The automotive market has introduced a new term in early 2026—7-year ultra-long low-interest auto loans. Tesla fired the first shot by launching its 7-year low-interest loan program on January 6, prompting other automakers to follow suit. This "financial battle" marks a new phase in China's auto industry, shifting from competing on "price" to competing on "leverage." Consumers should carefully consider their actual needs when facing such long-term financial tools: if you plan to keep a car for over 10 years, a 7-year loan can ease cash flow pressure; but if you intend to change cars every 3–4 years, it's best to avoid 7-year loans, as the resale value may not cover the remaining bank balance.
Even BYD Company Limited, which has long dominated China's new energy vehicle market, has joined the trend of ultra-long loans. On February 25, BYD's Ocean Network officially announced a 7-year low-interest loan, though the move seemed somewhat abrupt. Several sales staff at Beijing BYD 4S stores indicated they were unaware of specific details, such as execution methods and interest rates, only knowing that the down payment must be at least 33% of the invoice price.
The models offering low-interest ultra-long loans are mostly each brand's bestsellers. For example, Fangchengbao provides 7-year loans for the Titanium 7 and Leopard 8 models, with the Titanium 7 accounting for nearly 80% of the brand's sales over the past five months. Tesla covers its three main models—Model 3, Model Y, and Model YL. Brands like Li Auto, XPeng, and Zhiji offer the program across their entire lineup.
There are significant differences among manufacturers' ultra-long loan schemes. Some, such as Voyah, Jetour, GAC Aion, and GAC Hyper, offer "zero down payment" options. Others provide interest-free periods for the first few years on specific models, such as Li Auto's i8 and MEGA, which have a limited-time offer of zero interest for the first three years; GAC Hyper's HT and GT models also offer zero interest for the first three years.
Overall, most manufacturers require a minimum down payment of 15%. In terms of rates, annual fees for 7-year low-interest loans range between 0.49% and 2.5%. Most automakers partner with third-party financial institutions for these programs, while a few, like Tesla and Nio, collaborate with banks. Dongfeng Nissan and GAC Toyota stand out by extending low-interest loan terms to eight years.
The key concern for consumers is whether ultra-long loans are cost-effective. A rough calculation using Li Auto's app-based "financial calculator" shows that for a Li L6 Pro with a guide price of ¥249,800, a 7-year (84-month) loan with a 15% down payment (¥37,470) and a loan amount of ¥212,330 at an annual rate of 2.50% would result in total interest of ¥37,166 and monthly payments of ¥2,971. Under a Bank of China scheme with a 1.99% annual rate and the same down payment over 60 months, total interest would be ¥21,148, with monthly payments of ¥3,892. Without considering early repayment, the 7-year loan would cost about ¥16,000 more than the 5-year loan. Ultra-long loans do not save money; their main advantage is lower monthly payments, but the extended term leads to a higher total cost.
Why are automakers focusing on ultra-long loans? In recent years, the most effective way to boost sales was through direct subsidies. Lower prices for consumers naturally drove up sales. However, in December last year, the State Administration for Market Regulation issued draft guidelines targeting irregular pricing, fraud, and irrational competition in auto production and sales, warning against price wars. Analysts believe the guidelines' key significance lies in legally prohibiting "below-cost dumping," setting clear red lines for price competition with strong deterrence.
Visits to dealerships offering ultra-long loans reveal that many models no longer provide cash subsidies; the official guide price or a fixed price is the actual selling price, though some discounts on optional features remain for customers with personalized needs. Overall, compared to previous direct subsidies and price cuts, the incentives are significantly reduced.
Starting January 1, 2026, the vehicle purchase tax for new energy vehicles shifted from "full exemption" to "half reduction," leading automakers to use financial tools to offset the policy change and stimulate consumer demand. Although most ultra-long loan programs have set end dates (often by the end of March 2026), they are essentially under observation. The deadlines represent adjustment points for specific policies rather than the end of the programs.
A Xiaomi Auto salesperson stated that the Xiaomi YU 7 offers two 7-year low-interest plans: Plan A with a ¥99,900 down payment and a 0.8% annual rate, and Plan B with a ¥49,900 down payment and a 0.99% annual rate, available only until February 28. In March, the rates for these plans increased to 1.33% and 1.99%, respectively. Tesla, XPeng, Nio, Voyah, and others are following a similar approach, with adjustments to down payments and rates expected.
Importantly, ultra-long loans are backed by policy. In March 2025, the National Financial Regulatory Administration issued a notice encouraging commercial banks to extend personal consumption loan terms from a maximum of 5 years to 7 years for clients with long-term needs. Automakers' ultra-long loans are essentially a response to national calls to stimulate consumption.
Most ultra-long loans are structured as financial leasing. While some consumers see them as lowering the barrier to entry and reducing repayment pressure, others argue that needing a 7-year loan may indicate the purchase is beyond one's means, representing irrational consumption. Unlike traditional 5-year auto loans from banks, most ultra-long loan products involve third-party financial institutions. For example, Xiaomi Auto partners with Shanghai Xiaomi Financial Leasing and Shanghai Changtu Financial Leasing; Li Auto works with Yixin Group and Tianxiada Financial Leasing; BYD's brands collaborate with Fudi Financial Leasing.
Financial leasing is a common model in auto finance, divided into direct leasing and sale-leaseback. In direct leasing, the vehicle is registered under the financial institution's name; in sale-leaseback, it is registered under the consumer's name. However, the essence of financial leasing is "leasing"—even if the vehicle is registered to the consumer, ownership remains with the institution. The vehicle management system typically notes "financial leasing" or "mortgage registration," and consumers cannot transfer ownership until the lease is paid off and the mortgage is lifted.
Most manufacturers' financial schemes are transparent. For instance, Li Auto's app clearly states that for Yixin Group's financial leasing product, the vehicle is registered in the user's name, with ownership transferring after the lease term; for Tianxiada's product, the vehicle is registered under the subsidiary's name, with ownership transferring upon lease completion. Some institutions, like those partnering with Xiaomi Auto and Fangchengbao, require the vehicle's green book (vehicle registration certificate) as collateral. A Fangchengbao salesperson explained that with the 7-year loan, the vehicle is registered in the owner's name but owned by Fudi Financial Leasing, with the green book held as collateral. A nominal ¥1 purchase option payment is required at the end of the term to fully transfer ownership.
As the vehicle is mortgaged, some manufacturers charge fees for registration changes. For example, XPeng's financial leasing partner charges ¥120 for color change filings, with an additional ¥50 expedited service fee. Like traditional bank loans, financial leasing allows early repayment, but third-party institutions typically require 1–3 years before permitting it, with higher penalties for early termination than bank loans.
Approval for ultra-long loans is stricter due to the increased risk from longer repayment periods. A Tesla salesperson noted that while 5-year loans are relatively easy to approve, 7-year loans require higher personal qualifications. Despite the buzz, sales staff generally do not proactively promote ultra-long loans, offering them only when asked, and some even advise against them due to higher total costs. Most consumers still prefer traditional bank loan models.
Another consideration for new energy vehicles is resale value. The China Automobile Dealers Association's 2025 report on auto retention rates shows that the top 5 or 10 models in three-year retention rates are still predominantly fuel vehicles. With new energy vehicles updating as rapidly as smartphones, borrowers may consider trading in before the loan is paid off, potentially leaving a loan balance higher than the vehicle's residual value.
Legal experts advise consumers to carefully review contract terms for financial leasing, clarifying all costs, ownership details, and违约 provisions. It is crucial to assess repayment capacity realistically, avoid over-leveraging, and act within one's means.
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