① Auto finance companies have recently followed up the implementation of new car loan regulations and implemented “0 down payment” products. Currently, there are at least 7. ② Interviewees said that it will help boost the vitality of the automobile consumer market. At the same time, it is also necessary to establish and improve risk warning and handling mechanisms. ③ Auto finance companies took the lead in implementation. Interviewees said it was related to factors such as their ability to respond quickly and the relatively simplified approval process.
Financial Services Association, April 17 (Reporter Zou Juntao) Since the “Notice on Adjusting Policies Related to Auto Loans” was issued on April 3, a number of auto finance companies have taken the lead in implementing the new regulations to implement “0 down payment.”
On April 17, a Finance Association reporter noticed that FAW Auto Finance Co., Ltd. (“FAW Auto Gold” for short) officially announced the full launch of “0 down payment” financial products. Not long ago, GAC Huili Auto Finance Co., Ltd. (“Guangzhou Huili Auto Gold” for short) also published an article announcing the launch of a “0 down payment” financial product. Currently, there are at least 7 auto finance companies that have officially announced the launch of “0 down payment” financial products.
A number of interviewees said that auto finance companies are the first to launch “zero down payment” financial products, which will help boost the vitality of the automobile consumer market. At the same time, it is also necessary to establish and improve risk warning and handling mechanisms. A Financial Services Association reporter also noticed that unlike high-profile propaganda from auto finance companies, there are very few commercial banks in the market that have announced a “zero down payment” to follow up on car loans.
A number of auto finance companies have launched “0 down payment” products for car loans
On April 17, the official website of China FAW Group released news that in order to better support the Group's main business, innovate and use financial instruments, and promote automobile consumption, in the context of the “Notice on Adjusting Policies Related to Auto Loans” by the People's Bank of China and the General Administration of Financial Supervision, on April 16, FAW Auto Finance Co., Ltd. comprehensively adjusted the down payment ratio for auto loans, leading the industry to launch zero-down payment financial products to continue to create value for customers.
FAW Auto Gold said that the launch of zero down payment financial products has lowered the threshold for customers to buy cars, reduced customers' upfront investment in car purchases, and ultimately released the pressure on customers to buy cars.
On the afternoon of April 17, the Financial Services Association reporter called FAW Auto Gold's customer service staff. The other party said that currently the 0 down payment product only supports the Hongqi HS7 model. Subsidy policies for other FAW car brands will be introduced later, and it is expected to be launched in early May.
The Financial Services Association reporter noted that FAW Auto Gold is not the only financial institution that recently launched “0 down payment” products; many other auto finance companies have also recently officially announced the launch of “0 down payment.”
On April 15, Guangzhou Huili Finance posted an article on its WeChat account stating that “GAC Huili Auto Finance 0 down payment product was the first to be launched.” Relevant promotional posters show that the reason behind the launch of related products is to increase financial support for automobile consumption.
Furthermore, according to public information, auto finance companies such as Dongfeng Motor Finance Co., Ltd., Changcheng Binyin Auto Finance Co., Ltd., Chery Huiyin Auto Finance Co., Ltd., Shanghai Dongzheng Auto Finance Co., Ltd., and Volkswagen Finance (China) Co., Ltd. have also recently announced the launch of “0 down payment” products.
According to incomplete statistics from the Financial Services Association reporter, there are currently at least 7 auto finance companies that publicly claim to launch “0 down payment” products.
What is the impact of the implementation of the “0 down payment” car loan?
On April 3, the People's Bank of China and the China General Administration of Financial Supervision and Administration jointly issued the “Notice on Adjusting Policies Related to Auto Loans” (hereinafter referred to as the “Notice”), which clarifies that financial institutions independently determine the maximum loan disbursement ratio for private use of traditional power vehicles and private new energy vehicles based on the borrower's credit status, repayment ability, etc. on the premise that they comply with the law and that risks are manageable. This means that relevant financial institutions can implement the “0 down payment” policy for car loans in the future.
On the afternoon of April 17, Yu Fenghui, an economist and new finance expert, said in an interview with a reporter from the Financial Services Association that the auto finance company launched a “zero down payment” financial product in response to the government's policy to stimulate consumption and promote car upgrading. The aim is to lower the threshold for car purchases and stimulate consumers' desire to buy cars, especially in the current economic environment, and help boost the vitality of the automobile consumer market.
Yu Fenghui pointed out that the “zero down payment” policy has greatly reduced the financial pressure on consumers in the early stages of car purchases, making car purchases more inclusive, and is expected to attract more potential consumers, especially young people and first-time car buyers with high demand for capital liquidity, thus directly boosting car sales.
Other interviewees also agreed that the implementation of “zero down payment” would be of great benefit to stimulating automobile consumption. Su Xiaorui, chief researcher at Suxi Zhi Research, told the Financial Federation that some financial institutions have begun implementing the new regulations to launch zero down payment products, which mainly respond positively to relevant regulatory calls to provide customers with more convenient car consumption solutions, and also help to quickly acquire customers at this stage.
However, Yu Fenghui also pointed out that “zero down payment” means that consumers can buy a car without paying a down payment, which may cause some consumers to become overly indebted and increase credit risk. Auto finance companies need to strictly review loan applications to ensure that borrowers have the ability to repay, and at the same time establish and improve risk warning and disposal mechanisms.
Why can auto finance companies take the lead in implementing the new regulations?
It is worth noting that the financial institutions mentioned in the “Notice” include commercial banks, rural cooperative banks, rural credit cooperatives, and non-bank financial institutions that have been established in accordance with the law in the country and approved by the General Administration of Financial Supervision to operate RMB loan business.
This time, auto finance companies took the lead in implementing the new regulations. Regarding this, Su Xiaorui believes that auto finance companies can take the lead in implementation. On the one hand, auto finance companies have been deeply involved in the auto finance field for a long time, have mature auto finance product systems and solution capabilities, and also have the ability to quickly respond to market needs and carry out corresponding adjustments;
On the other hand, auto finance companies have scenario advantages and customer source advantages, have accumulated rich big data resources in vertical fields, and have the confidence and ambition to break the game in the face of “zero down payment”, which tests institutional risk control.
In addition to the above factors, Yu Fenghui pointed out that the decision-making process of auto finance companies is usually more agile, and the approval process is relatively simplified, which is also an important reason why they can take the lead in implementing the new regulations compared to other financial institutions such as banks.
Yu Fenghui also pointed out that as the government continues to introduce a series of policies to stimulate consumption, such as adjusting the down payment ratio for car loans, car purchase subsidies, and preferential policies for new energy vehicles, the auto finance market will continue to benefit, and the market size is expected to expand further.
He said that in the future, in the face of the huge potential and profit margins of auto finance, it is expected that more non-bank financial institutions will continue to increase their investment to compete for market share by innovating business models, improving risk control capabilities, and optimizing customer experience to achieve effective competition with traditional auto finance companies and commercial banks.