Ever since the massive deluge occurred in the North in August before spreading to the central basin and then Bangkok in mid-October, flood-hit people have been spending extra money to evacuate their homes and find temporary shelter.
After the floods subside, they will probably spend more on home and furniture repair and improvement, as well as car maintenance.
Many of them want loans to pay for these unexpected expenses, and good financial management is crucial.
Araya, 35, who works at an IT firm in Silom, wants to get some loans with low interest rates to repair her flooded house in Bang Khen.
"I don't know how much the house repair will cost exactly," she said. "But it will be a lot to fix a house that has been submerged under waist-deep water for several weeks. Moreover, I will have to pay a school fee for my son next month as well."
Her savings alone are not enough, as she has spent a great deal during the flood period. And she still can't go back to her house.
To ease financial worries, Kasikornbank has the K-WePlan, a personal financial service to assist flood victims in carefully planning spending post-flooding. The plan outlines spending as follows:
- Expenses such as transport of belongings and medical care. Flood victims are at risk of flood-related illnesses, including ringworm, leptospirosis, conjunctivitis and dengue fever.
- Expenses for transport, medicine and public utilities.
- Expenses for home cleanup and rehabilitation that may include landfilling to prevent future house floods.
- Expenses for purchasing new furniture and electrical goods if they are damaged: water pump, refrigerator, washing machine, air conditioner, etc; buying new appliances is better than repairing them if the cost is not so different.
- Expenses for auto maintenance to check whether floodwaters damaged car engines and other parts.
A staffer at KBank explained that spending priorities are different based on the demands of each person. If they are short on cash, they might look to borrow from banks.
K-WePlan suggests four financial sources for flood victims:
- Company welfare, which will offer loans at special interest rates and a grace period on interest payment for employees.
- A soft loan programme by the Social Security Office offering loans for house rehabilitation of up to 50,000 baht at 2.50% interest for the first two years and a maximum repayment period of 24 months. The scheme will be available from Dec 7 to April 30.
- A credit line from a life insurance policy. A policyholder can apply for a loan of up to 80% of policy sum assured at an interest rate two percentage points higher than the dividend yield fixed in the insurance policy. For instance, if the dividend yield is quoted at 4%, the loan rate is 6%.
- Bank loans of various types, including personal loans, cash-for-car, credit card or home loans. Banks are offering several housing loan packages for rehabilitation to help flood-hit customers.
Low and zero interest rates will be charged. However, the special rates are generally available to existing customers only.
- Bank offers zero interest on home loans under the rehabilitative programme for the first six months, and the bank offers credit lines equal to paid-up debts.
Chatchai Payuhanaveechai, the secretary-general of the Housing Finance Association and also a KBank executive vice-president, says demand for mortgage loans for rehabilitation is still low but will rise after the floodwaters subside.
"Clients who will apply for this kind of loan want to obtain loans valued around 20-30% of their losses," he said.
Siam Commercial Bank also offers zero-rate housing loans for the first three months, with credit lines of up to 120% of existing appraisal price.
CIMB Thai Bank will reduce the interest rate of an existing mortgage loan under its rehabilitation scheme.
Besides rehabilitation loan programmes, many banks also are offering special consumer loan packages to clients.
Such packages include extension of loan duration, a grace period for principal and interest payment, interest rate reductions and additional credit lines.
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