For the purposes of further supporting and promoting auto consumption, and regulating the management of auto loan services, the People's Bank of China and the China Banking Regulatory Commission have decided to revise the Measures for the Management of Auto Loans . The revised Measures for the Management of Auto Loans , as deliberated and adopted at the governor's meeting of the People's Bank of China and at the chairman's meeting of the China Banking Regulatory Commission, are hereby issued, and shall come into force on January 1, 2018. The former Measures for the Management of Auto Loans (Order No. 2 [2004], PBC and CBRC) shall be concurrently repealed.
Zhou Xiaochuan, Governor of the People's Bank of China
Guo Shuqing, Chairman of the China Banking Regulatory Commission
October 13, 2017
Chapter I General Provisions
Article 1 For the purposes of regulating the management of auto loan services, preventing the risks of auto loans and promoting the sound development of auto loan services, these Measures are developed in accordance with the Law of the People's Republic of China on the People's Bank of China, the Banking Supervision Law of the People's Republic of China, the Law of the People's Republic of China on Commercial Banks, and other laws and regulations.
Article 2 For the purpose of these Measures, “auto loans” means the loan granted by a lender to a borrower for the purchase of an auto (including a second-hand auto), including auto loans granted to individuals, distributors and institutions.
Article 3 For the purpose of these Measures, a “lender” means a commercial bank, rural cooperative bank, or rural credit cooperative lawfully formed within the territory of the People's Republic of China with the approval of China Banking Regulatory Commission (“CBRC”) and its local offices for providing RMB loan services or a non-banking financial institution approved to provide auto loan services.
Article 4 For the purpose of these Measures, “self-use autos” means autos purchased by borrowers through auto loans not for the purpose of profit making; “commercial autos” means autos purchased by borrowers through auto loans for the purpose of profit making; “second-hand autos” means autos whose ownership is transferred and for which the formalities of ownership transfer are undergone according to the law after the completion of the registration formalities and before the time when the state compulsory discarding standards are satisfied; and “new energy autos” means autos that adopt new types of power systems and are entirely or primarily driven by new types of energy, including plug-in hybrid (including extended-range) autos, pure electric autos, and fuel cell autos, among others.
Article 5 The interest rates on auto loans shall be governed by the provisions on loan interest rates issued by the People's Bank of China (“PBC”), and the methods for the calculation and settlement of interest shall be determined by the borrower and lender through consultation.
Article 6 The terms of auto loans (including the renewal) shall not exceed five years, of which, the terms of loans for second-hand autos (including the renewal) shall not exceed three years, and the terms of auto loans to distributors shall not exceed one year.
Article 7 Both borrowers and lenders shall follow the principles of equality, free will, honesty and good faith.
Chapter II Auto Loans to Individuals
Article 8 For the purpose of these Measures, “auto loans to individuals” means loans that are granted by lenders to individual borrowers for purchase of autos.
Article 9 To apply for auto loans to individuals, a borrower shall meet all the following conditions:
(1) He or she is a citizen of the People's Republic of China, or a resident of Hong Kong, Macao or Taiwan or a foreign national who has resided continuously in China for more than one year (including one year).
(2) He or she has a valid identity certificate, permanent and detailed domicile and full capacity for civil conduct.
(3) He or she has stable source of legal income or legal personal assets sufficient for repaying loan principal and interest.
(4) He or she has good personal credit.
(5) He or she is able to pay the down payment as required.
(6) Other requirements as required by the lender.
Article 10 When granting an auto loan to an individual, a lender shall, in comprehensive consideration of the following factors, decide the amount, term, interest rate and repayment methods of the loan principal and interest:
(1) The borrower's credit rating granted by the lender.
(2) The guarantee of the loan.
(3) The performance and purpose of the auto to be purchased.
(4) The development of the auto industry and the supply and demand of the auto market.
Article 11 A lender shall open a credit file for each borrower, which shall specify:
(1) the name, address, valid identity certificate and effective contact information of the borrower;
(2) a certificate proving the income level and credit standing of the borrower;
(3) the agreement on the purchase of the auto, and the type, engine number, vehicle identification number, price and purpose of the auto;
(4) the amount, term, interest rate, repayment method and guarantee of the loan;
(5) the record of demands for repayment; and
(6) other materials required for preventing credit risks.
Article 12 Where a lender grants loans for commercial autos to an individual, in addition to the contents as prescribed in Article 11 of these Measures, the annual inspection of the qualification certificate for business operation of commercial autos, depreciation of commercial autos, insurance and other items shall be added in the credit file of the borrower.
Chapter III Auto Loans to Distributors
Article 13 For the purpose of these Measures, “auto loans to distributors” means loans granted by lenders to auto distributors for purchase of autos, spare parts and components.
Article 14 To apply for an loan to an auto distributor, a borrower shall meet all the following conditions:
(1) It has a business license for an enterprise legal person approved and issued by the competent administrative department for industry and commerce.
(2) It has an auto sales agent certificate issued by the auto manufacturer.
(3) Its liability-asset ratio does not exceed 80%.
(4) It has stable legal income or legal assets sufficient for repaying the loan principal and interest.
(5) The distributor, senior management of the distributor and the clients whose loan applications are accepted by the distributer on a commissioned basis have no material non-compliance acts or poor credit record.
(6) Other conditions as required by the lender.
Article 15 A lender shall open and promptly update a separate credit file for each distributor borrower, which shall specify:
(1) the name, legal representative and business address of the distributor;
(2) the photocopies of various business licenses and certificates;
(3) the insurances bought by and the commercial credit and financial situation of the distributor;
(4) the type, price and purpose of the auto, spare parts and components purchased;
(5) the loan guarantee; and
(6) other materials required for preventing credit risks.
Article 16 The amount of a loan granted by a lender to an auto distributor for purchase of autos, spare parts and components shall be determined on the basis of the average inventory of the distributor in a certain period which shall be determined in the light of the distributor's inventory turnover.
Article 17 A lender shall regularly examine a distributor's credit by regularly checking the inventory of autos, spare parts and components purchased by the distributor, analyzing the distributor's financial statements, and other methods, and adjust the distributor's credit rating and the inventory-checking frequency according to the examination results.
Chapter IV Auto Loans to Institutions
Article 18 For the purpose of these Measures, “auto loans to institutions” means loans granted by lenders to legal persons and other economic organizations (hereinafter referred to as “institutional borrowers”) other than distributors for purchase of autos.
Article 19 To apply for an auto loan, an institution shall meet all the following conditions:
(1) It has a business license for an enterprise legal person, legal person certificate for a public institution, business license for a branch of a legal person, business license for an individual industrial and commercial household or any other statutory document proving the eligibility status of the borrower that is approved and issued by the enterprise or public institution registration authority.
(2) It has legal and stable income or legal assets sufficient for repaying the loan principal and interest.
(3) It is able to pay the down payment as required.
(4) It has no material non-compliance act or poor credit record.
(5) Other conditions as required by the lender.
Article 20 A lender shall, according to the provisions of Article 15 of these Measures, open a separate credit file for each institutional borrower, to strengthen the tracking monitoring of credit risks.
Article 21 A lender that grants commercial autos loans to institutions providing auto leasing services shall monitor the residual value estimate methods of the borrowers, to prevent risks brought about by excessively high residual value estimate to the borrowers.
Chapter V Risk Management
Article 22 The system of the maximum loan ratio requirements for auto loans shall be implemented, and the proportion of auto loan granted by a lender to the price of an auto purchased by a borrower shall not exceed the requirements for the maximum loan ratio; and the requirements for the maximum loan ratio shall be separately developed by the PBC and the CBRC according to the macro-economy, industry development and other actual conditions.
For the purpose of the preceding paragraph, “price of an auto” means, in the case of a new auto, the actual transaction price of the auto (excluding government subsidies, various surtaxes, charges and insurance premiums, among others) or the price announced by the auto manufacturer, whichever is lower, and means, in the case of a second-hand auto, the actual transaction price of the auto (excluding government subsidies, various surtaxes, charges and insurance premiums, among others) or the assessment price of the lender, whichever is lower.
Article 23 A lender shall establish a credit rating system for borrowers and determine the credit ratings of borrowers by prudently using external credit ratings in combination with internal credit ratings. The credit crating of an individual borrower shall be determined according to his or her occupation, income level, repayment capacity, credit records and other factors; and the credit rating of a distributor or an institutional borrower shall be determined according to its credit files, credit information of its senior management, financial conditions, credit records and other factors.
Article 24 To grant an auto loan, a lender shall require the borrower to provide the auto purchased as collateral or provide other effective guarantee. Where, upon examination and assessment of the lender, a borrower is confirmed to have good credit and be able to repay the loan, the borrower may be exempted from providing guarantee.
Article 25 A lender shall directly accept applications for auto loans or authorize distributors to accept applications for auto loans, improve the system for separation of loan examination and granting, and strengthen examination before the granting of loans and post-loan tracking and collection.
Article 26 A lender shall establish a second-hand auto market information database and a residual value assessment system for second-hand autos.
Article 27 A lender shall establish an auto loan classification monitoring system according to the loan amount, areas of borrowers, borrowers' financial conditions, auto brands, mortgages, guarantees and other factors, and conduct regular inspections and assessments of the risks of different types of auto loans. A lender shall, according to the results of the inspections and assessments, adjust the risk levels of different auto loans.
Article 28 A lender shall establish an auto loan early warning and monitoring analysis system, and develop the early warning standards; and take such measures as re-appraisal of the loan examination and approval system after the early warning standards are exceeded.
Article 29 A lender shall establish a categorized handling system for non-performing loans and prudential loan loss reserve system, and set aside corresponding risk reserves.
Article 30 When granting a mortgage loan, a lender shall prudently assess the value of the collateral, give sufficient consideration to the depreciation risks of the collateral, and fix the upper limit for the mortgage rate.
Article 31 A lender shall enter the relevant information on auto loans in the basic financial credit information database in a timely manner.
Chapter VI Supplementary Provisions
Article 32 Where a lender violates the provisions of these Measures when granting auto loans, the CBRC and its local offices shall have the right to impose punishment on the lender and its relevant personnel according to the provisions of the Banking Supervision Law of the People's Republic of China and other laws. The PBC and its branch offices may suggest that the CBRC and its local offices supervise and inspect the acts of lenders providing auto loan services in violation of the regulations.
Article 33 These Measures shall apply, mutatis mutandis, to the loans granted by lenders to borrowers for purchasing bulldozers, excavators, mixers, pumps and other engineering vehicles.
Article 34 The power to interpret these Measures shall remain with the PBC and the CBRC.
Article 35 These Measures shall come into force on January 1, 2018. The former Measures for the Management of Auto Loans (Order No. 2 [2004], PBC and CBRC) shall be concurrently repealed.
