How it works
Enter the car price, down payment, the flat rate from the lender and the number of months. You get the monthly installment, total interest and the effective annual rate, so you can compare with reducing-balance loans.
Formula
Amount financed = car price − down payment
Total interest = amount financed × annual rate × (months ÷ 12)
Installment = (amount financed + total interest) ÷ months, plus 7% VAT if selected
Effective rate = the reducing-balance rate that gives the same installment (before VAT)
What is a flat interest rate?
Most Thai car finance is quoted at a flat rate: interest is charged on the full amount financed for the whole contract, even as the principal falls each month.
- Total interest = amount financed × rate × years
- Installment = (amount financed + total interest) ÷ number of months
It is simple and the installment never changes, but the headline rate looks lower than the real cost.
Installment per 500,000 baht financed (incl. 7% VAT)
| Flat rate | 48 months | 60 months | 72 months | 84 months |
|---|---|---|---|---|
| 2% | 12,038 | 9,808 | 8,322 | 7,261 |
| 2.5% | 12,260 | 10,031 | 8,545 | 7,484 |
| 3% | 12,483 | 10,254 | 8,768 | 7,707 |
| 4% | 12,929 | 10,700 | 9,214 | 8,152 |
| 5% | 13,375 | 11,146 | 9,660 | 8,598 |
What a flat rate really costs
| Flat rate | Effective annual rate (60 months) |
|---|---|
| 2% | 3.82% |
| 2.5% | 4.73% |
| 3% | 5.64% |
| 4% | 7.42% |
| 5% | 9.15% |
The effective rate is nearly double the flat rate because you keep paying interest on principal you have already repaid. Use it to compare with reducing-balance loans such as personal loans or mortgage refinancing.
Rate caps and your rights
Car hire purchase is regulated by the Bank of Thailand under rules published in the Royal Gazette on 3 December 2025. For individuals buying for personal use:
| Vehicle | Maximum effective rate per year |
|---|---|
| New car | 10% |
| Used car | 15% |
| Motorcycle | 23% |
- Late-payment interest is capped at 5% a year and charged only on the overdue installment, not the whole balance.
- Paying off early earns a discount on the interest not yet due.
The caps apply to the effective rate, not the flat rate. A 5% flat rate over 5 years is about 9.15% effective, still under the new-car cap, but shorter terms or higher flat rates can exceed it. This calculator warns you when the effective rate is above 10%.
How much should you put down?
A bigger down payment cuts the amount financed, the installment and the total interest, and lenders often offer lower rates from about 20–25% down. Low or “zero down” deals mean higher installments and usually higher rates.
Even so, don’t spend your whole safety net on the down payment. Keep at least 3–6 months of expenses as an emergency fund.
Long or short term?
84 months gives a low installment but much more interest, and near the end you may be paying for repairs on an ageing car on top of the installment. If a shorter term is still comfortable, choose the shortest one you can afford.
Costs beyond the installment
- Car insurance — often included in year one, then yours to renew
- Annual road tax and compulsory insurance (Por Ror Bor)
- Fuel, maintenance and parking
Add everything up per month and compare it with your take-home pay to see whether the car is really affordable.
FAQ
How is car loan interest calculated in Thailand?
Most Thai car loans use a flat rate: total interest = amount financed × rate × years. Principal plus interest is divided by the number of months, so every installment is the same.
Is a 3% flat rate more expensive than it looks?
Yes. Interest is charged on the full amount for the whole term even as you pay it down. A 3% flat rate over 5 years is about 5.6% a year on a reducing balance. This calculator shows the effective rate so you can compare.
Should I put more money down?
A bigger down payment lowers the amount financed, the installment and the total interest, and lenders often offer a lower rate. Keep an emergency fund, though.
Do car installments include VAT?
Thai hire-purchase contracts carry 7% VAT on installments. Some lenders quote installments with VAT included and some without, so check before you compare. You can choose here whether to add VAT.
Is there a cap on car loan interest?
Yes. Under Bank of Thailand rules published in the Royal Gazette on 3 December 2025, hire purchase by individuals for personal use is capped at an effective 10% a year for new cars, 15% for used cars and 23% for motorcycles. Late-payment interest is capped at 5% a year on the overdue installment only.
References
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