Home Loan Interest and Fees to Be Mandatory Disclosed Starting August 1st; Prohibition on Collecting Undisclosed Charges

Source: 21st Century Business Herald Author: Guo Congcong

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

Officials from the 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 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 comprehensive financing costs for personal loans and implement a “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. They also explicitly state 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, and effectively protecting the right of financial consumers to be informed, 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”: first, all interest and fee items are included, covering loan interest, installment fees, credit enhancement service fees, late payment penalties, and default-related costs such as misuse 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 personal loan business is involved, the lender 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 propose an “one-table display” operation requirement.

The Regulations require lenders to clearly disclose, item by item, the specific cost items, collection methods, standards (converted to annualized rates), and collection entities when conducting personal loan business. They must also itemize potential costs and collection standards and entities in case of default or misuse. The comprehensive financing cost disclosure table must also clearly state that, apart from the costs already disclosed, 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 contract or proceeding with installment payments.

Online processing: The disclosure table must be displayed via pop-up windows with mandatory reading time, and borrowers must confirm.

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

Strengthening cooperation management and clarifying responsibilities

Given the widespread presence of third-party cooperation agencies in current 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 regarding the disclosure of comprehensive financing costs. Any violations or breaches by cooperation agencies must be promptly corrected. In severe cases, measures such as termination of cooperation, legal recovery of losses, and legal liability should be taken.

The Regulations are linked to 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 interest and fee transparency in internet lending and joint lending models.

Considering the practical needs of lenders to adjust business processes, the Regulations are set to take effect on August 1, 2026, allowing about five months for preparation. They adopt a “new and old” cutoff 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 new loans will achieve interest and fee transparency immediately after the regulation’s implementation.

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 authorities will strengthen supervision and management. They will hold lenders accountable for failing to disclose costs as required, for losing control over cooperation agencies, or causing significant risks or losses, and will work with relevant departments to crack down on illegal intermediary activities in the lending field.

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