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 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 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 and has played a positive role in promoting personal consumption and business operations. However, some institutions have issues with non-standard and non-transparent fee and interest disclosures, 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 the comprehensive financing cost for personal loans and implement a “Personal Loan 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 Regulations focus on the key aspect of fee and interest information disclosure, standardizing market order from the source, and effectively protecting the right of financial consumers to be informed, making personal loan costs transparent and open.

Covering all fee and interest 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 fee and interest 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 lenders.

In other words, as long as a personal loan business is involved, the lending institution 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 a “one-table display” operation.

The Regulations stipulate that when conducting personal loan business, lenders must itemize and clearly disclose to borrowers the specific cost items, collection methods, standards (converted to annualized rates), and collection entities. They must also itemize potential costs and collection standards and entities in case of default or misappropriation. The comprehensive cost disclosure table must also clearly remind that, apart from the 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 cost disclosure table before signing the loan agreement or installment plan.

Online processing: The disclosure table must be displayed via a pop-up window with a mandatory reading period, and the borrower 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 management of partner institutions and clarifying responsibilities

Given the widespread presence of third-party partner institutions 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 partners must clearly specify responsibilities and obligations regarding the disclosure of comprehensive costs. Any violations or breaches by partners must be promptly corrected, and in serious cases, measures such as termination of cooperation, legal recovery of losses, and legal liability should be taken.

The Regulations are linked to the earlier 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 fee transparency in internet-assisted 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 the industry with a buffer period and ensures that new loans will achieve fee transparency immediately after 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 partner institutions, or causing significant risks or losses, and will 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 of financial consumers to be informed. “In the past, consumers mainly focused on interest rates but overlooked various service and guarantee fees, leading to actual financing costs being much higher than expected. The new rules require clear disclosure on 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.”