At the start of 2026, multiple Chinese new energy vehicle (NEV) makers, including Tesla, Xiaomi, Xpeng, and Li Auto, launched “7-year low-interest” car loan plans, offering extended loan terms and lower monthly payments to reduce the purchase barrier and boost car sales.
Traditionally, new car loans in China range from 1 to 5 years. In February 2025, the Notice on Developing Consumer Finance to Help Boost Consumption allowed commercial banks to temporarily extend personal consumer loan terms from a maximum of 5 years to 7 years for customers with long-term consumption needs.
“This is a response to the government’s call to boost consumption,” said a bank automotive finance official. “Many customers want to buy or replace a car before the New Year to travel home for the holidays, so this car purchase plan is mainly aimed at boosting sales ahead of the New Year,” a sales representative from a new energy vehicle company said.
While all the automakers highlight “7-year low interest” as their key selling point, each company also sets a clear deadline, mostly between January and February 2026, making these limited-time promotions.
The most significant difference lies in the lending and financing institutions. Tesla partners with CITIC Bank and Shanghai Pudong Development Bank, while other companies rely on manufacturer financing or leasing firms, which affects consumers’ eligibility requirements and the level of protection they receive.
Down payment requirements vary widely. Voyah offers a 0% down payment option, while Geely Galaxy, Xpeng, Li Auto, and Xiaomi require 10% to more than 20% for certain models. Tesla offers two plans, where a down payment above 25% qualifies for a lower interest rate, providing more favorable financing terms for customers able to make a larger upfront payment.
Tesla’s loans are relatively low-cost, with a 0.5% annualized fee rate for the plan requiring a down payment above 25%, equivalent to an annualized interest rate of 0.98%. Some Li Auto models are more expensive, with a 2.5% annualized fee rate, or 4.69% annualized interest. Xpeng, Geely Galaxy, and Xiaomi fall in the middle, with equivalent annualized rates ranging from 1.9% to 3.5%.
In terms of model coverage, Voyah and Xpeng support all models, while other brands mostly focus on main, high-volume models, such as Tesla Model 3/Y series, Xiaomi YU7, and Li Auto L series.
Some consumers worry about the residual value risk of electric vehicles. The extended repayment period often exceeds the typical technology update cycle of smart EVs, and with rapid advancements, the residual value of older models may decline even further.
According to the China Automobile Dealers Association, in October 2025, plug-in hybrid vehicles had a residual value of 43.7%, pure electric vehicles dropped to 42%, while traditional fuel vehicles generally retained residual values above 50%.
The Association explained that prices for second-hand plug-in hybrid vehicles remain relatively stable because newer used models typically support fast charging, offering a better user experience. In contrast, the residual values of pure electric vehicles are more affected by fierce competition in the new car market, particularly with year-end model updates, which drives down second-hand prices.
Notably, the main models offered with “7-year low-interest” loans tend to retain higher residual values. According to the latest “2025 China Automobile Residual Value Research Report” by the Association, the top five pure electric vehicles in terms of residual value are the Xiaomi SU7, Wenjie M9, Li Auto MEGA, Geely Galaxy, and Tesla Model X.
Longer loan periods and lower down payments increase financial institutions’ risk control pressure, requiring higher capabilities in risk assessment and pricing.
For banks, extending consumer loan terms also extends their risk exposure. A lower down payment requires banks to assess not only a borrower’s short-term repayment ability but also their medium- and long-term financial capacity. “The main challenges include the lack of long-term personal credit data models and the difficulty of evaluating and managing collateral residual value over time,” said Xue Hui, Director of Financial Institution Ratings at Fitch Ratings Asia-Pacific.
For consumers, longer loan terms and greater repayment uncertainty have led banks and other financial institutions to tighten eligibility requirements.
A Tesla sales staff emphasized, “5-year interest-free loans are easier to approve, with more banks available; but 7-year low-interest loans require higher personal qualifications, and only two banks are options. Recently, many customers didn’t pass the final review, so they switched to 5-year interest-free loans.”
Sales staff asked about monthly salary, monthly bank flow, education level, continuous social security contribution years, and suggested consumers undergo a “pre-approval” before selecting a 7-year low-interest loan plan.
Compared with commercial banks, financing leasing companies are generally more flexible in approving consumers. However, for the “7-year low-interest” plans, some car company-affiliated or partner leasing firms have also tightened their eligibility requirements.
For example, Xpeng’s “7-year low-interest” plan is provided by Xpeng Financing Leasing, requiring a minimum 15% down payment and nationwide property proof, plus at least one year of continuous social security or provident fund contribution.
Similarly, Li Auto’s partner Yixin Financial requires uploading ID, bank statements, social security contributions, signing credit authorization and personal information processing agreements during pre-approval.
Notably, in the current public “7-year low-interest” schemes, Tesla cooperates with CITIC and SPD banks, while most other car companies work with manufacturer finance or financing leasing companies.
In the “7-year low-interest” plan, most car companies use the “return lease” mode. Li Auto’s partner Yixin Financial noted that their financing leasing product is a post-sale return lease: the vehicle is registered in your name, but mortgaged to the financial institution. After repayment, ownership is transferred. It does not affect national subsidies or trade-in benefits. Financing leasing is not renting; renting is paying to use a car temporarily, which must be returned after the contract.
In financing leasing, the vehicle remains the leasing company’s property until installments are fully paid. If the buyer defaults, the vehicle may be repossessed, and previous payments become rent, with the buyer losing rights to prior payments (depending on contract terms).
Xiaomi, Xpeng, and Li Auto sales staff about ownership transfer in financing leasing. They emphasized that the registered owner remains the buyer; only the car registration certificate (“green book”) is mortgaged. Ownership is returned upon loan completion.