The Financial Regulatory Administration and the People's Bank of China Jointly Issue "Provisions on Explicitly Stating Comprehensive Financing Costs for Personal Loan Business"

New Personal Loans Must Explicitly State 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 Regulations specify the scope, procedures, and steps for disclosing interest and fee information for personal loans, requiring lenders to present borrowers with a clear statement of the total financing cost, transparently revealing the interest and fee expenses of personal loans.

In recent years, China’s personal loan market has developed rapidly. At the same time, issues such as irregularities and lack of transparency in interest and fee charges, especially in 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 opaque practices 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 a clear disclosure of the total financing cost for personal loans, the aim is to make all interest and fee components transparent and open, better protect the legitimate rights and interests of financial consumers, facilitate the smooth transmission of financial policies benefiting the public, and promote industry regulation and healthy development.

The Regulations specify that when conducting personal loan business, lenders must present borrowers with a clear statement of the total financing cost. This statement should specify the principal amount of the loan, itemize all interest and fee items charged by the lender and its partner institutions, including their collection methods, standards, and responsible entities. Based on this, the annualized total financing cost under normal repayment conditions should be calculated comprehensively. Additionally, the statement should list potential costs and responsible entities in cases of default, such as overdue or misappropriated funds. Apart from the explicitly disclosed costs, lenders and their partners are not permitted to charge any other interest or fees related to the loan.

Furthermore, to standardize the procedures for disclosing total financing costs, the State Administration of Financial Supervision and the People’s Bank of China have developed sample disclosure forms for total financing costs, including a sample for installment payment pages in online consumption scenarios. These will be distributed to various lending institutions in appropriate ways. Financial regulatory authorities will guide relevant industry associations and self-regulatory organizations to leverage industry self-discipline, further refining 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 presented 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 information about installment fees and default costs must be clearly and prominently displayed 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 five-month preparation period has been reserved for implementation, mainly considering the practical needs of lenders and their partners to adjust business processes and systems, amend cooperation agreements, revise internal management policies, and conduct training. Additionally, according to the principle of “new rules apply to new business,” the disclosure requirements will be strictly enforced for new business activities upon the Regulations’ implementation.

Starting in 2024, pilot programs for disclosing total financing costs for corporate loans will be launched, and eventually, the total financing cost will be disclosed for personal loans. Through the comprehensive disclosure form, both enterprises and individuals will be able to clearly understand all interest and fee items and the total cost of borrowing, effectively safeguarding their legitimate rights and interests.

(Edited by: Wen Jing)

Keywords: Loan Personal Loan