9. Guarantee liabilities

The movement of guarantee liabilities during the years ended December 31, 2017, 2018 and 2019 are as follows:

RMB


	As of	Provision at				As of
	January 1,	the inception		Released on	Contingent	December 31,
	2017	of new loans	Net payout(1)	expiration	liability	2017
Xiaoying Credit Loan	38,368,513	797,431,715	(411,239,134)	(19,172,658)	109,086,588	514,475,024
Xiaoying Housing Loan	7,298,609	23,970,437	(1,169,476)	(21,410,597)	—	8,688,973
Internet Channel	2,477,791	28,924,659	(23,731,237)	(4,741,527)	—	2,929,686
Others	52,516,539	7,437,265	(111,092,188)	(3,278,354)	73,492,088	19,075,350
Total	100,661,452	857,764,076	(547,232,035)	(48,603,136)	182,578,676	545,169,033

RMB


	As of	Provision at				As of
	January 1,	the inception		Released on	Contingent	December 31,
	2018	of new loans	Net payout(1)	expiration	liability	2018
Xiaoying Credit Loan	514,475,024	5,884,134	(667,658,887)	(15,691,880)	182,289,328	19,297,719
Xiaoying Housing Loan	8,688,973	1,773,180	(378,694)	(8,482,977)	—	1,600,482
Internet Channel	2,929,686	—	(12,890,754)	(365,456)	10,326,524	—
Others	19,075,350	—	(42,688,268)	(135,000)	23,747,918	—
Total	545,169,033	7,657,314	(723,616,603)	(24,675,313)	216,363,770	20,898,201

RMB


	As of	Provision at				As of
	January 1,	the inception		Released on	Contingent	December 31,
	2019	of new loans	Net payout(1)	expiration	liability(2)	2019
Xiaoying Credit Loan	19,297,719	—	(6,333,472)	(3,366,501)	289,211	9,886,957
Xiaoying Housing Loan	1,600,482	184,036	97,593	(1,752,115)	—	129,996
Internet Channel	—	—	—	—	7,458,350	7,458,350
Others	—	—	—	—	—	—
Total	20,898,201	184,036	(6,235,879)	(5,118,616)	7,747,561	17,475,303

USD


	As of	Provision at				As of
	January 1,	the inception		Released on	Contingent	December 31,
	2019	of new loans	Net payout (1)	expiration	liability(2)	2019
Xiaoying Credit Loan	2,771,944	—	(909,746)	(483,568)	41,543	1,420,173
Xiaoying Housing Loan	229,895	26,435	14,018	(251,676)	—	18,672
Internet Channel	—	—	—	—	1,071,325	1,071,325
Others	—	—	—	—	—	—
Total	3,001,839	26,435	(895,728)	(735,244)	1,112,868	2,510,170

(1)

Net payouts represent the amount paid to ZhongAn upon borrowers’ default net of the amount subsequently collected from the borrower if they paid back the loan.

(2)

The Group recognized a contingent liability of RMB7,458,350 (US$1,071,325) relating to expected default loans referred by a cooperated Fintech channel partner who experiences business difficulties. In order to maintain the reputation among investors, the Group decided at its sole discretion to reimburse investors if the channel partner fails to fulfill its obligation to make the reimbursement.

The following table presents the maximum potential undiscounted future payments by product, remaining weighted average contractual loan term, and estimated net default rates as of December 31, 2018 and 2019, respectively:


	Maximum potential
	undiscounted future	Remaining weighted
	payment	average contractual	Estimated net
As of December 31, 2018	(RMB)	term (Month)	default rate
Xiaoying Credit Loan	61,705,508	18.02	16.57	%
Internet Channel	2,004,234,932	8.19	0.00	%
Xiaoying Housing Loan	282,830,247	3.60	0.60	%
Other products	1,427,397	3.67	0.00	%
Total	2,350,198,084


	Maximum potential	Maximum potential
	undiscounted future	undiscounted future	Remaining weighted
	payment	payment	average contractual	Estimated net
As of December 31, 2019	(RMB)	(USD)	term (Month)	default rate
Xiaoying Credit Loan	20,314,823	2,918,042	13.07	15.7	%
Internet Channel (1)	1,399,671,106	201,050,175	0.43	—
Xiaoying Housing Loan	21,666,185	3,112,153	7.9	0.60	%
Other products	—	—	—	—
Total	1,441,652,114	207,080,370

(1)

Relates to loans referred from third party channel cooperators that has back to back guarantee arrangements with the Group. As such, estimated net default rate is 0% as of December 31, 2019.

As of December 31, 2018 and 2019, the maximum potential undiscounted future payment that had been collateralized by real estate was estimated to be RMB0.28 billion and RMB21.67 million (US$3.11 million)respectively.

From August 2017, the Group entered into a new arrangement with a third party asset management company to obtain a back to back guarantee for an identified portfolio of Xiaoying Housing Loan products. The third party asset management company has the commitment to compensate the Group for the actual losses incurred on any loan within the portfolio upon default by the borrower and will acquire the creditor's rights and the associated collateral of the underlying loan from the Group upon settlement. The Group pays 0.6% of the portfolio amount as service fee to the asset management company for providing such services and accounts for as part of origination and servicing cost over the term of the asset management agreement. The Group ceased cooperation with the asset management company in 2018.

From 2018, the Group entered into a series of arrangements with various external asset management companies to provide guarantee service for an identified portfolio of loans facilitated on the Company’s platform and engages directly with the borrowers and investors on the platform. Throughout the loan term, borrowers pay the guarantee fee directly to the asset management companies. Upon the default of the borrower, the asset management companies directly compensate the investors and obtains the creditor’s rights of the loans. As a result, no guarantee liabilities have been recorded by the Group for the loan portfolio that are guaranteed by the asset management companies.

The Group co-operates with selected Fintech and other financial companies by connecting the borrowers referred by those companies to investors on the Group's platform. Though it is the selected companies who provide credit enhancements on the loans facilitated to the borrowers, since 2019, the Group voluntarily provides guarantee service to the investors from its platform for reputational maintenance, if any indication of operational deterioration is found among these selected companies.