The wind of bank involution has blown into the trade-in field again.
"The customer wants to change a car in full, and later finds that if he applies for a consumer loan, the subsidies from the government, the car company and our bank can fully cover the interest, which is equivalent to buying a car interest-free" "The amount of our bank's trade-in consumer loan products is up to 1 million yuan, and the annual interest rate is as low as 3.3%, welcome to understand" "Participate in the installment activity of our bank's green home appliance trade-in benefit, and save up to 250 yuan".
Have you been swiped by such bank propaganda recently? Titanium media APP noticed that under the opportunity of the "trade-in" policy, many banks have launched various forms of consumer loan products for consumer goods such as automobiles, home appliances, and home decoration, swiping the circle of friends of consumers.
Many products are attractive in terms of loan interest rates, quotas, tenors, etc., while focusing on simplifying business processes and increasing the speed of lending. On the whole, the amount of trade-in consumer loan products of banks has risen and the interest rate has fallen.
The "old for new" loans have been increased, and the preferential range has been increased
Recently, a number of banks, including Bank of China, Agricultural Bank of China, Zhongyuan Bank, etc., have launched relevant consumer loan products for the "trade-in" of consumer goods such as automobiles, home appliances, and home improvement.
Specifically, Bank of China has launched four products and service solutions, including BOC Auto • Renewal Installment, BOC Hui Installment, BOC Home Improvement • Housing Installment, and BOC Renewal Consumer Loan to meet the consumer needs of household appliances, mobile phones, digital replacement and home improvement, etc., which customers can borrow and repay at any time during the validity period of the quota. Agricultural Bank of China launched the "Netfast Loan" exclusive self-service small-amount consumer loan to support trade-in, with preferential interest rates and a maximum credit line of 1 million yuan; Zhongyuan Bank has released a series of new products, including "Renewal e-Loan", "Renewal New Car Loan" and "Renewal Housing Loan".
Taking the Bank of China's trade-in car renewal installment as an example, the bank's credit card WeChat official account shows that the purchase of a designated model of a certain brand can get up to 36 zero-interest purchase discounts, and if you participate in the trade-in, you can enjoy the dual discounts of national subsidy and factory subsidy.
Image source: Bank of China credit card official account
The data shows that the loan amount of automobiles, home improvement and other categories of consumer goods has increased significantly. In May, the Agricultural Bank of China invested 19.5 billion yuan in credit funds for automobile installment loans, an increase of 137% year-on-year and 8% month-on-month; The credit funds of the Agricultural Bank of China for home improvement installment loans were 3.7 billion yuan, an increase of 22.78% year-on-year and 3.96% month-on-month. In the first quarter, Bank of China invested more than 50 billion yuan in installments of automobiles, a year-on-year increase of 59.36%, of which the installment of new energy vehicles increased by 103.76% year-on-year.
"By tradeping in traditional consumer goods and durable consumer goods such as automobiles and home appliances, it can stimulate the release of domestic demand, enhance the vitality of the domestic market, and drive the increase of domestic demand." The relevant person in charge of the consumer finance department of the Bank of China told the titanium media APP.
Guosheng Securities' financial research team said that trade-in consumer loans can be used as an effective customer reach tool, although banks have "sacrificed" in loan yields, but in the medium and long term, they can attract traffic to other personal businesses such as wealth management, which is conducive to banks saving customer acquisition costs and accumulating high-quality customer base.
In addition, the bank's credit card installment business has also launched a series of "trade-in" support policies. For example, Bank of Jiangsu, in conjunction with JD.com, Suning, Pinduoduo and other platforms, provides inclusive price discounts for mobile phone communications, household appliances, computer digital, home building materials and other goods by exchanging old and new products with credit card installment discounts. Bank of Jiangsu credit card holders who purchase trade-in products on Suning Tesco (including online APP/WAP terminal) or Xingtu Financial APP have the opportunity to enjoy a discount of 80 yuan for a single order over 2,000 yuan and 200 yuan for a single order over 5,000 yuan.
Titanium Media APP found that banks have made some more attractive designs in terms of interest rates and quotas for trade-in consumer loans. In terms of interest rates, the overall decrease is 20-50BP compared with 2023, and the maximum amount can reach hundreds of thousands to millions.
According to the product promotion of a city commercial bank, the interest rate of the bank's "trade-in" loan product ranges from 3.35% to 4.15%, mainly based on customer credit approval, and the loan amount can reach 500,000 yuan, and the amount of high-quality customers will be increased accordingly.
The trade-in market space exceeds one trillion yuan, and "trade-in" loans are expected to become a new growth point for banks
China is a big country with machinery and equipment and durable consumer goods, and the market space for large-scale equipment renewal and consumer goods trade-in is very huge.
Ernst & Young Greater China Retail & Consumer Goods Industry Leader Cheng Mingju said that large-scale equipment renewal and consumer goods trade-in will drive effective investment and promote national consumption. It is expected that equipment renewal will be a huge market with an annual scale of more than 5 trillion yuan, and the replacement of automobiles and home appliances can also create a market space of one trillion yuan.
According to the Bank of China Research Institute, a new round of consumer goods "trade-in" policy will give rise to new consumption growth points. Under different circumstances, this round of "trade-in" policy is expected to stimulate the demand for new automobiles and household appliances is estimated to be about 210.9-629.3 billion yuan, which will drive GDP growth by about 0.16-0.5 percentage points. If the current round of "trade-in" policy for consumer goods is combined with preferential policies such as new energy vehicles and new home appliances going to the countryside, it is expected to release greater consumption potential.
In February 2024, at the fourth meeting of the Central Financial and Economic Commission, it was proposed to "encourage and guide a new round of large-scale equipment renewal and trade-in of consumer goods, encourage the trade-in of traditional consumer goods such as automobiles and home appliances, and promote the trade-in of durable consumer goods".
In March 2024, the State Council issued the Action Plan for Promoting Large-scale Equipment Renewal and Consumer Goods Trade-in, which made a comprehensive deployment for promoting large-scale equipment renewal and consumer goods trade-in. Since then, the People's Bank of China, the State Administration of Financial Supervision and Administration and other four departments jointly held a large-scale equipment renewal and consumer goods trade-in financial work promotion meeting, making it clear that it is necessary to "do a good job in financial support for large-scale equipment renewal and consumer goods trade-in work". In June, the Ministry of Finance issued 6.44 billion yuan of financial interest discounts and awards and subsidies in 2024 for the pre-allocation of central financial subsidy funds for "trade-in" automobiles in 2024.
Various localities have also followed up on the trade-in activities and implementation rules. On March 8, 2024, Chongqing launched the 2024 "Aishang Chongqing" green smart home appliances into towns, streets, and communities to trade in the old for the new to benefit the people. Subsequently, Hangzhou announced that it would carry out a new season of home appliances from March to April, and fully link platforms, home appliance companies and live broadcast e-commerce to launch home appliances trade-in activities to benefit the people. On May 31, 2024, eight departments, including the Beijing Municipal Bureau of Commerce, jointly issued the "2024 Beijing Automobile Trade-in Subsidy Implementation Rules". The subsidy conditions and standards of the "Detailed Rules" are still implemented in accordance with the "Notice of the Ministry of Commerce, the Ministry of Finance and Other 7 Departments on Printing and Distributing the Implementation Rules for the Trade-in Subsidy for Cars". According to the "Detailed Rules", consumers scrap old cars and buy different types of passenger cars, and the maximum subsidy amount can reach 10,000 yuan.
Du Yang, a researcher at the Bank of China Research Institute, pointed out that banks have launched various trade-in loan products and preferential measures, which have lowered the threshold for consumers to replace their products in the short term, which can stimulate consumption and stimulate domestic demand. In the long run, it will help promote the development of the mainland consumer market in the direction of high-end, green and intelligent, promote industrial optimization and upgrading, and help high-quality economic development.
The relevant person in charge of the Consumer Finance Department of Bank of China said that it will continue to follow up the progress of the trade-in of consumer goods, cooperate with the trade-in policies of consumer goods in various places, and provide consumer loan support for residents' home renovation and car replacement.
In recent years, China's banking industry is undergoing a revolution in retail banking, which has become the main driving force for the growth of the overall income pool of China's banking industry. As an important part of consumer finance, the trade-in consumer loan business is expected to become an important growth point for the bank's retail business.
According to EY's "China Listed Banks 2022 Review and Future Outlook" report, the proportion of retail business revenue of mainland listed banks in 2022 was 45.61%, higher than the proportion of corporate business (40.80%) and financial market business (10.43%). In the first half of 2023, this proportion will increase to 47.07%.
Interest rates on consumer loans have fallen to "historical" lows. According to the data monitored by the Rong 360 Digital Technology Research Institute, in May 2024, the average minimum executable interest rate of online consumer loans of national banks was 3.15%, down 4BP month-on-month and 46BP year-on-year; The average minimum enforceable interest rate for consumer loans of state-owned banks was 3.27%, down 2BP month-on-month and 29BP year-on-year.
Tian Lihui, dean of the Institute of Financial Development of Nankai University, said that for banks themselves, the launch of "trade-in" consumer loans is an important measure to expand their business areas and improve profitability. In fact, the consumption of large commodities is an important area for banks to develop consumer loans, and banks can make full use of the market opportunities brought about by the trade-in of consumer goods to provide relevant financial services. The first is to strengthen policy publicity and guidance; The second is to innovate financial products and service models, including optimizing business processes and improving the availability and convenience of consumer loan services; Communicate with industry authorities, strengthen cooperation with businesses, identify work priorities, and accelerate project docking.
Pan Helin, a member of the Information and Communication Economy Expert Committee of the Ministry of Industry and Information Technology, said that the "trade-in" policy has brought about an increase in consumer credit demand, and has also brought customer acquisition channels for banks, deepening the relationship between banks and customers. He suggested that after acquiring customers, banks can embed more consumption scenarios on this basis, guide customers to invest in wealth management, expand bank intermediary business, and cooperate with online platforms to expand consumer credit issuance through financial technology and online finance.
While increasing revenue, how to balance customer acquisition and risk control? Su Xiaorui, a senior researcher at Suxi Zhiyan, believes that on the one hand, banks need to adopt targeted customer acquisition methods, such as cutting into specific business districts and parks through offline channels, and combining customer acquisition with due diligence; On the other hand, it is not possible to have a lax mentality in the work related to risk control, fully explain the use of compliant funds to the applicant, and continue to control the flow of funds after the business occurs, so as to strike a good balance between the scale of new business and business risk management.
Consumers have mixed opinions about "trade-in" loans, and they need to do what they can
Will consumers exchange new cars and home improvement appliances because of the trade-in policy?
On a social platform, the Titanium Media APP found that netizens had mixed reviews. Some people say, "I bought an electric appliance, I didn't use it and exchanged it for a lot of money, I regretted it, and I lost four or five hundred yuan." Some people also said, "Trade-in is a bit of a pitfall, I originally thought of trading in the old for 300 to get a subsidy, but when I saw that the recycling price was too low, I still returned it."
The data shows that the effect of the trade-in policy is initially emerging. On June 24, the Ministry of Commerce issued a document disclosing that the supporting policies for the trade-in of consumer goods in various places have been implemented one after another, and the "6.18" online shopping promotion has been superimposed, which has driven the sales of home appliances, communication equipment and new energy vehicles to a certain extent in May. New energy vehicle sales achieved rapid growth, according to data from the China Automobile Dealers Association, in May, the transaction volume of new energy passenger vehicles increased by 38.4% year-on-year. From January to May, the trade-in sales of home appliances on major e-commerce platforms increased by more than 80%, and trade-in has become an important factor in promoting the growth of home appliance consumption.
However, experts pointed out that as consumers, the low interest rate and high amount of dividends of bank consumer loans are "fragrant", but they should also assess their own repayment ability to prevent the emergence of a debt cycle of "using cards to support cards" and "loans to support loans".
Dong Ximiao, chief researcher of Zhaolian, appealed that although the "zero down payment" products launched by some financial institutions have lowered the threshold for consumers to replace themselves, the total interest on the full loan will also be larger, and consumers should fully consider their own repayment ability and reasonably determine the down payment ratio. At the same time, it is also necessary to read the terms of the contract clearly to avoid merchants raising prices and charging additional handling fees in disguised form by taking advantage of "zero down payment" and "zero interest rate". (This article was first published on the Titanium Media APP, author | Yan Fanyao, editor - Liu Yangxue)
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