"Seven-Year Low-Interest" Auto Financing Halted; April 30 Deadline

On January 6, 2024, Tesla became the first automaker to launch a "seven-year low-interest" auto financing plan called "Te You Xiang," targeting Model 3 and Model Y vehicles with down payments starting at RMB 79,900 and monthly installments as low as RMB 1,918. Shortly afterward, numerous automakers—including Xiaomi, Li Auto, XPeng, NIO, Voyah, Geely, and BYD—quickly followed suit, introducing similar seven-year ultra-long-term loan programs. Some offerings pushed annual percentage rates (APRs) below 1%, with certain plans even combining zero-down-payment options. Dongfeng Nissan briefly extended loan terms to eight years, advertising daily payments as low as RMB 27. These financing schemes were typically provided by financial service institutions or leasing companies and operated under a finance lease model. Under this arrangement, consumers only held usage rights to the vehicle during the repayment period and could obtain full ownership only after fulfilling the entire lease term. Unlike traditional bank loans, this model raised concerns regarding vehicle ownership, hidden costs, and privacy risks—such as mandatory GPS installation. Around April 23, multiple banks and leasing companies received notices instructing them to tighten or halt these programs. A Xiaomi Auto sales representative revealed that applications for six- to seven-year financing products would be accepted until no later than April 30. By May, Tesla’s vehicle purchase incentives no longer included the seven-year low-interest option, retaining only five-year zero-interest and one- to five-year ultra-low-interest plans. Other automakers also gradually adjusted their policies, with most setting the actual cutoff date for these offers at April 30, 2024. From its launch in January to its termination at the end of April, the "seven-year low-interest" scheme lasted approximately three months. Although it significantly reduced monthly payment burdens and saved substantial interest expenses—for example, the base trim of the Xiaomi SU7 could save about RMB 21,000 in interest under optimal conditions—the program primarily targeted buyers seeking low down payments and minimal monthly installments, raising doubts about their long-term repayment capacity. The potential risk of defaults drew regulatory scrutiny, ultimately leading to the abrupt suspension of these financing plans.