Entering China
Since the beginning of the year, the consumer loan market has heated up, and many banks have lowered consumer loan interest rates, some to the prefix of “2”, and some banks have even launched interest rate “group purchase prices”.
In recent years, consumer loans have been welcomed by some consumers in consumption scenarios such as education, car purchases, and home improvement. What are the factors behind this round of interest rate cuts? What will be the impact on consumption?
Banks started “fancy” marketing of consumer loans
Recently, various commercial banks have taken turns to start the “fancy” marketing of consumer loans. On the occasion of the 10th anniversary of the launch of the “flash loan”, China Merchants Bank launched a limited-time discount with an annualized interest rate of 2.78% and issued 10,000 interest coupons of 118 yuan; Bank of Beijing’s “Beijing e-Loan” focuses on the advantage of high limit, and the maximum credit for a single account can reach 1 million yuan; The minimum annualized interest rate of Minsheng Bank’s “Minyi Loan” dropped to 2.76%.
“I used consumer loans three or four years ago, and at that time, the application limit of bank consumer loans was generally between 100,000 yuan and 300,000 yuan, and the interest rate was basically above 4%. Now that the loan interest rate has been reduced by nearly half, the amount of money that can be applied for has also increased, which is really exciting. Ms. Ma, who lives in Nanjing, Jiangsu Province, said that since the beginning of this year, various banks have been calling and texting to promote consumer loans, “Recently, there is a house renovation plan at home, and I plan to apply for a consumer loan to replace major appliances and install a smart home system.” Now, low-interest loans can be combined with trade-in offers, which can save a lot of money. Ms. Ma said.
At present, the most common preferential methods for consumer loan products of many banks include giving customers interest rate discounts, providing interest-free periods, issuing interest rate coupons, etc., and some banks also provide preferential treatment in terms of loan amount, term, repayment method, etc.
There are even banks that have introduced interest rates “group purchase prices”. According to the marketing information of a consumer loan product of a rural commercial bank, new customers can enjoy a minimum preferential interest rate of 2.68% when they become the “head of the group”, and the maximum loan period is 24 installments. It is understood that if new customers want to get preferential interest rates, they can generate a product QR code online as a “group leader” and invite other new customers to join the group. After the approval of the loan limit application for other new customers, the system will issue an interest rate coupon to the team leader, and other new customers do not need to use the approved loan line, and the group leader can enjoy the preferential interest rate.
What do consumers think about the reduction of interest rates on consumer loans?
“This is the first time I have bought a car with a consumer loan, and I have a good experience. The loan interest rate of 2.00 points, combined with interest coupons and bank New Year discounts, can save a few thousand yuan. “Mr. Liu, a restaurant owner from Chengdu, Sichuan, did not choose a traditional car loan when he bought a second-hand car, but chose a consumer loan product from a commercial bank.” When I consulted before, I learned that the annualized interest rate of car loans provided by car dealers is generally more than 4%, and the interest will be paid nearly 10,000 yuan more after 3 years of accounting. Mr. Liu made a calculation: “In comparison, the consumer loan launched by the bank is more cost-effective and more suitable for me. With low interest rates and the repayment method of interest first and principal later, the extra money earned in the peak season can be repaid in advance at any time, and there is no need to worry about fixed monthly payments in the off-season. Mr. Liu said.
Some consumers see it as a tool to ease financial pressures. “With the renovation of a new house and the shortage of working capital in hand, considering that taking out a large amount of wealth management funds in advance will depreciate the interest, I chose the ‘flash loan’ product of China Merchants Bank after a comprehensive evaluation.” Xiao He, who was born in 95, said that he would not borrow at will because of the drop in interest rates, “The drop in interest rates can save more interest for me, but it will not lead to consumption.” ”
Multiple factors have contributed to the decline in consumer loan interest rates
Why is the interest rate of consumer loans falling? It is understood that the adjustment of consumer loan interest rates is determined by factors such as the policy environment, market situation, product positioning, customer demand and the bank’s own development needs.
For banks, there is a rationale for lowering interest rates now, and there are benefits. Dong Ximiao, chief researcher of Zhaolian, said that since last year, the cost of bank funds has decreased due to factors such as the reduction of deposit interest rates, and there is a certain basis for reducing the interest rate of personal consumption loans. At the same time, in order to expand their market share, some banks hope to attract more customers through lower interest rates, which is a kind of “small profits but quick turnover” promotional behavior.
However, there are certain threshold requirements for low-interest rate consumer loan products. For example, China Merchants Bank’s “flash loan” will issue corresponding consumer loan interest rate coupons according to the different value of customers’ “loan points”, and only if the “loan points” exceed 16,000 points, they can enjoy an annualized interest rate discount of 2.78%. Minsheng Bank’s preferential interest rate of 2.76% is mainly provided to specific groups such as payroll customers, VIP customers, mortgage loan customers, employees of some cooperative units, and customers who pay provident fund in Beijing. Dong Ximiao said that some banks have launched ultra-low interest rate consumer loans, which are usually aimed at high-quality customer groups and have higher requirements for customer occupations and incomes, so they are not universal, and the risks are generally controllable.
Compared with small and medium-sized banks, large state-owned banks have less preferential lending incentives, and consumer loan interest rates are generally maintained at more than 3%. For example, the maximum amount of the consumer loan product “Quick Loan” launched by China Construction Bank is 200,000 yuan, with an annualized interest rate of 3.45%; The minimum annualized interest rate of Bank of China’s “Bank of China e-Loan” is 3.4%.
“Overall, the reduction in consumer loan interest rates will help reduce the interest expenses of financial consumers and increase consumers’ willingness to apply for consumer loans, thereby helping to boost consumption and expand domestic demand.” Dong Ximiao said, but the lower the consumer loan interest rate, the better, and banks should avoid over-reliance on low-interest rate competition.
“The Central Economic Work Conference held at the end of last year proposed to comprehensively rectify the ‘involution’ competition. Banks should abandon the scale and speed complex, and instead of pursuing simple scale growth and market share, they should keep lending rates at reasonable levels to enhance business sustainability. Dong Ximiao said.
Enrich product supply and strengthen risk management and control
“Trade-in” is in full swing. He Yadong, spokesman of the Ministry of Commerce, said that as of 24 o’clock on February 19, 169,000 cars have been scrapped and updated across the country in 2025, more than 3.97 million consumers have purchased more than 4.87 million trade-in products for 12 categories of household appliances, more than 26.71 million consumers have applied for subsidies for the purchase of three types of digital products such as mobile phones, tablets and smart watches (bracelets), and 647,000 electric bicycles have been traded-in.
According to expert analysis, many banks have lowered consumer loan interest rates in order to better connect with the “new” consumption boom, and it is expected that they will continue to exert force this year. The reason for this judgment is that the market potential is large, and the state has made it clear that the “two new” are the focus of this year’s consumption policy, and the banks can make efforts to meet the credit needs of consumers in the field of trade-in and promote the prosperity of the consumer market. The second is the strategic needs of banks themselves, in the low interest rate environment, banks are facing the pressure of sluggish income growth of traditional deposit and loan business, and consumer loans have become an important profit growth point.
How can consumer loans better activate the vitality of the consumer market?
Financial institutions should further enrich the use scenarios of consumer credit, especially to promote the organic integration of consumer goods trade-in measures and consumer credit products. “The use scenario, convenience and good experience of consumer loan products are important considerations for consumers to choose.” Dong Ximiao suggested that the payment scenarios of consumer goods trade-in activities should be enriched, a variety of payment methods should be supported, and online consumer loans, consumer installments and other products should be added to better play the role of financial leverage and improve consumers’ willingness and ability to expand consumption. In bulk consumption scenarios such as automobile consumption and tourism consumption, it is also possible to cooperate with commercial banks, consumer finance companies and other institutions to introduce a variety of consumer credit products.
In addition to enriching scenarios, it is also necessary to further segment customer groups and develop innovative consumer loan products and services in a differentiated manner. “In addition to traditional high-quality customers, commercial banks and consumer finance companies can focus on employees of new high-quality productivity enterprises and residents of third- and fourth-tier cities.” Dong Ximiao said that differential pricing can also be carried out according to the risk and demand of customer groups, and appropriate fee reductions and concessions for emerging customer groups.
As consumer loan interest rates fall, the attractiveness increases, and it is especially important to guard against possible negative effects. Recently, a number of banks have issued statements reminding customers to beware of “consumer loans” becoming “routine loans”, emphasizing that personal loan funds should be used in accordance with the purpose agreed in the contract, and it is strictly forbidden to flow into real estate, stock market, funds, futures and other fields in violation of regulations.
Dong Ximiao said that as far as consumers are concerned, they must not blindly apply because the interest rate is low, and the application for consumer loans must be handled by commercial banks, consumer finance companies, and other formal financial institutions, and the burden of personal debts should be controlled within a reasonable level based on the consumption needs of individuals and families, and at the same time, loan funds should be used in accordance with the contract and should not be diverted to other purposes. In addition to paying attention to compliance and regulatory requirements, banks also need to pay attention to strengthening risk control and post-loan management when developing consumer loan business. Cooperative institutions should be managed by category according to the content and degree of risk of cooperation, to ensure that cooperative institutions and cooperation matters comply with laws, regulations, and regulatory requirements.
