Cars for personal use will be eligible for 0 percent down payment, while previously consumers were required to pay at least 20 percent of down payment for conventional cars and at least 15 percent for NEVs.
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China has relaxed its policy on lending for personal-use cars as part of an effort to stimulate consumption.
Financial institutions can independently determine the maximum percentage of loans for conventionally powered vehicles and new energy vehicles (NEVs) for personal use based on the borrower's creditworthiness and repayment ability, according to an announcement jointly issued by the People's Bank of China (PBOC) and the National Financial Regulatory Administration.
For commercial conventionally powered vehicles, the maximum loan ratio is 70 percent, and for commercial NEVs the maximum ratio is 75 percent, according to the announcement, dated March 28 and posted today on the PBOC website.
For used cars, the maximum loan ratio is 70 percent.
The move is aimed at increasing financial support for auto consumption, promoting auto trade-in, and stabilizing and expanding auto consumption, the announcement said.
China's previously implemented auto loan policy was released in November 2017, in which the maximum loan ratio was 80 percent for traditional-powered vehicles used for personal purposes and 85 percent for personal-use NEVs.
The previous maximum ratio for loans for commercial conventional-powered vehicles was 70 percent, 75 percent for commercial NEVs and 70 percent for used vehicles.
The new policy released today means that consumers will be able to make 0 percent down payment on their purchase of an automobile for personal use. The loan requirements for commercial and used vehicles remain unchanged.
The new policy is effective as of the date of its release, and the previous policy from 2017 is repealed, according to the announcement on the PBOC website.
Financial institutions are encouraged to reduce or waive default penalties arising from early loan closure during the auto trade-in process to support reasonable auto consumption demand, according to the announcement.
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