Guest thrillbill8 Posted September 27, 2009 Posted September 27, 2009 --don't know if anyone on this forum will know about Thai banks but here is the question: My Thai buddy borrowed money a couple years ago from a bank up in Isaan in order to set up a small tailor shop. He used his rice acreage as collateral. At the time he was doing this I was in the States on holiday;for, if he had asked for my opinion I would have said "NO WAY" since the loan was for 200,000 baht with only a two year loan. Because of the economy and poor location of his shop, he had to close it. Then eventually I gave him some $$$ to open up a shop selling ready-made clothes in a small town that does NOT depend on tourists, but only locals. He is doing ok... The question I have is that he has been paying only the 6,000 baht a month. Now that the two years is up, the bank is going to take his land away since the whole balance isn't paid off. Is there anything he can do-Such as re-negotiate his loan? He has a balance of 150,000 on the loan. I'd "loan" him the money but I already spent $$ on his getting his new shop stocked up. Any ideas. He is totally non-business savvy when it comes to money. Quote
Gaybutton Posted September 27, 2009 Posted September 27, 2009 Any ideas. He is totally non-business savvy when it comes to money. He owes 150,000 baht on a 200,000 baht loan that is now due? It can't hurt for him to try negotiating, but I'd say he literally "bet the farm" and he lost. You said he was paying off the loan at 6000 baht per month. How much per month was he supposed to be paying? When I do the math, it comes out to he has so far paid 144000 baht. That means he still owes approximately US $1700 before you even start talking about the interest he probably owes along with it. It seems to me that if he has been paying it off and has paid back that much, and if he has been making timely payments, then the bank might consider renegotiation if he has something to collateralize it with. It can't hurt for him to try. If you have the means and you can trust him, maybe you can pay off his loan for him and have him pay you back month-to-month at a rate you both can live with. It would seem a shame for him to lose acreage for US $1700 that he can't immediately cough up. Quote
Guest lvdkeyes Posted September 27, 2009 Posted September 27, 2009 WOW!! That's 47% interest over the term of the loan. I just talked to my bf and he said he thinks the bank will not lower the payment, but he can try to talk to the bank. Quote
Guest Posted September 27, 2009 Posted September 27, 2009 Logically, if he can borrow 200,000 two years ago, then he should be able to borrow 150,000 against the same asset now, with the same bank or another one. I assume agricultural land values are holding up. He should speak to a couple more banks to have a back up plan. The interest rate seems very high according to the above math. Quote
Gaybutton Posted September 28, 2009 Posted September 28, 2009 Logically, if he can borrow 200,000 two years ago, then he should be able to borrow 150,000 against the same asset now Logic in Thailand? Good luck. These are the same banks that find logic in charging 150 baht a pop for use of a foreign ATM card. Quote
Guest lvdkeyes Posted September 28, 2009 Posted September 28, 2009 Borrowing money from a bank is an expensive proposition. I wouldn't recommend borrowing more money from the bank to pay the bank. That is just compounding the problem. If you can pay off the bank, it would be less costly. Have a lawyer draw up a legally binding contract for him to pay you back. Quote
Guest fountainhall Posted September 28, 2009 Posted September 28, 2009 These are the same banks that find logic in charging 150 baht a pop for use of a foreign ATM card Is that illogical? I'm a bank and in these recessionary times I'm in trouble. I have to raise cash. My Thai clients scream at me in Thai if I raise their rates. Most farangs, on the other hand, are richer than my Thai clients (or that's my perception) and don't speak much Thai. Much easier, therefore, to screw them. Perfect logic! Quote
Guest Posted September 28, 2009 Posted September 28, 2009 Well it sort of depends how much he wants to keep hold of the land. If there's some family attachment to it or if he is likely to lose out when the bank sells the land off cheaply to the bank managers buddy, then it's best to try & keep hold of it. A borrower with collateral who will repay the loan slowly sounds like the kind of customer banks should go after. Quote
Guest fountainhall Posted September 29, 2009 Posted September 29, 2009 Have a lawyer draw up a legally binding contract for him to pay you back A long time ago I was told of an Asian proverb: "Never lend money to a friend because you'll lose both the money and the friend." Over the years I have happily dished out small amounts to Thai 'friends' - for key money and the first month's payment on an apartment lease, for a mother's eye operation, to help the family pay off a brother's gambling debts etc. etc. (no, I haven't had the water buffalo one yet ). In almost all cases, the money has never been returned and the friends have disappeared. That probably says more about me than the supposed friends. Sure, one or two were rather recent 'friends', but most have been guys I'd known for quite some time and I really cared more about the friendship than the money. Many of us, I guess, have been in the same sort of leaky boat. Whilst I will probably continue to provide the occasional small loan in future (well, after all, next time it'll be different - won't it! ), not even a binding contract will induce me to part with anything larger. Quote
Guest lvdkeyes Posted September 29, 2009 Posted September 29, 2009 I agree with you. When Thrillbill8 said "Thai buddy", I assumed he meant his bf, which is what I based my posting on. I know about ASSUME. Correct me if I am wrong. Quote
Guest thrillbill8 Posted September 29, 2009 Posted September 29, 2009 I agree with you. When Thrillbill8 said "Thai buddy", I assumed he meant his bf, which is what I based my posting on. I know about ASSUME. Correct me if I am wrong. _____________ Yes, it is my Thai BF which I have known for 5 years. There was about 6 months when I didn't see him and this is when he went to the bank and borrowed money because he had such a strong desire to get his tailor shop going again. The guy works hard, is proud of his work...but has NO business sense...and trusts everyone, such as bankers. I have persuaded him to go up to his bank in Isaan, and directly talk to the manager to renegotiate his loan. I have a "gut " feeling that this was a "set up" from the village bank; for they had him put up his whole farm as collateral instead of part of it. And paying back 200,000 baht in two years should have been more of a 4 year contract. Quote
Gaybutton Posted September 30, 2009 Posted September 30, 2009 they had him put up his whole farm as collateral instead of part of it. I can't imagine that a bank would allow part of a farm as collateral. If the bank has to seize the property if the loan isn't paid, then they have to sell the farm to regain the amount they are owed. I doubt that very many people would be interested in buying half a farm. What the bank probably does in cases like this is sell the property, retain the amount they are owed, plus fees, interest, and expenses. Whatever is left from the sale of the property, if anything, goes back to the person who took out the loan. Quote
Guest lvdkeyes Posted September 30, 2009 Posted September 30, 2009 What the bank probably does in cases like this is sell the property, retain the amount they are owed, plus fees, interest, and expenses. Whatever is left from the sale of the property, if anything, goes back to the person who took out the loan. You really must be dreaming. If you put up the farm as collateral and renege on the loan, you forfeit the farm. Period. End of story. Quote
Gaybutton Posted September 30, 2009 Posted September 30, 2009 You really must be dreaming. Well, I did say 'probably.' I don't know if I'm correct or you're correct, but in Thailand I wouldn't be at all surprised if you're the one who is correct. Quote
Bob Posted September 30, 2009 Posted September 30, 2009 You really must be dreaming. If you put up the farm as collateral and renege on the loan, you forfeit the farm. Period. End of story. I'd wonder if you'd explain the mortgage foreclosure process in Thailand. Most countries have a process that takes from several months to over a year for a bank to end up with ownership after a default but I have no clue how Thai law works (or doesn't work). You seem to somehow be aware that the process is just automatic so I'd appreciate hearing how you know it works that way. Quote
Guest lvdkeyes Posted September 30, 2009 Posted September 30, 2009 I don't know how the system works. I just know that I told my bf of the situation and asked if the bank would give back the difference. He laughed and said absolutely not, if you don't pay the bank you lose your farm. Quote
Guest Posted September 30, 2009 Posted September 30, 2009 In the UK, I believe any surplus funds after paying creditors should go back to debtor. Trouble is the bank is motivated just to make a quick sale, rather than trying quite hard to get the best price. In your case, the I figure the bf should be trying to get another loan at that bank or a different one. He has 50,000 at stake here. Clearly I don't know the circumstances, but he does seem rather too laid back about it. Or maybe expecting a bail out from the Farang. Apologies if I offend with these comments. Quote
