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Some commercial banks in China have recently made adjustments to their auto finance business, reported the 21st Century Business Herald. Some major state-owned banks have suspended their “high interest, high commission return” auto loan business in some regions, but the degree of enforcement varies from place to place.
According to a person within auto finance industry, many dealer groups have already negotiated with banks to gradually discontinue cooperation on “high interest, high commission return” auto loans, but there are still some differences between branches in different cities.
The so-called “high interest, high commission return” business refers to the cooperation between some Chinese commercial banks and dealers to woo customers for auto finance business. Such banks entice dealers to participate by offering high commission return upon high interests on auto loans, and the dealers subsidize the car price through the bank’s commission. Through this model, the relevant banks can expand their share in the auto finance market.
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