Here comes the era of “zero-interest”

　　“Zero-interest” auto loans, in contrast to housing loans, have swept over the automotive market in Chengdu. A great number of automakers have intimated the “zero-interest rate” promotion campaign to occupy the auto market, including Honda, BMW, Benz, Audi, Toyota, and Fiat. According to reporters from Western China City Daily, although most people would choose “zero-interest” auto loans, some people still know little about it.

　　“Zero-interest” auto loans means banks or auto financing companies firstly lend money to car buyers, who will pay the rest without any interest in the following months.

　　“Zero-interest” auto loans are everywhere.

　　This week, Mr. Huang, working in a foreign trade company, owned his first car with “zero-interest” financing. In the beginning of last year, Mr. Huang has always felt like owning a car, and once considered of auto loans due to no enough cash flow. Nevertheless, he found it was not a good bargain, owning to 7000yuan of only premium, insurance or some other items, 3000yuan of deposit, plus 6 % of annual interest. Recently, he has learned about that his favorite vehicle, Guangzhou Honda Feng Fan, has been launching the “zero-interest” promotion campaign. Thus, He was pleased to purchase his first car finally.

　　Although the automotive market is in a low season right now, there are still a lot of people purchasing cars with “zero-interest” auto loans, like Mr. Huang, as more and more automakers start to provide “zero-interest” financing. Take Guangzhou Honda for example, it cooperates with China Construction Bank and China Merchants Bank to initiate the “zero-interest rate” preferential campaign for the eighth generation of Honda Accord and all series of Feng Fan models. Mr. Hu, a private owner, purchased Accord and said to our reporter that “I chose to pay the rest by 18 installments, and could save 14,000yuan in interest and service charge. It’s really not a small amount of money.”

　　Meanwhile, FAW Toyota has also launched the “preferential-interest” promotion campaign to sell its best-selling vehicle models, such as Vios, Corolla, and Crown with engines of 3 liters. It only takes consumers less than 30000yuan down payments, if they would like to drive Vios away. As for SPIRIOR, Jianguo Dongbenjichi 4S shop, along with China Merchants Bank, has provided a convenient car purchase service. After paying 50% of the total, consumers could pay the rest by 12 installments without any interest and fee. Even some luxurious vehicle brands are included in the incentive promotion, such as Lexus. In Chenyu Lexus 4S shop, Car buyers only pay 117,000yuan, the lowest down payments, to drive Lexus ES away, and enjoy the “zero-interest” auto loans in 2 years, or “zero-interest and no installment” within 1 year.

　　Carmakers will help you pay auto loans.

　　As banks or auto financing companies make profits from lending rates, will “zero-interest” auto loans mean they will lend money to consumers for nothing? A person, engaged in credit, disclosed that “zero-interest” auto loans don't mean banks or auto financing companies will charge no interest any more, which are not allowed to provide zero-interest financing to consumers in accordance with the rules. Actually, it is automakers and dealers who will handle and pay this part of interest to banks or auto financing companies.

　　“It’s a brand-new way of sales promotion that carmakers and shops pay consumers’auto interest,”an insider of the sector has said so. If car buyers apply for auto loans from banks directly, the interest would rise 10% in accordance with benchmark interest rate issued by the People’s Bank of China. Besides, consumers have no right to enjoy the preferential policy of one-time payment, and have to pay a higher interest-rate. For example, if car buyers apply for 100,000yuan of normal auto loans, they will pay the rest in 3 years and the interest will total almost 10,000yuan based on average capital plus interest. However, if consumers choose “zero-interest” auto loans, they will pay the rest in 2 or 3 years without any installment after paying 30% and 50 % of down payments. Furthermore, they are allowed to repay ahead of time.

　　What’s more, the approval procedures of normal auto loans are not as convenient as those of “zero-interest” auto loans. Some dealers told to our reporter that it takes consumers about 3 days to go through all procedures of “zero-interest” auto loans, but it’s about 1 or 2 months for banks to lend the normal auto loans to consumers. (Translator: qinghua: serena)

　　See original Chinese report please click: http://auto.sohu.com/20100603/n272534932.shtml