified in the lease-purchase agreement, a full discount shall be provided on the outstanding interest on the lease-purchase that has not yet fallen due.
That’s definitely good news for those interested in getting a new car! However, for those who aren’t ready to buy a new one but want to keep their current car running smoothly for a long time, it’s important to regularly inspect and maintain their vehicle. If any parts are damaged or worn out, they can always consult JP Auto Parts for assistance.
___________________________________
Place an order/Become a distributor.
GP MOBILITY PUBLIC COMPANY LIMITED
Line id: @gpautoparts or Link
Contact: https://www.gpmobility.co.th/contact-us/
Follow me: https://linktr.ee/gpmobility
Service Monday to Saturday from 08:30 AM to 05:30 PM.
02-941-1222 (Auto),02-579-2882
