New Personal Loans Must Clearly Disclose Comprehensive Financing Costs Starting in August

Securities Times Reporter Sun Lulu and Qin Yanling

On March 15, the State Administration of Financial Supervision and the People’s Bank of China jointly issued the “Regulations on Clear Disclosure of Total Cost of Personal Loan Business” (hereinafter referred to as the “Regulations”). Within the existing framework of loan information disclosure regulation, the scope, operation methods, and procedures for disclosing interest and fee information for personal loans are detailed. Lenders are required to present borrowers with a clear statement of the total financing cost, transparently disclosing the interest and fee expenses of personal loans.

In recent years, China’s personal loan market has developed rapidly. At the same time, irregularities such as confusing interest and fee charges in personal loan business, especially internet loans, have occurred from time to time. Officials from the State Administration of Financial Supervision and the People’s Bank of China stated that these irregular and non-transparent issues not only easily lead to financial consumer disputes but also affect the effectiveness of interest rate policies and weaken the quality of financial services supporting the real economy. By implementing the clear disclosure of the total financing cost for personal loans, the goal is to make all interest and fee items transparent and open, better protect the legitimate rights and interests of financial consumers, smooth the channels for implementing financial惠民 policies, and promote industry规范 and healthy development.

The Regulations specify that when conducting personal loan business, lenders must display a clear statement of the total financing cost to borrowers. The statement should specify the principal amount of the loan, itemize all interest and fee items charged by the lender and its cooperative institutions, including the charging methods, standards, and entities, and then calculate the annualized total financing cost under normal performance conditions. Additionally, it should list potential costs and their standards and entities in cases of default, such as overdue or misappropriated loans. Apart from the explicitly disclosed cost items, lenders and their partners shall not charge any other interest or fees related to the loan.

Furthermore, to unify operational standards for the disclosure of total financing costs, the State Administration of Financial Supervision and the People’s Bank of China have organized the development of sample disclosure forms for total financing costs, including a sample for installment payment pages in online consumption scenarios. These will be distributed to various loan institutions in appropriate ways. Financial regulatory authorities will guide relevant industry associations and self-regulatory organizations to leverage industry self-discipline, and further refine industry implementation rules based on practical needs.

The Regulations specify that for on-site personal loan transactions, borrowers must sign and confirm the disclosure of total financing costs on the statement before signing the loan agreement or initiating installment payments. For online personal loans, the disclosure must be shown via a pop-up window, with a mandatory reading period, and confirmed by the borrower before signing the loan agreement or starting installments. In online consumption scenarios involving installment payments, the installment fee, default costs, and other relevant information must be clearly and prominently disclosed on the payment page.

To ensure the smooth implementation of the disclosure of total financing costs for personal loans, the Regulations will take effect on August 1, 2026. Officials from the relevant departments stated that a preparation period of about five months has been reserved for implementation, mainly considering the practical needs of lenders and their partners to adjust business processes and systems, modify cooperation agreements, update internal management systems, and conduct policy training. Additionally, according to the principle of “new replacing old,” the new regulations will be strictly followed for new business activities upon implementation.

Starting from 2024, the pilot work for disclosing the total financing costs of corporate loans will be launched, and personal loan businesses will also be required to disclose these costs. Through the comprehensive disclosure form, both enterprises and individuals can more clearly understand the various interest and fee items and the total cost of borrowing, effectively safeguarding their legitimate rights and interests.

(Edited by Qian Xiaorui)

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