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China’s New Auto Loan Rules to Support Car Sales but Raise Credit Risks for Some
China’s revised auto loan rules are likely to support car sales this year, especially for lower-priced, new energy vehicle (NEV) models, says Fitch Ratings. The removal of the regulatory minimum downpayment requirement is likely to introduce some lower-quality borrowers to auto finance companies (AFCs) and banks, but brings the regime more into line with most other developed auto-financing markets. Underlying default rates for auto loan asset-backed securities (ABS) could ultimately edge higher if more loans with higher loan-to-value (LTV) ratios and longer terms are added to the securitization pools. Their ... (full story)