As the year draws to a close, a fresh wave of promotional activities regarding consumer loan interest rates has emerged, as anticipatedHowever, this time around, the marketing is more temperedUnlike the instances observed in September where certain financial institutions offered consumer loan rates as low as the "teenage" range, current offerings generally hover around the "twenties." Moreover, banking organizations have recently issued notices urging customers to stay alert against predatory loan intermediaries luring them with suspiciously low ratesThe prevailing sentiment among market observers indicates a consensus: in light of efforts to boost consumer spending and with a moderately relaxed monetary policy, there remains potential for further reductions in consumer loan interest rates.

Most major banks continue to maintain interest rates above 3 percent.

Looking ahead to 2024, consumer loan rates are expected to be particularly attractive, with reductions from the "thirty" rate to the "twenties," or even dipping down to the "teenage" rates, sparking a fervent competitive atmosphere

This year's promotional strategies for consumer loans have been varied and innovative, with numerous institutions launching new products, offering rate discount coupons, establishing "whitelists," and engaging in group purchasing tactics to manipulate interest ratesThe "price war" is proving especially fierce.

In December, various banks announced exciting new consumer loan promotionsFor instance, the lowest available rate for a consumer loan at Beijing Bank can now be as low as 2.78%. The annualized rate for their Jing E Loan is at this attractive figure, with a maximum borrowing limit of up to 1 million yuan and a maximum term of three years, running through to January 31, 2025. This represents a decrease compared to November, when the minimum interest rate for the Jing E Loan was reported to be at 2.98%, expiring on November 30.

Similarly, Shanghai Pudong Development Bank has rolled out time-limited offers for its "Pu Flash Loan," with annual interest rates starting at 2.88%. Meanwhile, the Beijing branch of China Merchants Bank is also marketing its Lightning Loan with competitive rates beginning at 2.88%, available until the end of December.

In a promotion run by Hangzhou Bank, potential borrowers may find the minimum interest rate for consumer loans after combining benefits with first-time loan coupons to be as low as 2.88% with a maximum loan amount of 200,000 yuan

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New customers can also benefit from a 50 yuan phone credit with their first loan, with a possibility of another 100 yuan after meeting certain criteria.

Apart from engaging in this "price war," enhancing service levels is also a part of the strategyAs announced on December 18th, the Bank of China will migrate its online personal banking services related to consumer loans to its mobile banking platform starting January 12, 2025. This shift includes services like loan applications, consultations, agreements, disbursement, and repaymentsThe bank has urged customers with pending transactions on its online platform to complete them before the cutoff date of January 11, 2025.

While large state-owned banks take a more composed approach, most of them keep consumer loan rates above 3%. For instance, the Agricultural Bank currently offers personal consumer loans with a minimum rate of 3.1%. Loans below 200,000 yuan can be processed online, while those exceeding this amount necessitate application at physical branches

The Bank of China provides the Zhongyin E Loan with a borrowing limit set at 200,000 yuan and an interest rate starting at 3.4%.

Overall, as the year-end approaches, the current round of "major promotional events" conducted by banks appears relatively rational, avoiding the steep sub-2% rates seen with select banks in September.

It should be noted that these ultra-low consumer loan rates are not universally accessible, as many come with certain prerequisitesFor instance, "whitelisted" clients or those working for state-owned enterprises or specific professional categories like healthcare workers may find themselves with better access to these loans, illustrating the varied requirements imposed by different banks.

According to Wang Pengbo, a senior analyst at BoTong Consulting, credit cards and consumer loans represent critical access points for financial institutions

During holidays such as New Year's and the Spring Festival, consumer spending typically surges, offering banks a prime marketing opportunityTherefore, financial institutions need to continuously monitor shifts in consumer behavior and adapt their product strategies accordingly, ensuring that their innovative products truly meet market demand, thereby fostering growth in consumer finance and expanding their client base.

Conversely, Zhou Maohua, a macroeconomic researcher at Everbright Bank, cautions that excessive pricing competition within the consumer loan market is detrimental to risk management for financial institutionsHe emphasizes the necessity for heightened vigilance over business risks and sustainable operations, noting that overly low consumer loan rates can tempt borrowers into arbitrage scenarios that lead to excessive debt and potentially fuel localized asset bubbles.

As banks unveil a new series of consumer loan promotions, illegal loan intermediaries are simultaneously becoming increasingly active

Several banking staff have voiced concerns that these unscrupulous intermediaries often advertise annual interest rates as low as 2% or 3% to lure in customersBesides enticingly low rates, these intermediaries often present themselves as reputable institutions with appeals of "no collateral," "no guarantees," and "clean credit history," thereby pushing consumers into taking out loansHowever, hidden traps often lie behind such offers, such as the imposition of exorbitant fees or potential loan scams.

In an effort to combat these illegal practices, over 30 banks have recently released statements urging customers to exercise caution, warning against the risks of consumer loans morphing into "trap loans." For example, on December 3, Qilu Bank issued a risk advisory via its official WeChat account, underscoring that personal loan funds must be used strictly for their intended purposes as outlined in contracts

It sternly prohibits utilizing the loans for speculating in real estate, stock markets, funds, futures, and similar unauthorized areasSuch violations could result in the bank invoking penalty interest and the immediate recall of the loan.

Additionally, banks including Chifeng Yuanbaoshan Rural Commercial Bank, Taiyuan Rural Commercial Bank, and Xinjing County Xintian Village Bank clarified in their statements that they do not engage in cooperative loan business with any intermediaries, warning the public to remain vigilant against being lured into unauthorized loan agreementsMajor banks like the Zhongshan branch of ICBC and the Taizhou branch of China Construction Bank have made similar assertions, emphasizing they do not collaborate with any loan intermediaries or engage brokers for loan documentation and assessment.

Financial consumer institutions are also taking active measures

For example, Zhaolian Consumer Finance is leveraging new media platforms like WeChat Video Number and Douyin to raise financial literacy on subjects such as personal credit, installment consumption, fraud prevention, and basic consumer financeThey are creating a series of original content to ensure that residents can promptly access information on avoiding telecommunication fraud as well as identifying financial risks.

Moreover, they are utilizing a combination of digital channels, including their official websites, apps, WeChat accounts, weibo, and short videos to engage in comprehensive outreach, having already connected with over 200 million consumers.

On December 24, the National Financial Regulatory Administration also issued a risk advisory, highlighting the rising incidents of illegal loan intermediaries advertising "debt restructuring" or "debt optimization" on social media platforms

These intermediaries often entice consumers into "borrowing anew to pay off old debts" or seeking high-interest bridge financingSuch practices, labeled as "restructuring" or "optimization," are fraught with financial traps and risks of personal information leakage, and may even breach legal stipulations.

The Financial Consumer Rights Protection Bureau under the National Financial Regulatory Administration warns against misleading advertisements and inducements from illegal loan intermediariesConsumers are advised to understand the risks and dangers associated with non-compliant "backward lending" practices, maintaining vigilance against intermediaries who may obscure critical information while only presenting attractive termsProspective borrowers should be wary of unsolicited phone calls, messages, promotional leaflets, or advertisements on social media that assure "debt restructuring," "debt optimization," or "no collateral or guarantees," to avoid falling into related traps.