General Motors plans to offer car loans in China, where it is the number-two automaker behind Volkwagen AG. The move will help the company sell cars in the world's fastest growing major car market, reported Reuters.

GM was the first automaker to apply to finance vehicles in China. It expects to gain government approval in November. Ford, Volkswagen and Toyota have also applied, according to Bloomberg.

"There is a huge correlation between car financing and car sales," said Christian Weidemann, head of GM's finance arm in China. "Definitely it will improve car sales." Weidemann helped launch GM's finance units in former East Germany and Poland.

GM has experienced remarkable growth in China's auto market. Reuters reported that in the first quarter of 2004, its profits nearly quadrupled to $162 million.

According to Weidemann, about 18 percent of the 4.6 million autos sold last year in China were financed by banks. But government restraints on lending resulted in a 75 percent decrease this year in auto loans by local lenders. Weidemann predicts that by 2010, the number of vehicles financed will rise to about 40 percent of vehicles sold as captive finance arms enter the market.

Auto financing will come with much more risk in China, which lacks credit bureaus and the means to repossess cars from those who default on loans. Fewer consumers will qualify. Verifying a buyer's credit past will be like "hiring a private detective" in that market, according to Weidemann.