Starting August 1st, Personal Loan Interest and Fees Will Be Mandatory Disclosed! Expert: Focus on Internet Lending

Cover News Reporter Dai Yun

On March 15, the State Administration for Financial Regulation and the People’s Bank of China jointly issued the “Regulations on Clear Disclosure of Total Financing Costs for Personal Loan Business” (hereinafter referred to as the “Regulations”), which will take effect on August 1, 2026. The goal is to maintain order in the personal loan market, protect the legitimate rights and interests of financial consumers, and improve the quality and efficiency of financial services.

Overall, the Regulations refine the scope, operational methods, and procedures for disclosing interest and fee information in personal loan business within the existing regulatory framework for information disclosure. They require lenders to present a clear comprehensive financing cost disclosure form, transparently disclose personal loan interest and fee costs, and effectively implement the disclosure requirements for personal loan business interest and fee information.

A bank staff member counts banknotes. Photo courtesy of Xinhua News Agency

01.

What is the “comprehensive financing cost” of personal loan business?

In recent years, China’s personal loan market has developed rapidly, playing a positive role in promoting personal consumption, business operations, and supporting steady and healthy economic growth. At the same time, issues such as irregular and non-transparent disclosure of interest and fee information in personal loan business have emerged, which can lead to financial consumer disputes, affect the effectiveness of interest rate policies, and weaken the quality of financial services to the real economy.

To accurately and comprehensively reflect the actual financing costs borne by borrowers in personal loan business, the Regulations include all costs related to personal loans in the comprehensive financing cost, including but not limited to the interest, installment fees, credit enhancement service fees, and other financing costs paid by borrowers under normal performance, as well as late payment penalties and other contingent costs in case of default. Borrowers should pay attention to the comprehensive financing cost when applying for personal loans, fully understanding the cost items, collection methods, standards, annualized rates, collection entities, and default responsibilities.

Dong Ximiao, Chief Economist of Zhaolian and Deputy Director of the Shanghai Financial and Development Laboratory, told Cover News that the Regulations will explicitly cover the entire personal loan business chain. This is particularly important and necessary given the evolution of personal loan models and the deep-seated issues exposed in practice.

He explained that currently, especially in internet loan models, a single loan often involves multiple entities such as commercial banks (and consumer finance companies), loan facilitation platforms, guarantee companies, and insurance companies. In the past, some cooperative institutions (like facilitation platforms and guarantee companies) often charged high fees in addition to interest, under the guise of “information consulting fees,” “guarantee fees,” “service fees,” “membership fees,” etc. This resulted in borrowers seeing a lower apparent interest rate (loan interest rate), but actually bearing a higher overall financing cost (including all third-party fees).

“Therefore, including the fees charged by cooperative institutions into the borrower’s cost calculation is timely and necessary. It will help prevent these institutions from engaging in ‘hidden operations’ outside the interest rate, fully address issues of undisclosed financing costs, and better protect the rights and interests of financial consumers,” Dong Ximiao said.

02.

What operational requirements do the Regulations propose?

Specifically, the Regulations set out operational requirements for three scenarios: on-site personal loan processing, online personal loan processing, and online consumer installment payments.

The Regulations require that for on-site personal loan applications, borrowers must sign and confirm the comprehensive financing cost disclosure form before signing the loan agreement or initiating installment payments. For online personal loan applications, the disclosure form must be displayed via a pop-up window, with a mandatory reading period, and confirmed by the borrower before signing the loan agreement or starting installments. For online consumer installment payments, the relevant information must be clearly displayed on the payment page of the order.

Specifically, the comprehensive financing cost disclosure form should specify the loan principal amount, itemize all interest and fee items charged by the lender and its partners, including collection methods, standards, and collection entities. It should also calculate the annualized comprehensive financing cost under normal performance. Additionally, it should list contingent costs and their standards and collection entities in cases of default or misappropriation.

Furthermore, the Regulations specify that in online consumer installment scenarios, the payment page must prominently display the loan principal, installment plan, service fees, collection entities, the annualized comprehensive financing cost under normal performance, and any contingent costs and their standards in default situations.

Both the comprehensive financing cost disclosure form and the online payment page must clearly state that, apart from the disclosed costs, the lender and its partners will not charge any other interest or fees related to the loan.

Officials from the relevant departments of the two ministries stated that, to promote standardized operation of comprehensive financing cost disclosure, they have prepared sample disclosure forms and examples of the disclosure display on online installment pages. They will also guide industry associations such as the China Banking Association, China Internet Finance Association, and the Market Interest Rate Pricing Self-Regulatory Mechanism to leverage industry self-discipline to support the implementation of these requirements.

03.

Experts: Focus on Internet Loans

Dong Ximiao pointed out that most personal loans issued by commercial banks, consumer finance companies, and other legitimate financial institutions have relatively low and transparent interest and non-interest costs. Therefore, the focus of the comprehensive financing cost disclosure should be on internet loans, including personal loans offered through cooperation between financial institutions and facilitation platforms, as well as personal lending products launched by internet platforms.

He noted that overall, internet loan participants are numerous, and their fee structures are complex, with significant issues of opacity. These are key areas that require “penetration” and clear disclosure. The focus of disclosure should be on non-interest costs, including but not limited to mortgage fees, guarantee fees, insurance premiums, matchmaking service fees, intermediary fees, and membership rights fees. Whether credit card installment products should be included in the scope of personal loan comprehensive financing cost disclosure requires further clarification.

The reporter also learned that recently, the Financial Regulatory Authority held interviews with five platforms—Fenqile, Qifu Borrow, Niwo Loan, Yixianghua, and Credit Fei—regarding issues related to internet facilitation services.

The interviews emphasized that platform operators working with financial institutions must strictly regulate marketing practices, clearly disclose interest and fee information, protect personal information, conduct collections lawfully and compliantly, establish effective complaint mechanisms, and safeguard the legitimate rights and interests of financial consumers.