German automaker Volkswagen's financial arm started its automobile credit business in China, Thursday.

The company promoted two credit services for private car buyersin China, said Klaus-Uwe Schaffrath, general manager of VolkswagenFinance (China) Co. Ltd.

The company received approval from the Chinese government to offer loans in Renminbi in August this year to be the first wholly-owned foreign car finance company.

Meanwhile US car manufacturer General Motors' joint venture with Shanghai Automotive Industry Corp (SAIC) also received the final approval.

Among its two credit services, buyers can choose a similar installment plan with bank loans or pay a lower monthly installment but return the rest of loan when the contract ends, which is a new service in local car credit market.

"The consumers trade in their used car for a new Volkswagen or ask for another 12-month credit if they are not willing to return the rest of the loan once," Schaffrath said.

Many commercial banks in China have raised the threshold for auto financing and even stopped the business now for fear of bad loans.

Source: Xinhua