Exclusive | Chinese millennials are buying hamburgers on instalment, fuelling micro loan industry

For Chinese millennials these days, instalment payments are not just for big purchases. Feel like a hamburger? Want to buy a movie ticket? Buy now and pay later – much later in some cases.

Widely accepted in developed countries, the practice of paying by instalments has grown in popularity in China because high property prices mean most people pour all their money into housing and have little left over for discretionary spending.

The trend is especially pronounced among millennials, whose earning power is lower, giving a boost to the growth of online micro lenders like Lexin Fintech.

Lexin, founded in 2013 by former Tencent Holdings employee Jay Xiao Wenjie, operates the online shopping centre Fenqile – which roughly translates as “happy instalment” – offering a wide range of products from mobile phones and computers to snacks and cosmetics that can be funded by micro loans. A small layer cake can be had for as low as 0.46 yuan per month for three years, or there’s lipstick for only 1.93 yuan (3 US cents) per month for two years. Interest rates differ based on the product price and repayment period but some loans are offered interest free.

“Paying by instalment is becoming a habit among young Chinese [born after 1990],” said Xiao, who took the Shenzhen-based Lexin public on Nasdaq last year. “They prefer instalments because they are more interested in trying innovative things [and] don’t have much money, but are still very optimistic about the future.”

The instalment trend is a stark contrast to previous generations of Chinese who resisted borrowing money, especially for smaller items, only taking out loans for homes, cars and similar major purchases.