In today's society, taking out a loan to buy a car has become a regular way for many people to realize their dream of owning a car. Especially with the rise of Internet finance, all kinds of loans to buy cars are overwhelmed. Recently, many consumers have found that the threshold for buying a car has been further reduced, and in the 4S store of automobile sales and service, preferential programs such as 0 down payment, low down payment, and low interest rate have become high-frequency words in the mouth of automobile salesmen, and even many 4S stores have shouted the slogan of "loan installment purchase, car price can be lower".
Taking 0 down payment as an example, according to the provisions of the mainland's "Measures for the Administration of Auto Loans", the amount of the loan issued by the lender for self-use shall not exceed 80% of the price of the car purchased by the borrower, that is, the minimum down payment for consumer loans to buy a car shall not be less than 20%, and "zero down payment" is impossible in principle. Why do the major 4S stores offer a loan plan with 0 down payment, and why is the tide of "price reduction" of car loans intensifying?
What are the pitfalls behind the loan to buy a car?
Recently, a friend of the author took a fancy to a first-line luxury car with a market price of 400,000 yuan, and originally planned to buy a car in full, but because he heard the sales say that the interest rate of the loan to buy a car is relatively low, and there is a discount for buying a car, and the general ledger is more cost-effective, he finally took out a loan to buy a car. At the same time, he also kept a sum of cash in his hand in case of emergency.
The author's friend is actually a microcosm of the car-buying community. Now many 4S stores have launched installment car purchase plans such as 0 down payment, low down payment, low interest rate, and installment subsidy, and claim low interest and low threshold, so more and more consumers choose to buy cars in installments and drive their cars home at a small cost.
Almost all car owners will be sold when buying a car, explicitly or implicitly, using a loan to buy a car, and whether it is in terms of preferential prices or gifts, it is often more affordable to buy a car with a loan than to buy a car in full. This phenomenon is not limited to one brand, it is now almost an unspoken rule in the car sales industry. If some car owners insist on buying a car with full payment, the enthusiasm for sales will often be reduced or even given a cold reception.
As the saying goes, "no profit cannot afford to be early", if there is no greater profit to be made for the merchant to buy a car with a loan, why do they go to great lengths to persuade consumers to use the loan to buy a car? When buying a car with a loan, the sales will generally require that the insurance be bundled, and the consumer can basically only buy the type of insurance prescribed by the merchant, and the reason of the merchant is that the store stipulates that if the insurance is not taken from the store, then the consumer is likely to be unable to buy a car. The reason is that the insurance company has already reached a tacit understanding with the merchant at this time, and the merchant will get a commission of 3-5 points from the insurance company every time he facilitates a business.
The same is true for loans, and the lender will basically return a rebate of 3-5 points to the merchant for each business. In addition, the GPS that must be installed for the loan to buy a car, the merchant requires consumers to buy the more expensive kind, and this is a considerable profit, the full purchase of the car is different, all the prices are almost transparent, and can be negotiated directly, such as the naked car price can be negotiated, the insurance cost can be negotiated, the license fee, the warehouse fee can also be negotiated, and the vehicle and vessel tax, The purchase tax is calculated directly according to the standards set by the state, so when consumers buy cars in full, merchants can almost only earn the difference in the price of cars brought about by a manufacturer's subsidy.
Therefore, 4S stores will let sales encourage customers to take out loans to buy cars, because they can not only earn the difference in the price of the car from consumers, but also earn rebates from banks, insurance and other institutions. Therefore, driven by interests, if you want consumers to use the loan to buy a car willingly, you will be given a greater discount on the price of a naked car, such as a discount of 10,000 yuan for the full purchase price, and a discount of 15,000 yuan for the loan, or give you some less valuable gift packages or decorations. It is this huge discount gap and all kinds of sweetness that merchants use to make consumers deeply feel the benefits of taking out a loan to buy a car.
Can the auto finance market thrive?
Buying a car with a loan will indeed reduce the financial pressure on consumers to spend a lot of money, which is suitable for those who want to buy a good car with a small amount of money. This has also given rise to a huge auto finance market. According to the "2023 China Auto Finance Industry Development Report" edited by the China Automobile Dealers Association, the size of the mainland auto finance market in 2022 will be 2.5 trillion yuan.
In the future auto finance market, considering the supply chain finance business and retail finance business, it will be a market size of more than 4 trillion yuan and an annual new business of more than 2 trillion yuan. At the same time, combined with the new play of the new energy vehicle industry chain, the auto finance market is also likely to develop into a huge potential market of more than 10 trillion yuan.
In order to compete for more market share in auto finance, many banks have increased subsidies for sales channels. A bank official told the author that the down payment ratio of 20% of car loan installments is now very low, and it was basically between 40% and 50% before, and the decrease in the down payment ratio is mainly due to the increase in banks' investment in car loan installment business.
In fact, the contraction of mortgage data in 2023 is also forcing banks to look for new growth poles. According to the 2023 statistical report of the People's Bank of China's financial institutions, the balance of personal housing loans in 2023 was 38.17 trillion yuan, a year-on-year decrease of 1.6%, and the growth rate was 2.8 percentage points lower than that at the end of the previous year. However, in terms of auto loans, by the end of 2023, banks have issued a total of 1.4 trillion personal auto mortgage securitization products to the market.
According to a report released by the China Automobile Dealers Association, the proportion of financial insurance in the overall profit structure of auto dealers in the country will be 18.2% in 2022 and rise to 24.7% in 2023.
Since 2023, various banks have taken turns to start a price war for consumer loans, and the interest rate has moved from 3 to 2, and the war on consumer loans will continue in 2024. Because the main body involved in auto finance is not only commercial banks, but also auto finance companies. At present, there are 25 authorized auto finance companies in China, all of which are established or controlled by vehicle companies, such as Volkswagen Finance (China) Co., Ltd., BYD Auto Finance Co., Ltd., etc.
As of the end of 2023, at least 20 auto brands have both auto finance companies and auto finance leasing companies. Due to the background of shareholders, although auto finance companies have inherent advantages in cooperating with car companies, they are still under great pressure in the process of competition with commercial banks. The increased involvement of banks in the auto finance business makes it more challenging for auto finance companies to access assets, especially since their business is more one-liner in nature, while banks have diversified lines of business.
Last year, the revised Measures for the Administration of Auto Finance Companies came into effect, opening up policy space for auto finance companies to expand their business scope, expand their business regions, and enrich financing channels, so as to promote more diversified products and meet the needs of segmentation. With the further increase in the penetration rate and ownership of new energy vehicles, consumers' demand for products and services is more diversified, and the development of the new energy vehicle aftermarket has brought new opportunities for auto finance.
The people evaluate the car
The auto finance market in 2024 is the first year when the thinking of OEMs and auto financial institutions in the past is completely broken and the market leader becomes a market participant.
However, with the rapid development of the auto finance market, car buyers should also remain vigilant at all times. A low down payment or even zero down payment option may seem convenient, but there are many risks and pitfalls hidden behind it. If consumers have enough budget, then it will be easier to choose to buy a car in full, but be prepared to be coldly treated during the whole process of buying a car.
