Personal Loan Interest and Fees Mandatory Disclosure Starting August 1st, Prohibition on Undisclosed Charges

On March 15, the National Financial Regulatory Administration and the People’s Bank of China jointly issued the “Regulations on Clear Disclosure of the Total Cost of Personal Loan Business” (hereinafter referred to as the “Regulations”), which specify detailed requirements for the scope, operation methods, and procedures of fee and interest disclosures for personal loans. The Regulations consist of 11 articles and will officially take effect on August 1, 2026.

Officials from relevant departments of the Financial Regulatory Administration and the People’s Bank of China stated that in recent years, the personal loan market has developed rapidly, playing a positive role in promoting personal consumption and business operations. However, some institutions have issues with non-standard and non-transparent disclosure of interest and fee information, which can easily lead to financial consumer disputes, affect the effectiveness of interest rate policies, and weaken the quality of financial services to the real economy.

Therefore, the Regulations clarify the scope of the comprehensive financing cost for personal loans and promote the “Personal Loan Comprehensive Financing Cost Disclosure Table,” requiring all financial institutions engaged in personal loan business to clearly and fully disclose all interest and fees to borrowers before lending, and explicitly remind that “except for the costs already disclosed, no other interest or fees will be charged.”

Industry experts say that this time, the Regulations focus on the key link of interest and fee information disclosure, standardizing market order from the source, effectively protecting the right to information for financial consumers, and making all interest and fees for personal loans “sunshine” and “transparent.”

Covering all interest and fee items, eliminating “invisible charges”

According to the Regulations, the comprehensive financing cost of a personal loan refers to all interest and fees borne by the borrower related to the loan, including but not limited to loan interest, installment fees, credit enhancement service fees, and potential costs such as late payment penalties in case of default.

The Regulations achieve two “full coverage” principles: first, all interest and fee items are included, covering loan interest, installment fees, credit enhancement service fees, late payment penalties, and default penalties; second, all types of lending institutions are covered, including commercial banks, rural cooperative banks, rural credit cooperatives, auto finance companies, consumer finance companies, corporate group finance companies, trust companies, microloan companies, and other lending entities.

In other words, as long as a financial institution conducts personal loan business, it must disclose all normal performance costs and potential default costs “on the table.”

Based on clarifying the scope of comprehensive financing costs, the Regulations further require an “itemized disclosure” operation.

The Regulations stipulate that when conducting personal loan business, lenders must clearly disclose to borrowers each cost item, collection method, standard (converted to an annualized rate), and collection entity. They must also itemize potential costs and collection standards and entities in case of default or misappropriation. The disclosure table must also clearly remind that, apart from the already disclosed costs, the lender and its partners will not charge any other interest or fees related to the loan.

To ensure borrowers fully understand the financing costs before signing, the Regulations specify specific requirements for different scenarios:

• On-site processing: Borrowers must sign to confirm on the comprehensive financing cost disclosure table before signing the loan agreement or proceeding with installment payments.

• Online processing: The disclosure table must be displayed via a pop-up window with a mandatory reading period, and the borrower must confirm.

• Online installment in consumer scenarios: The loan principal, installment plan, service fees, collection entities, the annualized comprehensive financing cost under normal performance, and potential costs and standards in default must be clearly displayed prominently on the payment page.

Strengthening cooperation management and clarifying responsibilities

Regarding the widespread presence of third-party cooperation agencies in personal loan business (such as marketing, customer acquisition, guarantee, and credit enhancement agencies), the Regulations explicitly require lenders to strengthen management of these partners. Agreements with cooperation agencies must clearly specify responsibilities and obligations for implementing the disclosure requirements, and corrective measures must be taken promptly if violations or defaults occur. In severe cases, measures such as termination of cooperation, legal recovery of losses, and legal liability should be pursued.

The Regulations align with the previously issued “Notice on Strengthening the Management of Internet Lending Business by Commercial Banks and Improving Financial Service Quality” (Jingui [2025] No. 9), reflecting ongoing regulatory attention to transparency in fee and interest disclosures under internet-assisted and joint lending models.

Considering the practical needs of lenders to adjust business processes, the Regulations set the effective date as August 1, 2026, allowing about five months for preparation. They also adopt a “new and old” separation principle—new businesses must strictly follow the new regulations, while existing businesses are not affected. This arrangement provides a buffer period for the industry and ensures that newly launched businesses can achieve fee transparency immediately after the regulations take effect.

The Regulations state that the Financial Regulatory Administration and its dispatched agencies, the People’s Bank of China and its branches, and local financial management agencies will strengthen supervision and management. They will hold lenders accountable for failing to disclose costs as required, for mismanagement or loss of control over cooperation agencies, and for causing significant risks. They will also work with relevant departments to crack down on illegal intermediary activities in the lending sector.

Industry experts say that the issuance of these Regulations is a substantive measure to protect the right to information for financial consumers. “In the past, consumers mainly focused on interest rates but overlooked various service, guarantee, and other fees, leading to actual financing costs far higher than expected. The new rules require clear disclosure in a table, itemized listing, and annualized totals, truly allowing borrowers to see exactly how much they will pay, effectively safeguarding their legal rights and interests.”