Wendy Zhang/ Shanghai Daily news

Domestic banks have started to expand their auto financing business by raising the maximum loan ratio to 80 percent of the total car price as part of a move to react to the head-on competition from auto financing companies, the Shanghai Evening Post reported today.
The car loan business can bring large profits but also the possibility of bad debts for the banks. With the issuing of a series of measures by the People's Bank of China and the Chinese Banking Regulatory Commission on August 16 to control car loan risks, many banks began to expand their auto financing business.
A state-owned bank in Shanghai has offered a car loan ratio of 80 percent of the total car price in a bid to attract more purchasers.
According to the new car loan regulations to be implemented on October 1, loans on cars for personal use cannot exceed 80 percent of the total car price and for business use cannot exceed 70 percent of the total car price.
"Afraid of high risks, domestic banks usually offer no more than 70 percent of the car loans to individual buyers but we are the first to offer 80 percent loans," said a spokesman with the bank, adding that they are facing high risks.