Thailand's Ministry of Finance has issued a royal decree placing the business of hire purchase and leasing of cars and motorcycles under the scope of the Financial Institution Business Act B.E. 2551 (2008), effective December 2, 2025. This is to ensure appropriate regulatory oversight of these business activities, as they function similarly to credit granting and serve as a source of funding for the public with a broad impact on the overall economic system and consumers at large.
The business operators that this royal decree applies to include corporate entities engaging regularly in the business of hire purchase or leasing of cars or motorcycles, currently excluding:
- Financial institutions and specialized financial institutions.
- Individuals operating such businesses (noncorporate entities).
- Cooperatives.
Key regulatory obligations of this royal decree include the following:
- Business operators must disclose interest rates, service fees, and other relevant business information to the public and report to the Bank of Thailand (BOT).
- Business operators must display how the annual percentage rate (APR), including all annual charges covering interest and service fees, is calculated.
- Business operators must maintain accurate accounting records in accordance with recognized accounting standards.
- The BOT may issue warnings or suspend operations if business operators fail to comply with this royal decree or act unfairly in a way that may result in serious harm to customers.
- Directors, managers, and responsible persons of any business operator that violates this royal decree may also be subject to the prescribed penalties.
Before the royal decree takes effect, business operators should conduct internal assessments and engage with counsel to prepare for regulatory implementation. The BOT is expected to issue further subordinate regulations and guidance regarding:
- Interest, service fees, deposits, collateral, benefits, and penalties that may be charged by business operators.
- Contract content, methods of benefit calculation, and format in conducting business with customers.
- Requirements for contracts that grant the business operator the right to unilaterally amend the contract.
- Further details on business operator disclosure requirements.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
