Qudian Inc., a Chinese e-commerce business that provides cash credit products via mobile technology, extended its business into the auto finance sector.
The company allows borrowers to apply for credit on their mobile phones and receive approval within seconds, according to a company press release. Approved borrowers are then able to draw down on their cash credit with cash disbursed immediately into their Alipay accounts in digital form.
Now the company has launched Dabai Auto — after a beta launched in late November 2017 concluded — which allows “high-quality” Qudian users who have been approved with credit lines to use the service for a car down payment, loan installments, or leasing payments.
“It’s very similar to what you have in the U.S.,” Alan Wang, a public relations representative for Qudian, told Auto Finance News.
The penetration rate for financial leasing solutions in China in new car sales has been historically lower compared with developed countries. In the U.S., for instance, 84% of new cars were financed in 2014 compared with 20% in China, according to Experian. The Chinese auto finance rate rose to 38% in 2016 and is expected to rise steadily in the next few years — reaching an estimated 55% in 2021, according to ReportLinker.
Qudian assesses credit quality through its credit assessment system for new borrowers as “A score.” A score incorporates variables, including internal data — such as the historical delinquency rates it experiences in the Chinese province where a prospective borrower resides — data from external parties, stability of online social networks, average liquid asset index, online consumption level, and credit repayment index.
Qudian refers to its credit assessment system for borrowers who have established certain histories with the company as “B score.” Once a borrower’s B score is available, his or her A score will be replaced by B score for future credit assessment and re-evaluation purposes.
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