Recently, the mainland has restarted the era of "0 down payment" and "0 interest rate" car purchases.
On April 3, the People's Bank of China and the State Administration of Financial Supervision jointly issued the Notice on Adjusting Relevant Policies for Auto Loans (hereinafter referred to as the "Notice"), which proposed that financial institutions should independently determine the maximum proportion of loans for self-use traditional power vehicles and self-use new energy vehicles based on the borrower's credit status and repayment ability under the premise of legal compliance and controllable risks.
Less than half a month after the issuance of the "Notice", according to incomplete statistics, a number of banks, as well as Volkswagen Finance, Dongzheng Auto Finance, Chery Auto Finance, FAW Auto Finance, Great Wall Binyin Auto Finance, GAC Huili Auto Finance and Dongfeng Motor Finance and other financial institutions have successively launched "0 down payment" and "0 interest rate" car purchase products.
While the industry applauds the "0 down payment" and "0 interest rate" car loan products that greatly reduce the threshold for car purchase and alleviate the pressure of low-income car purchases, some people in the industry remind that the new car loan policy does not engage in "flood irrigation", and the industry must pay attention to risk control.
The terminal transaction has been able to "zero down payment"
The reason why the adjustment of the auto loan ratio is interesting is that for the first time, the loan ratio for self-use cars has been liberalized in the form of a document, that is, financial institutions, including banks, are allowed to provide "zero down payment" products for automobiles. According to the Notice, the maximum proportion of loans for self-use of traditional power vehicles and new energy vehicles for self-use shall be determined by financial institutions, the maximum proportion of loans for commercial traditional power vehicles shall be 70%, the maximum proportion of loans for commercial new energy vehicles shall be 75%, and the maximum proportion of loans for second-hand vehicles shall be 70%.
In addition, the Notice also gives financial institutions greater autonomy in determining the term and interest rate of auto loans: under the premise of legal compliance and controllable risks, each financial institution shall reasonably determine the specific disbursement ratio, term and interest rate of auto loans based on the borrower's credit status and repayment ability, taking into account the institution's auto loan delivery policy, risk prevention and control and other factors.
When the reporter visited Dongfeng Honda's Beijing Guangshun Jinlong store, he saw that the slogan "0 yuan for new, 0 down payment, and 0 pressure on monthly payment" was written on the huge electronic screen in the store, which was particularly eye-catching. The advertising banners hanging on the railing on the second floor "ultra-long term 60 periods, ultra-low rate of 1.99%" and "daily interest rate of less than 1 pack of cigarettes, no pressure on loans" stirred the nerves of car buyers.
Ms. Lu, the person in charge of the sales business of Dongfeng Honda's Beijing Guangshun Jinlong store, said that there are no "0 down payment" customers in the store at present, but from the perspective of customer experience, it is actually close to "0 down payment". Dongfeng Honda Guangshun Jinlong 4S store cooperates with banks, and the loan disbursement ratio for high-quality customers reaches 80%~90%, and customers only need to pay a very low down payment to enjoy 60 ultra-long loan services.
She told reporters that the down payment for new energy models in the store is even less than 10,000 yuan. On April 15, the store delivered a new car, and the customer only paid a down payment of 8,700 yuan.
Later, the reporter came to the Hongqi 4S store in Xianglong Borui Automobile Park, Huahugou, Chaoyang District, Beijing, and saw the roll-up banner placed at the door of the store with the words: Buy Hongqi EH7 690 Pro, you can enjoy zero-pressure worry-free GO, zero-pressure time-limited Yue, zero-pressure four lifetimes, up to 100,000 yuan of rights.
Li Qingjun, general manager of the 4S store, said that the "Zero Pressure Worry-free GO" includes zero pressure car purchase, enjoying financial and replacement rights. Automobile manufacturers have always had an auto finance discount policy, and dealers can adjust the down payment and interest according to customer needs within the range of the discount amount given by the manufacturer. After the adjustment of the national policy, banks and financial institutions can directly launch "zero yuan purchase" financial products, which is good for those customers who use their funds elsewhere and are really eager to buy a car.
The auto consumer loan policy has been adjusted several times
The mention of "0 down payment" can't help but remind people of 20 years ago, when auto consumer loans went from "blowout" to "brake".
In 1998, the People's Bank of China issued the Measures for the Administration of Automobile Consumer Loans, allowing wholly state-owned commercial banks to set up automobile consumer loan business on a pilot basis. It mentions that the term of the auto consumer loan shall not exceed 5 years, and the borrower's loan amount shall meet the following requirements: if the loan is applied for by pledge, or the bank, If the guarantee company provides joint and several liability guarantee, the down payment amount shall not be less than 20% of the purchase price and the maximum loan amount shall not exceed 80% of the purchase price; if the loan is applied for with the mortgage of the purchased vehicle or other immovable property, the down payment amount shall not be less than 30% of the purchase price and the maximum loan amount shall not exceed 70% of the purchase price; if the loan is applied for by way of a third-party guarantee (except for banks and insurance companies), the down payment amount shall not be less than 40% of the purchase price and the maximum loan amount shall not exceed 60% of the purchase price. Subsequently, the car market was greatly stimulated by the purchase of a car loan.
Before 2000, the quality of consumer credit for automobiles in mainland China was relatively high on the whole, and the breeding of bad debts originated in the second half of 2002. At that time, some banks had reduced the down payment of car loans to 10% and extended the repayment period to 8 years. Banks are scrambling to follow suit but neglecting risk management. By the end of 2004, at least 94.5 billion yuan of personal car loans could not be recovered, and the non-performing loan ratio exceeded 50 percent.
In 2004, the People's Bank of China and the former China Banking Regulatory Commission promulgated the Measures for the Administration of Auto Loans in order to standardize the management of auto loan business, prevent auto loan risks and promote the healthy development of auto loan business. In the context of stricter supervision of the industry by relevant departments, banks have begun to raid and rectify bad debts of auto loans, and several of them have suspended personal auto loan business.
On October 13, 2017, the People's Bank of China and the former China Banking Regulatory Commission revised and issued the Measures for the Administration of Auto Loans. It mentions that the maximum loan disbursement ratio requirement system is implemented for auto loan issuance, and the proportion of the auto loan amount issued by the lender to the price of the car purchased by the borrower shall not exceed the maximum loan disbursement ratio requirement; the maximum loan disbursement ratio requirement shall be separately stipulated by the People's Bank of China and the China Banking Regulatory Commission according to the actual situation of macroeconomy and industry development. A few days later, the People's Bank of China and the former China Banking Regulatory Commission issued the Notice on Adjusting Relevant Policies for Auto Loans, clarifying that the maximum disbursement ratio of loans for self-use traditional power vehicles is 80%, and the maximum disbursement ratio of self-use new energy vehicle loans is 85%.
This policy adjustment is not a "flood irrigation"
20 years ago, the "flooding" of auto consumer loans caused many financial institutions to step on the pit, so is it worth exploring whether the "0 down payment" car loan is back in the rivers and lakes?
Zhou Wei, deputy secretary-general of the financial branch of the China Automobile Dealers Association, stressed that the introduction of the auto loan policy is not a "flood irrigation", and it can be seen that the government's attitude towards the supervision of auto consumer finance loans is still supportive and prudent, and it does not want systemic risks in the financial sector. Twenty years ago, the purchasing power of the domestic middle class was not solid, the construction of the entire social credit system was in its infancy, and financial institutions had relatively little experience in risk management, which led to financial risks.
He pointed out that the launch of "zero down payment" financial products is expected to promote the prosperity of the auto market, but the final effect needs to be cautiously optimistic. Financial institutions are allowed to adjust the down payment ratio on the premise of satisfying risk control. Banks and financial institutions must select high-quality customers to ensure that the asset quality is not reduced, and the proportion of customers with good assets, strong willingness to repay and need "zero down payment" will not be too high. After the launch of "0 down payment", the demand is to release a certain purchasing ability and repayment ability, and at present, due to the lack of down payment, is still holding a wait-and-see attitude.
The relevant person in charge of Peanut Good Car said that whether there is a hidden risk behind the "0 down payment" car loan depends on how to manage and use this financial tool.
First of all, as a financial means, auto consumer loans enable more consumers to realize their dreams of buying cars in advance, which promotes the prosperity of the auto market. However, there are also certain risks associated with car loans, especially in the case of poor management and lax risk control, which may lead to the outbreak of financial risks.
He believes that the main reasons for the outbreak of financial risks in car loans are as follows: First, the credit policy is too loose, so that some borrowers with poor credit status and insufficient repayment ability can also obtain loans, which leads to the accumulation of loan risks.
Second, risk management is not in place. When the bank grants loans, there are defects in the borrower's credit assessment and repayment ability review. At the same time, there are no effective risk management and disposal measures for the collateral of the car loan, the car. This makes it difficult for banks to effectively recover loans when borrowers default.
Third, changes in the market environment. With the intensification of competition in the auto market and the decline in consumer demand for car purchases, some borrowers have difficulty in repayment, resulting in an increase in the bad debt rate of auto loans. In addition, some criminals also use car loans to commit fraud and other illegal activities, further exacerbating the risk.
Dr. Yang Ting, School of Economics and Management, North China University of Technology, said in an interview with a reporter from China Automotive News that like many default crises, when there is a credit incentive policy, financial institutions will expand the scale of credit at the same time, if the risk control measures are relatively lagging behind, it will easily lead to subsequent default problems. Therefore, the "Notice" particularly emphasizes that business must be carried out under the premise of "controllable risks".
Regulatory and risk control measures have been significantly upgraded
Compared with 20 years ago, the current financial regulatory policies and risk control methods have undoubtedly been upgraded. Moreover, the issuance of the "Circular" also puts forward clear requirements for the risk management of financial institutions' lending, which is not completely laissez-faire. The "Notice" pointed out that it is necessary to effectively strengthen the management of the whole process of auto loans, strengthen pre-loan review and post-loan management, continue to improve the borrower's credit risk evaluation system and collateral value evaluation system, ensure the safety of loan assets, and strictly prevent loan funds from being misappropriated for other purposes.
The relevant person in charge of Peanut Good Car told reporters that compared with 20 years ago, the level of financial management and risk control of automobiles in mainland China has been greatly improved, which is mainly reflected in: the comprehensive strengthening of regulatory policies, and the current financial supervision policies are more comprehensive and strict; the scientific and technological means of risk control, such as big data, artificial intelligence and other technologies are widely used in credit assessment, risk assessment, etc., making risk assessment more accurate and efficient; financial institutions have also strengthened cooperation with credit bureaus and third-party data providers to share information and improve the level of risk control.
He suggested that financial institutions should take the following measures to further improve the quality of loans and reduce financial risks. First, it is necessary to strictly implement the loan policy. When granting auto loans, financial institutions should strictly follow the policies and regulations to ensure that the loans are issued to borrowers with good credit status and sufficient repayment ability. For borrowers who do not meet the requirements, loans should be resolutely refused.
Second, risk assessment and management should be strengthened. Financial institutions should strengthen the risk assessment and management of borrowers, and use advanced technology to improve the accuracy of assessment. At the same time, for loans that have been disbursed, risk monitoring and assessment should be carried out on a regular basis to identify and deal with potential risks in a timely manner.
Zhou Wei said that after 20 years of economic development and market tempering, the current domestic consumers' purchasing power has improved, and their feelings about personal credit investigation have become more intuitive. All of these help to reduce financial risks.
Moreover, in fact, some financial leasing companies already have experience in the risk management of "zero down payment" for specific vehicle models. Now it can also be done from the country's mainstream financial institutions, first, it can promote consumption, and second, it also reflects the trend of financial market modernization. From the perspective of the attributes of financial business, the role of finance is to serve the public and improve the quality of life of the people, so financial institutions need to launch attractive and high-quality products that can match the needs of different consumers.
Yang Ting also said that with the application of Internet of Things technology in the field of auto finance, it is not difficult to achieve functions such as remote warning and remote car locking. However, she also said that from the perspective of actual operation, the early warning device on the vehicle may still be maliciously removed, and banks and financial leasing companies should not take it lightly.
Financial leasing is also promising
From the perspective of mature auto finance markets, financial leasing is indeed the mainstream sales channel. Taking Volkswagen Financial Services as an example, leasing business accounted for 60% of customer receivables in 2023 and 58% of customer receivables in 2022. The complexity of foreign car rental business is higher, not just financing, but financing + service. For example, Arval, a car rental company owned by BNP Paribas, the second-largest leasing agency in Europe, will have a profit of 673 million euros from financing operations (financial interest margins) and 879 million euros from services in 2023.
However, the "Notice" does not mention the relevant content of auto financial leasing, which makes auto finance people feel a little regretful.
Zhou Wei told reporters that from the current domestic market, the car loan installment market is larger, the people's acceptance is higher, and the effect on the market promotion is more obvious. The domestic financial leasing business has encountered some obstacles and some risks, and the current auto loan asset quality is better.
The above-mentioned person in charge of Peanut Good Car said that the people facing car loans and financial leasing are different, and the policy is mainly to stimulate the purchasing power of another group of people. As a participant in the financial leasing industry, enterprises also hope that policymakers can continue to pay attention to the dynamic changes in the auto finance market and adjust policies in a timely manner according to the actual market situation. At the same time, the company will also strengthen the opportunities for collaboration and information sharing with automakers, dealers, financial institutions and other industries, which will help improve the operational efficiency and risk control level of the entire market, and promote the healthy development of the market.
Yang Ting also pointed out that financial leasing and lending are completely different businesses with different transaction structures. Taking the core "stimulus point" of this policy - the maximum loan issuance as an example, there is no limit on the maximum issuance ratio of financial leasing. In the initial stage, the finance lease is fully financed. The lessor fully financed the purchase of the equipment. It is embodied in the car, which is to buy the car in full and then rent it to the lessee for use. In an operating lease, the lessor may also set aside a significant percentage of the residual value. For example, if 30% of the residual value is retained, then the lessee only needs to repay the principal and interest and rent for the remaining 70%.
"Auto financial leasing will definitely be a promising business direction in the future, which is the objective law of financial transactions. However, in the process of development, similar to auto credit, the risk of over-pursuing scale and ignoring risk control, resulting in a surge in defaults, must also be taken seriously. Yang Ting said. In financial leasing transactions, the leased property, that is, the car, is the core of risk control. In the form of the transaction, in law, the ownership of the leased property belongs to the lessor. However, in actual operation, whether the lessor can firmly grasp the ownership depends on the ability of the leasing company itself.
In the case that most of the lessees are small and medium-sized customers, how can the lessor monitor the leased property at a low cost? How to deal with the potential problem of "bona fide third party"? This requires technical means + cautious risk control attitude. After firmly grasping the ownership, in case the lessee breaches the contract, how can the lessor get back the leased property, and how will it dispose of it after taking it back? Can it compensate for the loss or even make a profit after the disposal? This tests the leasing company's ability to manage the second-hand equipment. Therefore, leasing companies also need to improve their own risk control capabilities with the help of technological development, and at the same time, they need to increase the complexity of their business like advanced foreign leasing companies, so as to increase their sources of profit.
Text: Chen Meng Editor: Jiao Yue Layout: Zhao Fangting
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