Question: Car Financing with VAT added

General Udon Thani topics only!
User avatar
semperfiguy
udonmap.com
Posts: 2183
Joined: July 16, 2010, 12:49 pm
Location: Udon Thani, Thailand

Question: Car Financing with VAT added

Post by semperfiguy » October 13, 2020, 2:38 pm

My stepson is negotiating to buy an Isuzu truck and has been quoted a price of 974,000 Baht which includes the 7% VAT tax. They ask for 20% down and balance over 84 months at 2.69% interest with financing at the dealership. They enter those figures into an auto loan calculator app to determine the monthly installment, and inside the calculator is a toggle switch to turn on to calculate another 7% VAT tax into the monthly installment. In other words, they are trying to charge him the VAT twice. I keep telling him this is not correct and the VAT should be taken off the sales price before calculating the monthly installment with the VAT added to the monthly payment. Or, the entire amount, car price plus VAT, should be entered into the calculator and turn off the VAT toggle switch when computing the monthly installment. My stepson's answer is always the same...."dealer says this is the way they always do it". I tell him to walk and go somewhere else, but he's dead set on getting this truck regardless and may fall for their trick to double charge him the VAT.

Does anyone else have any experience with this, and if so, am I correct in the method to calculate.
Last edited by semperfiguy on October 13, 2020, 4:00 pm, edited 3 times in total.


Colossians 2:8-10...See to it that no one takes you captive through philosophy and empty deception, which are based on human tradition and the spiritual forces of the world rather than on Christ. For in HIM dwells all the fullness of the GODHEAD bodily; and you are complete in HIM, who is the head of all principality and power.

User avatar
kopkei
udonmap.com
Posts: 1732
Joined: August 27, 2010, 6:55 am

Re: Question: Car Financing with VAT added

Post by kopkei » October 13, 2020, 3:15 pm

hi semper , i did ask me this question also long time ago when my sister in law bought a car ,she also had to pay 7% vat with the monthly payments , easy to calculate how much he pays more over these years,compared to the original cash price + rated intrest ...., i think it has something to do with this , when you buy the car you will borrow the money including vat , your payment of the car is subject on paying vat but so is the monthly down payment , so every down payment is considered a new transaction what is subject to vat again according to the Thais regulations ...so it is not vat on the price of the car but vat on your down payment transaction ...sorry ,difficult to explain ... not logic but TIT ;)

User avatar
Niggly
udonmap.com
Posts: 481
Joined: December 5, 2018, 5:51 pm
Location: ‘www.overthere.com’

Re: Question: Car Financing with VAT added

Post by Niggly » October 13, 2020, 5:38 pm

Shame he’s set on an Isuzu, Ford have got some cracking 0% finance deals on at the moment.
I guess the drawback could be it’s 30% down & over 4 years not 7 years


Actually edit that, I’ve just seen some models of Ranger with 25% down & 7 years payment. They seem to be the more basic, agricultural ones though so I guess it depends on what he’s after

Whistler
udonmap.com
Posts: 1183
Joined: June 15, 2019, 8:24 pm
Location: Udon, West of Ciity
Contact:

Re: Question: Car Financing with VAT added

Post by Whistler » October 13, 2020, 9:47 pm

Semper, you are 100% logically correct, but governments have you stymied. Same in OZ, every step in the process is taxed as a separate transaction, even re-financing something like a 40% residual into a rollover lease attracts a 10% tax. The government taxes much more than the nominal 7%, it recycles transactions that attract a 7% tax over and over again
there were two Churchills, one did not play for the Rabbitohs

User avatar
AlexO
udonmap.com
Posts: 1193
Joined: June 8, 2015, 11:45 am
Location: Nong Lat Udon

Re: Question: Car Financing with VAT added

Post by AlexO » October 13, 2020, 11:35 pm

Why not just borrow from the bank, pay the dealer for a one off purchase and VAT charge then pay the bank monthly. There is no 7% monthly VAT tax charges on bank loan repayments.

User avatar
semperfiguy
udonmap.com
Posts: 2183
Joined: July 16, 2010, 12:49 pm
Location: Udon Thani, Thailand

Re: Question: Car Financing with VAT added

Post by semperfiguy » October 14, 2020, 3:06 pm

Thank you for all the replies I have received thus far, but I'd still like to hear more if others can contribute with their personal experience.
Colossians 2:8-10...See to it that no one takes you captive through philosophy and empty deception, which are based on human tradition and the spiritual forces of the world rather than on Christ. For in HIM dwells all the fullness of the GODHEAD bodily; and you are complete in HIM, who is the head of all principality and power.

User avatar
Tango Sierra
udonmap.com
Posts: 24
Joined: April 11, 2010, 3:32 pm
Location: Udon

Re: Question: Car Financing with VAT added

Post by Tango Sierra » October 14, 2020, 9:01 pm

Semper, the wife used Krungsri Bank for her auto loan and every month a 7% VAT is added to the repayment to the tune of 897 Baht.

User avatar
semperfiguy
udonmap.com
Posts: 2183
Joined: July 16, 2010, 12:49 pm
Location: Udon Thani, Thailand

Re: Question: Car Financing with VAT added

Post by semperfiguy » October 14, 2020, 10:12 pm

Tango Sierra wrote:
October 14, 2020, 9:01 pm
Semper, the wife used Krungsri Bank for her auto loan and every month a 7% VAT is added to the repayment to the tune of 897 Baht.
Thanks TS! Do you know if the bank paid the dealership a lump sum price which already included a 7% VAT tax? That's really what I need to know. If that is common practice, then they are charging twice for the VAT tax on a car. If they took the VAT out of the car price from the dealer before they figured the financing, then that would be the proper way to do it. Can you confirm what happened in your case. If you prefer to PM me, that would be great! Thanks!
Colossians 2:8-10...See to it that no one takes you captive through philosophy and empty deception, which are based on human tradition and the spiritual forces of the world rather than on Christ. For in HIM dwells all the fullness of the GODHEAD bodily; and you are complete in HIM, who is the head of all principality and power.

User avatar
kopkei
udonmap.com
Posts: 1732
Joined: August 27, 2010, 6:55 am

Re: Question: Car Financing with VAT added

Post by kopkei » October 15, 2020, 8:26 am

it will be everywhere the same , as it are 2 separate transactions , vat is required on both ....
on is the vat on the car buy , the other on the loan ...
i have checked the second car buy (on borrowed money) of my sister in law and it is the same ... ;)

User avatar
semperfiguy
udonmap.com
Posts: 2183
Joined: July 16, 2010, 12:49 pm
Location: Udon Thani, Thailand

Re: Question: Car Financing with VAT added

Post by semperfiguy » October 15, 2020, 11:51 am

kopkei wrote:
October 15, 2020, 8:26 am
it will be everywhere the same , as it are 2 separate transactions , vat is required on both ....
on is the vat on the car buy , the other on the loan ...
i have checked the second car buy (on borrowed money) of my sister in law and it is the same ... ;)
Now I'm wondering if this is allowed by law or it's the dirty little secret that car dealers and finance companies don't want you to know. My stepson has been around town talking to dealers and banks and all of them play dumb and won't give him a straight answer. Surely this is illegal!
Colossians 2:8-10...See to it that no one takes you captive through philosophy and empty deception, which are based on human tradition and the spiritual forces of the world rather than on Christ. For in HIM dwells all the fullness of the GODHEAD bodily; and you are complete in HIM, who is the head of all principality and power.

User avatar
deankham
udonmap.com
Posts: 597
Joined: March 17, 2008, 5:24 am
Location: Alseep under the tree

Re: Question: Car Financing with VAT added

Post by deankham » October 15, 2020, 2:07 pm

semperfiguy wrote:
October 15, 2020, 11:51 am
kopkei wrote:
October 15, 2020, 8:26 am
it will be everywhere the same , as it are 2 separate transactions , vat is required on both ....
on is the vat on the car buy , the other on the loan ...
i have checked the second car buy (on borrowed money) of my sister in law and it is the same ... ;)
Now I'm wondering if this is allowed by law or it's the dirty little secret that car dealers and finance companies don't want you to know. My stepson has been around town talking to dealers and banks and all of them play dumb and won't give him a straight answer. Surely this is illegal!
My info is at least 10 years old and is only based on what I was told, so sorry it will not really give you any concrete answer but I was previously told that;

1. If you buy a used car and finance it your paying the tax on the cost of the used vehicle then your loan repayments are also taxed, so paying twice. This is consistent with what has been said and what your son is being asked to do, HOWEVER
2. If your buying a new vehicle the owner of the vehicle will be the dealer and he will be able to claim back the tax on the price of the NEW vehicle. You will still have to pay the tax on the loan repayments. I was told this is only applicable to a new vehicle where the dealer retains the ownership until the loan / finance is repaid in full.

But as I said this info was 10 years ago. Times have changed and rules might have also. Even though you say he really wants the Isuzu, get him to try Ford and Mitsu (or Nizzan, Toyota, etc) just to go through the process and see what they offer. He then at least knows the score.

More recent experience with Izusu (2 years ago), my wifes male cousin returned from working in Korea and wanted to buy a brand new Isuzu truck for cash. As he's no experience of dealing with sales people he took my wife along to help get a decent price. They returned several hours later with the paperwork to a brand new Nissan truck!
At Isuzu they were offered no discount and the sales guy didn't even want to sell the truck without finance. After an hour of getting frustrated they went a few hundred meters down the road to Nissan and were offered discount, insurance, tints, etc, etc and the truck was ready to collect the next day.
Point being I get the feeling Isuzu are used to ripping of people who won't challenge them or are prepared to look for a better deal. Hard to explain to your son as I'm guessing the Isuzu he wants is the hottest model to look cool in.

Good luck

User avatar
semperfiguy
udonmap.com
Posts: 2183
Joined: July 16, 2010, 12:49 pm
Location: Udon Thani, Thailand

Re: Question: Car Financing with VAT added

Post by semperfiguy » October 17, 2020, 8:24 am

deankham wrote:
October 15, 2020, 2:07 pm
semperfiguy wrote:
October 15, 2020, 11:51 am
kopkei wrote:
October 15, 2020, 8:26 am
it will be everywhere the same , as it are 2 separate transactions , vat is required on both ....
on is the vat on the car buy , the other on the loan ...
i have checked the second car buy (on borrowed money) of my sister in law and it is the same ... ;)
Now I'm wondering if this is allowed by law or it's the dirty little secret that car dealers and finance companies don't want you to know. My stepson has been around town talking to dealers and banks and all of them play dumb and won't give him a straight answer. Surely this is illegal!
My info is at least 10 years old and is only based on what I was told, so sorry it will not really give you any concrete answer but I was previously told that;

1. If you buy a used car and finance it your paying the tax on the cost of the used vehicle then your loan repayments are also taxed, so paying twice. This is consistent with what has been said and what your son is being asked to do, HOWEVER
2. If your buying a new vehicle the owner of the vehicle will be the dealer and he will be able to claim back the tax on the price of the NEW vehicle. You will still have to pay the tax on the loan repayments. I was told this is only applicable to a new vehicle where the dealer retains the ownership until the loan / finance is repaid in full.

But as I said this info was 10 years ago. Times have changed and rules might have also. Even though you say he really wants the Isuzu, get him to try Ford and Mitsu (or Nizzan, Toyota, etc) just to go through the process and see what they offer. He then at least knows the score.

More recent experience with Izusu (2 years ago), my wifes male cousin returned from working in Korea and wanted to buy a brand new Isuzu truck for cash. As he's no experience of dealing with sales people he took my wife along to help get a decent price. They returned several hours later with the paperwork to a brand new Nissan truck!
At Isuzu they were offered no discount and the sales guy didn't even want to sell the truck without finance. After an hour of getting frustrated they went a few hundred meters down the road to Nissan and were offered discount, insurance, tints, etc, etc and the truck was ready to collect the next day.
Point being I get the feeling Isuzu are used to ripping of people who won't challenge them or are prepared to look for a better deal. Hard to explain to your son as I'm guessing the Isuzu he wants is the hottest model to look cool in.

Good luck
If this is the case then it would seem that when the dealer claims back the 7% VAT on the new car purchase, then they should refund that tax to the purchaser; however, this must be their dirty little secret that they pocket that 7% and the purchaser effectively pays the VAT twice.
Colossians 2:8-10...See to it that no one takes you captive through philosophy and empty deception, which are based on human tradition and the spiritual forces of the world rather than on Christ. For in HIM dwells all the fullness of the GODHEAD bodily; and you are complete in HIM, who is the head of all principality and power.

User avatar
kopkei
udonmap.com
Posts: 1732
Joined: August 27, 2010, 6:55 am

Re: Question: Car Financing with VAT added

Post by kopkei » October 17, 2020, 11:20 am

i have given a call to my cousin who works as engineer at swampy,he always buys his car and big bike on loan ,he will let me know on monday when he goes to work as these documents are at his work .... ;)

User avatar
semperfiguy
udonmap.com
Posts: 2183
Joined: July 16, 2010, 12:49 pm
Location: Udon Thani, Thailand

Re: Question: Car Financing with VAT added

Post by semperfiguy » October 17, 2020, 1:17 pm

kopkei wrote:
October 17, 2020, 11:20 am
i have given a call to my cousin who works as engineer at swampy,he always buys his car and big bike on loan ,he will let me know on monday when he goes to work as these documents are at his work .... ;)
Thank you Kopkei! I look forward to hearing back from you.
Colossians 2:8-10...See to it that no one takes you captive through philosophy and empty deception, which are based on human tradition and the spiritual forces of the world rather than on Christ. For in HIM dwells all the fullness of the GODHEAD bodily; and you are complete in HIM, who is the head of all principality and power.

User avatar
Giggle
udonmap.com
Posts: 1161
Joined: October 18, 2016, 4:24 pm

Re: Question: Car Financing with VAT added

Post by Giggle » October 18, 2020, 4:08 pm

I bought a Ford Ranger Wildtrak in Udon last year for slightly less than a million baht.
I paid cash for the total amount and will never, ever pay any shyster a single satang in loan interest.

Why are so many people incapable of saving for things they want?

User avatar
Niggly
udonmap.com
Posts: 481
Joined: December 5, 2018, 5:51 pm
Location: ‘www.overthere.com’

Re: Question: Car Financing with VAT added

Post by Niggly » October 18, 2020, 7:09 pm

Giggle wrote:
October 18, 2020, 4:08 pm
I bought a Ford Ranger Wildtrak in Udon last year for slightly less than a million baht.
I paid cash for the total amount and will never, ever pay any shyster a single satang in loan interest.

Why are so many people incapable of saving for things they want?
Agreed, I’ve never taken out a loan with interest except a mortgage

User avatar
ajsp9
udonmap.com
Posts: 307
Joined: January 10, 2009, 9:43 pm
Location: Bristol, England

Re: Question: Car Financing with VAT added

Post by ajsp9 » October 19, 2020, 12:12 am

Giggle wrote:
October 18, 2020, 4:08 pm
I bought a Ford Ranger Wildtrak in Udon last year for slightly less than a million baht.
I paid cash for the total amount and will never, ever pay any shyster a single satang in loan interest.

Why are so many people incapable of saving for things they want?
I think that’s a little unfair as some folk simply can’t afford to stump up 1m THB and I think of the OP is looking at a 7 year plan then clearly he can’t. Finance can suit an individuals circumstances and as Nighlyb says a 0% deal is potentially available.

Cash flow is an inportant part of life and it can work out fine as it suits individual needs. It’s certainly not a black and white situation so I don’t have such a harsh opinion on finance.

User avatar
parrot
udonmap.com
Posts: 9563
Joined: March 19, 2006, 8:32 pm

Re: Question: Car Financing with VAT added

Post by parrot » October 19, 2020, 6:58 am

A few interesting things according to the https://www.rd.go.th/publish/57334.0.html
If you buy a vehicle that the dealer lists for 1,000,000 Baht, for example, and the dealer gives you a discount of say 100.000 Baht, you pay VAT on the listed price of the vehicle.......1,000,000, not the 900,000 you actually paid.

Selling a vehicle you own: if you sell it yourself, the buyer doesn't pay tax. If a company buys your vehicle and resells it, the VAT is applied when the company resells it https://th.carro.co/blog/buy-secondhand ... d-vat-tax/

Although I haven't yet been able to find an answer to the question about VAT applied to financing, I'm still searching Thai websites. If I uncover a definitive answer, I'll post it here.

Kenr6583
udonmap.com
Posts: 792
Joined: July 13, 2019, 2:15 pm

Re: Question: Car Financing with VAT added

Post by Kenr6583 » October 19, 2020, 7:10 am

Giggle wrote:
October 18, 2020, 4:08 pm
I bought a Ford Ranger Wildtrak in Udon last year for slightly less than a million baht.
I paid cash for the total amount and will never, ever pay any shyster a single satang in loan interest.

Why are so many people incapable of saving for things they want?
How many Thai people do you know have/can save 1 million baht? The OP clearly states it is his stepson who is buying this vehicle, not himself.

User avatar
kopkei
udonmap.com
Posts: 1732
Joined: August 27, 2010, 6:55 am

Re: Question: Car Financing with VAT added

Post by kopkei » October 19, 2020, 3:01 pm

ok i have got the reply from my cousin ,and we are looking at this the wrong way ,we do not pay 2 times vat ,as all calculations are made vat inclusive , i will give an exact calculation how it should be for example buying a nissan almera 599.000 baht incl vat /20% down payment / 4% annual/term 60 months ...calculations all including vat!
purchase 599.000 - 119.800 (20% dp) = 479.200 baht to finance
479.200 x 4% = 19.168 x 5(year) = 95.840 + 479.200 = 575.040 total to pay back over 60 months /again incl vat
575.040 : 60 = 9.584 baht monthly payment including vat...(8.957 excl/vat 627 baht)
easy to check all ok
479.200 + 95.840 = 575.040 total (60 x 9.584 = 575.040)
easy to check all the freebies are really free :D
this is how all finance calculations (for car or motorbike ) should be done , if not ??,walk away...
so semper check your finance offer from isuzu according to my example here and you should know ,good luck all.... ;)

Post Reply

Return to “General Udon Thani Forum”