Fast Money aims to remake the motorcycle securities lending market

Fast Money aims to remake the motorcycle securities lending market

Interest rate almost half of the current mark

Mr Vitai, on the left, said the new financial services would be available at 500 GSB branches by May.

The joint venture between Government Savings Bank (GSB) and SET-listed Srisawad Corporation Plc (SAWAD) has earmarked baht 20 billion for the motorcycle securities lending business, offering an interest rate of nearly half of market rates.

Fast Money Co, 49% of which was acquired by GSB for 1.5 billion baht in November last year from Srisawad, yesterday launched a low-interest motorcycle title loan product that offers a interest rate of only 14.99%, or a flat rate of 0.69% a month.

This rate is much lower than the market rate of financial institutions of 24-28% per annum.

“The annual rate of 14.99% is well below the 18% announced earlier. We think it’s a good thing for low-income people who need quick cash using their motorcycle securities as loan collateral, ”said Vitai Ratanakorn, CEO and President of GSB.

“The main objective of GSB’s foray into the vehicle securities lending industry is to force market interest rates for this lending segment down to 16-18% over the longer term. “

When interest rates on vehicle title loans fall, it could lower the interest rates charged on other categories of loans, he said.

Mr. Vitai said that within the next two months, the joint venture is also expected to start providing car title lending service, again with a lower than market interest rate.

He said the low-interest vehicle securities lending business would be operated through 5,000 branches of Srisawad across the country.

GSB branches will have Fast Money Co booths installed to provide the service, starting with 35 branches in the first phase, Vitai said.

The number of GSB agencies providing the service will eventually increase to 500 by May and 800 by the end of the year, he said.

GSB has 1000 branches in total.

According to Vitai, the bank aims to alleviate the financial hardship of low-income people, helping them reduce income disparities and poverty.

This new activity gives low-income people better access to loans at low interest rates.

There are around 25 million people in Thailand who earn less than 15,000 baht per month.

Of the total, up to 40% can access loans in the country’s financial system, he said.

There are approximately 21 million motorcycles in the country, and the owners of 3.5 million are customers who have motorcycle title loans from financial institutions, Mr. Vitai said. The rest use funding that does not come from financial institutions.

Even with Fast Money’s new low-interest offering, he believes traditional financial institutions selling motorcycle securities loans will remain profitable as their net interest margin (NIM) averages 20%.

This rate is much higher than the NIM of public banks and commercial banks, at 2.2-2.5% and 3.5%, respectively.

The NIM is a measure that compares the net interest income that a financial firm generates from loan products with the outgoing interest it pays to holders of savings accounts and certificates of deposit.

Thida Kaewbootta, head of investor relations at Srisawad Corporation, said Fast Money plans to expand from 800,000 to 1 million customers an average of 20,000 to 30,000 baht per customer, with a repayment period of 18 to 24 months.

The company estimates that it takes less than 15 minutes per person to approve the loans.

There is no requirement for a vehicle title transfer, but for motorcycles, customers must be over 15, she said.

Priscilla C. Carnegie