by ZENG Lingjun

Chinese automakers are increasingly using ultra-long financing plans to attract buyers, shifting competition from price cuts toward lower monthly payments in the world's largest auto market.

For CHEN Yang, a 27-year-old office worker in Dongguan, southern Guangdong province, the decision to buy a Xiaomi YU7 electric SUV ahead of the 2026 Lunar New Year came down to financing rather than discounts.

The standard model is priced at 253,500 yuan (US$36,659), but Xiaomi's newly introduced seven-year, 84-month low-interest plan reduced Chen's monthly payment to about 2,600 yuan — manageable on his monthly salary of 8,000 yuan.

"Under a traditional five-year bank loan, the down payment alone would be at least 50,000 yuan, and monthly payments would exceed 4,500 yuan," Chen told Jiemian News. "That would have been too much for me."

His experience reflects a broader shift across China's auto industry. More than 20 brands — including Tesla and Chinese brands such as BYD, Xiaomi, Li Auto, Xpeng, Nio, Aito, Zeekr and Neta — have introduced seven-year car-financing plans, breaking with the long-standing one-to-five-year norm. Most offer annualized interest rates of roughly 2.5% to 5%.

Tesla recently said buyers of Model 3 and Model Y who place orders before March 31 will be eligible for seven-year ultra-low-interest financing or five-year zero-interest loans, with a 79,900-yuan starting down payment for Model 3 and a limited 8,000-yuan insurance subsidy upon delivery.

Analysts say such financing plans lower the barrier to buying a car by spreading payments over a longer period.

"Extending the loan term is the most direct way to lower the barrier to buying a car," JIANG Han, a senior researcher at Pangoal Institution, told Jiemian News.

A manager at a joint-stock bank in Guangzhou said a car priced at around 250,000 yuan financed with a traditional five-year bank loan and a 20% down payment would require monthly payments of about 3,700 yuan. Under a seven-year plan with a 10% down payment, the monthly cost can fall below 2,800 yuan.

Sales staff at a new-energy vehicle showroom in Guangzhou said customer traffic has increased since carmakers introduced longer financing plans, as lower monthly payments encourage hesitant buyers to visit dealerships.

One notable feature of the new financing wave is that banks are largely absent.

Most seven-year plans are provided by automakers' financial-leasing subsidiaries or third-party leasing companies rather than commercial banks. Xiaomi's program, for example, is arranged through Xiaomi Financial Leasing and Shanghai Changtu Financial Leasing.

Industry insiders say regulatory limits explain why banks have stayed on the sidelines. Chinese rules cap auto-loan maturities at five years, with minimum down payments of 20% for conventional vehicles and 15% for new-energy vehicles.

Risk concerns also play a role. "From a bank's perspective, it's hard to predict a borrower's ability to repay over seven years," the Guangzhou-based auto-finance manager said.

Financial-leasing arrangements operate differently. Under a traditional auto loan, the buyer owns the vehicle while the bank holds a mortgage claim. In a leasing model, ownership remains with the leasing company until all 84 monthly payments are completed, with the customer holding only the right to use the car during the repayment period.

"In simple terms, customers are signing a long-term lease rather than taking out a loan," said LI Mo, a former risk-control director at an auto leasing firm.

Because the leasing company retains ownership of the vehicle, approval standards are typically looser. Some programs require only an ID card and driver's license, without proof of income or bank statements, and down payments can be as low as zero, though 10% to 15% is more common.

Dealers say the model also helps boost sales. "Leasing approvals are faster, and dealers can receive rebates from leasing companies," a sales manager at a joint-venture car brand told Jiemian News. "Longer repayment terms and lower monthly payments make it easier for buyers who might otherwise struggle to qualify for a car loan."