The number of Thais buying motorcycles with cash has increased. If this happened during a strong economy, it might indicate greater purchasing power. However, given the current era of high prices and low wages, and the fact that obtaining loans has become more difficult, there is concern that some people may be turning to informal loans to buy motorcycles for daily use.
Mongkol Pianpitakrit, Managing Director of ttb Leasing Company Limited (ttb leasing), said that in Thailand's current motorcycle hire-purchase market, the share of cash purchases has risen to 25-30% from about 20% previously. This raises concerns that people unable to access formal credit may be borrowing informally to buy motorcycles with cash instead.
This issue has been closely watched because most people excluded from formal credit lack financial documentation. Previously, motorcycle hire-purchase businesses set high interest rates to cover increased risk but still issued loans if deemed worthwhile. In 2023, interest rate caps were introduced, limiting hire-purchase loans to no more than 23% per year, which may have increased loan rejections in this group, causing some to rely on informal debt instead.
Therefore, ttb leasing aims to develop a flexible, accessible motorcycle hire-purchase loan model targeting salaried workers, freelancers, and underserved groups without access to funding. They will apply AI technology to comprehensively analyze data for credit decisions, assessing risk, screening financially disciplined customers, and making loan approvals more convenient and faster. Currently, their loan approval rate is about 60%, close to the market average.
With effective risk screening through technology combined with field staff verifying borrowers’ actual income and clear addresses, ttb leasing believes it can control non-performing loans (NPL) well by 2026, keeping them below the market average of around 5%. For customers needing assistance, additional measures like installment reductions to lower monthly debt burdens are in place.
ttb Leasing launched on 1 May 2023 and has received 3,000 loan applications, approving 2,000 with nearly 100 million baht in loans. Initially, the company will expand in Bangkok, the metropolitan area, and the western region, then nationwide in 2023. The goal is to reach 3 billion baht in total loans, aiming to become the third largest in the industry within three years (2029), with projected loans of 9 to 10 billion baht by then.
Note: ttb Leasing Company Limited is a joint venture between ttb Consumer Company Limited and MBK FNB Holding Company Limited.
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