Cash-strapped Chinese consumers wanting to purchase vehicles on Tmall.com, China’s largest B2C shopping website, can now apply for interest-free car loans that allow them to pay off their balances over 18 months.
The loan program offers unusually generous terms but is initially limited both geographically and in the selection of cars available. Participating automakers are Shanghai General Motors, which operates Tmall.com flagship stores for the Chevrolet and Buick brands, and SAIC Motor, formerly Shanghai Automotive Industry Corp.
At the launch, consumers can only buy cars through Shanghai GM and SAIC Motor dealerships in Shanghai, Guangzhou, and Zhejiang and Fujian provinces.
Under the program, loans are available to Tmall.com shoppers able to make a minimum down payment of 20 percent. Applicants need not furnish proof of income or other conventional loan documentation. Creditworthiness is determined by a buyer’s shopping and payment history on Tmall.com and sister website Taobao Marketplace, both owned by e-commerce giant Alibaba Group.
Qualified applicants can borrow up to RMB 60,000 ($9,678). Loan payments are made through Alipay, the e-payments provider related to Alibaba Group. Customers reserve cars online but actually complete deals and take delivery offline at their nearest dealerships. The 18-month loans carry no interest or service charges.
The Tmall.com program is the latest example of Alibaba Group’s push to leverage the Internet to provide financial services to consumers and small businesses that are underserved by China’s traditional banking system. On July 22, Alibaba Group’s international wholesale trading website, Alibaba.com, announced a program to provide business loans to small Chinese exporters.
The car loan program is run by Small and Micro Financial Services Group, a company spun out of Alibaba Group that includes Alipay and that operates the popular Yu’e Bao money market fund and investment service. Small and Micro Financial Services isn’t funding the loans. The company is acting as an intermediary, confirming creditworthiness before turning the actual funding over to agents for licensed lenders.
Although shopping websites do not generally offer consumer loans on big-ticket items like cars, some Chinese sites have been experimenting with installment payment plans for home appliances and consumer electronics. In June, Tmall started offering three, six and nine month installment plans on white goods and digital devices.
During a special car-sales promotion that took place July 25-Aug. 11 last year, 17 auto brands with Tmall.com storefronts sold a total of 3,400 cars worth RMB 80 million ($12.9 million) through the website.