More Transparent! Personal Loan Comprehensive Financing Cost Will Be Disclosed to Borrowers

According to Xinhua News Agency Beijing, March 15 — The National Financial Regulatory Administration and the People’s Bank of China jointly released the “Regulations on Clear Disclosure of Total Financing Costs for Personal Loan Business” on March 15. The regulations require lenders to present borrowers with a clear disclosure form of total financing costs, making the interest and fee costs of personal loans transparent and open.

Officials from the relevant departments of the Financial Regulatory Administration and the People’s Bank of China explained that in recent years, China’s personal loan market has developed rapidly. At the same time, there have been issues with irregularities and lack of transparency in the disclosure of interest and fee information for personal loans, which can lead to financial consumer disputes, affect the effectiveness of interest rate policies, and weaken the quality of financial services supporting the real economy. Therefore, it is necessary to establish regulatory rules to promote industry standardization and healthy development.

To accurately and comprehensively reflect the actual financing costs borne by borrowers in personal loan transactions, the regulations include all costs related to personal loans in the total financing costs. This includes, but is not limited to, interest, installment fees, credit enhancement service fees, and other financing costs under normal performance, as well as late payment penalties and potential costs in case of default.

The regulations stipulate that all types of lending institutions—such as banks, consumer finance companies, auto finance companies, trust companies, and micro-lenders—must be covered.

Lenders are required to clearly disclose, when offering personal loans, each specific cost item, collection method, fee standard (converted to an annualized rate), and the entity collecting the fee. They must also explicitly remind borrowers that, apart from the disclosed costs, neither the lender nor its partners will charge any other interest or fees related to the loan.

In terms of implementation, for on-site personal loan services, borrowers must sign and confirm the comprehensive financing cost disclosure form before signing the loan agreement or proceeding with installment payments. For online personal loan services, the disclosure form must be displayed via a pop-up window, with a mandatory reading period, and borrowers must confirm before signing the loan agreement or proceeding with installments. For installment payments in online consumer scenarios, the relevant information must be prominently and clearly displayed on the payment page.

The regulations will take effect on August 1 of this year. For new and existing businesses, the disclosure of total financing costs must be carried out strictly according to the new requirements from the date of implementation.

Editor: Liu Jiani