Bank of Thailand to Regulate Automotive Hire-Purchase Sector Starting December 2025

On June 5, 2025, the Royal Decree concerning the Regulation of Hire Purchase and Leasing of Automobiles and Motorcycles was published in the Government Gazette of Thailand. This decree, which will take effect on December 2, 2025, marks a significant regulatory shift as the Bank of Thailand (BOT) assumes oversight over the automotive hire-purchase and leasing sector, a critical component of the national economy.

The automotive hire-purchase and leasing market in Thailand has seen outstanding credit of approximately 1.6 trillion Thai Baht (THB), accounting for about 10% of total household debt. This substantial figure underscores the importance of the sector to the financial stability of the country. According to Mr. Prasarn Trairatvorakul, a former Governor of the Bank of Thailand, “The regulation is essential to manage systemic risks associated with household debt, ensuring that consumers are protected and that industry standards are raised.”

The Royal Decree introduces activity-based regulations applicable to any juristic person engaging in the hire-purchase or leasing of vehicles, targeting non-bank companies primarily involved in these activities. The decree explicitly covers a wide range of vehicles as defined under the Motor Car Act B.E. 2522, including both cars and motorcycles. However, it does not apply to existing financial institutions, Specialized Financial Institutions (SFIs), or cooperatives, which are already subject to separate regulations.

Under the new regulations, businesses in the automotive hire-purchase and leasing sector must adhere to several key obligations aimed at enhancing transparency and consumer protection. Operators are required to display all interest rates, service fees, and other charges clearly at their offices and in all advertising media. Dr. Anan Petchsang, an economist at Chulalongkorn University, emphasizes that “full transparency in financial transactions is crucial to safeguard consumers against exploitative practices.”

Moreover, the BOT will issue guidelines on contract terms and benefit calculation methods to protect consumers from unfair practices. Businesses must also register with the BOT within a designated timeline and comply with standards concerning interest rates, fees, and reporting requirements. The BOT has been granted significant supervisory powers, including the ability to set financial rules and conduct inspections of companies to ensure compliance.

In terms of enforcement, the BOT can issue warnings, cease-and-desist orders, and even suspend businesses that fail to comply with regulations, particularly in instances of severe violations. This new level of oversight is expected to reshape the operational landscape for companies in the sector. As stated by Mr. Somchai Suwanpong, CEO of a leading automotive finance firm, “The new regulations will challenge us to elevate our business practices and prioritize consumer welfare.”

Looking ahead, the 180-day transition period before the regulations take effect provides an opportunity for businesses to align their operations with the new standards. This includes reviewing contractual agreements, fee structures, and internal processes. Industry players are encouraged to participate in focus groups and public hearings organized by the BOT to facilitate a smooth transition.

As these regulations take hold, they are anticipated to have significant implications for both operators in the sector and consumers alike. Industry analysts predict that enhanced regulation could lead to a more stable financial environment, fostering greater consumer trust and potentially reducing the burden of household debt over time. Dr. Nattawut Khaokham, a financial analyst at the Bank of Thailand, notes, “The long-term effects of these regulations could be profound, promoting a healthier financial ecosystem.”

In conclusion, the BOT's new regulatory framework for automotive hire-purchase and leasing represents a pivotal shift in Thailand’s financial landscape, aiming to enhance consumer protection, elevate industry standards, and maintain economic stability. Stakeholders in the sector must prepare for these changes to ensure compliance and adapt to the evolving regulatory environment.