New regulations have been released, personal loans will not be allowed to have hidden charges

Finance Expert Lao Wang | New Regulations Implemented: No Hidden Fees on Personal Loans

Have you ever experienced signing a loan agreement that only states a 6% annual interest rate, only to find later additional charges like guarantee fees, service fees, consulting fees, and many other unexpected costs? To address these irregular practices, the State Administration of Financial Regulation and the People’s Bank of China announced new rules on the evening of the 15th, requiring all personal loans to clearly disclose the total financing cost, ensuring transparent financial consumer rights.

The new regulations particularly emphasize protecting consumers’ right to be informed and provide clear guidance for practical implementation.

The term “total financing cost” sounds technical, but it simply refers to the sum of all interest and related fees associated with your loan. The new rules specify that interest rates, installment fees, and additional credit enhancement costs during guarantee processes must be explicitly displayed. If you fail to repay on time, any late payment penalties or other potential fees must also be disclosed in advance. This way, you will know exactly what costs to expect before taking out a loan.

According to the new rules, before obtaining a loan, banks and other institutions must include all related charges in the comprehensive financing cost disclosure form, confirm with the borrower that these are the only costs, and ensure no hidden fees exist.

How to ensure compliance?

• When applying for a loan in person, the borrower must sign the comprehensive financing cost disclosure form to acknowledge understanding.
• For online applications, a pop-up window must forcefully display the disclosure form with a countdown to ensure the consumer reads and understands it.
• For installment payments in online consumption scenarios, the payment page must clearly show installment fees, penalty charges, and other relevant information.

What if the institution claims this regulation only applies to financial institutions and they are intermediaries not bound by the new rules? Don’t believe it! All entities involved in loan services—including banks, microloan companies, online lending platforms, and loan assistance agencies—must comply with these regulations.

Considering that institutions need time to adjust their systems, the new rules will officially take effect from August 1st this year.

Warm reminder: Before applying for a personal loan under the new regulations, ask questions, clarify all fees, and protect your right to be informed.

【Editor: Yu Xiaoyan】

【Source: CCTV News Client】