People's Bank of China and China Banking Regulatory Commission, Administration of Auto Loans Procedures

Promulgated: August 16 2004
Effective: October 1 2004
Interpreting authority: People's Bank of China and China Banking Regulatory Commission (CBRC)
Applicability: "Auto loans" means loans granted by lenders to borrowers for the purchase of automobiles (including second-hand vehicles), including personal auto loans, dealers' auto loans and institutional auto loans (Article 2). "Lenders" means commercial banks, urban and rural credit unions, and non-banking financial institutions that are allowed to engage in auto loan business, that are established in accordance with the law in the People's Republic of China and approved to engage in renminbi loan business by the CBRC or its branches (Article 3). "Vehicle for personal use" means an automobile that the lender purchased with an auto loan and for non-profit making purposes. "Commercial vehicle" means an automobile that the lender purchased with an auto loan and for profit making purposes. "Second-hand vehicle" means an automobile that has its ownership changed and procedures for transfer of ownership handled in accordance with the law within the period from the completion of motor vehicle registration procedures to one year before the stipulated time limit for mandatory scrappage (Article 4).

Main contents: Auto loan rates shall follow the provisions on loan rates announced by the People's Bank of China. The method of calculating and payment of interest shall be agreed and determined by the borrower and lender (Article 5). The maximum maturities (including the extension period) for auto loans, second-hand vehicle loans and dealers' auto loans are five years, three years and one year respectively (Article 6). "Personal auto loans" refers to loans lent by lenders to individual borrowers for the purchase of automobiles (Article 8). A borrower applying for personal auto loans must be a citizen of the People's Republic of China, or a resident from Hong Kong, Macao or Taiwan or a foreigner who has resided in the People's Republic of China for one year or above consecutively (Article 9). When granting personal auto loans, lenders shall determine the amount, maturity, rate and repayment of principal and interest of loans by taking the following factors into consideration: 1) the borrower's credit rating as assigned by the lender; 2) loan guarantees; 3) functions and use of the purchased automobile; and 4) development of the automotive industry and the supply and demand within the automobile market (Article 10). Dealers' auto loans refers to loans granted by lenders to auto dealers for the purchase of vehicles and/or parts and components (Article 13). A borrower applying for a dealers' auto loan shall have an auto agent business certificate issued by an automobile manufacturer and an asset-liability ratio of not more than 80% (Article 14). Institutional auto loans refers to loans granted by lenders to legal persons or other economic organizations other than dealers for the purchase of automobiles (Article 18). A lender applying for an institutional auto loan shall have legal and stable income or legal assets that are adequate for the purpose of repaying loan principal and interest, and shall have the ability to effect the down payment as stipulated by the Procedures (Article 19). The amount of a personal vehicle loan granted by the lender shall not exceed 80% of the price of the vehicle purchased by the borrower; the amount of a commercial vehicle loan granted by the lender shall not exceed 80% of the price of vehicle purchased by the borrower; and the amount of a second-hand vehicle loan shall not exceed 50% of the price of the vehicle purchased by the borrower. Price of vehicles refers to the actual transaction price (excluding all kinds of additional taxes, fees and insurance premiums, etc.) or the price as listed by the automobile manufacturer for new cars, whichever is lower, and as for second-hand vehicles, it refers to the actual transaction price (excluding all kinds of additional taxes, fees and insurance premiums, etc.) or the price as evaluated by the lender, whichever is lower (Article 22).
Related legislation: PRC People's Bank of China Law (Revised), Dec 27 2003, CLP 2004 No.1 p4; PRC Banking Regulation Law, Dec 27 2003, CLP 2004 No.1 p45 and PRC Commercial Banking Law (Revised), Dec 27 2003, CLP 2004 No.1 p4
Repealed legislation: People's Bank of China, Administration of Vehicle Consumer Loans Procedures (Trial Procedures), Sep 11 1998, CLP 1999 No.1 p7