Over 200,000 Complaints Point to "Upfront Fees," New Personal Loan Regulations Will Eliminate Online Lending "Ambiguous" Charges

Have you ever experienced this: using financial products “without knowing” and only discovering afterward that multiple fees were deducted?

On March 16, Caixin found on the Heimao Complaint Platform that there are 217,000 complaints with the keyword “cut-head interest” (i.e., pre-deducted interest or fees from the principal at the time of disbursement), including 8,810 complaints with the keywords “unaware + cut-head interest”; 145,000 complaints with “loan + service fee”; and 82,000 complaints with “loan + membership fee.”

To address issues where some institutions hide true costs through various charges and indirectly inflate borrowing costs, regulators have introduced new policies for standardization. On March 15, the National Financial Regulatory Administration and the People’s Bank of China issued the “Regulations on Clear Disclosure of Personal Loan Total Financing Costs” (referred to as the “New Regulations”), which specify that eight types of lending institutions must clearly disclose the total financing costs in three major scenarios, eliminating “invisible fees.” The New Regulations will take effect on August 1, 2026.

In fact, regulatory rectification has been ongoing. Over the past month, authorities have held two meetings with a total of 11 platforms, focusing mainly on the language used in lending promotions and information disclosure standards. According to a report by Zero One Think Tank, typical violations that indirectly raise overall borrowing costs include four types: forced bundling of charges, hidden service fees, disguised charges through scenarios like equipment leasing or installment malls, and membership benefits set up as disguised fees.

Economist and new finance expert Yu Fenghui told Caixin that personal loan regulation policies are moving toward greater transparency, standardization, and enhanced consumer rights protection. In the long run, these policies will help purify the market environment, promote healthy development of the financial services industry, and increase public trust in the financial system.

Mandatory Disclosure of Personal Loan Interest and Fees

On March 15, the National Financial Regulatory Administration and the People’s Bank of China jointly issued the “Regulations on Clear Disclosure of Total Financing Costs for Personal Loan Business,” requiring eight types of financial institutions—including commercial banks, rural cooperative banks, rural credit cooperatives, auto finance companies, consumer finance companies, corporate group finance companies, trust companies, and microloan companies—to display a clear total financing cost disclosure form to borrowers in three scenarios: on-site personal loan processing, online personal loan processing, and installment payments in online consumption scenarios. These regulations will be implemented from August 1, 2026.

The total financing cost refers to all interest and related fees borne by the borrower, including but not limited to loan interest, installment fees, credit enhancement service fees, and potential costs such as late payment penalties or default-related charges.

Specifically, for on-site personal loan processing, the borrower must sign and confirm the total financing cost disclosure form before signing the loan agreement or initiating installment payments.

For online personal loan processing, the institution must display the total financing cost disclosure form via a pop-up window, set a mandatory reading period, and require the borrower to confirm before signing the loan agreement or starting installments.

In online installment payment scenarios within consumption contexts, the platform must prominently display the principal, installment plan, service fees, the fee-paying entity, the annualized total financing cost under normal performance, and the potential costs and standards in case of default. It must also clearly state that no other interest or fees will be charged beyond those explicitly disclosed.

Meetings with 11 Lending Platforms

It is noteworthy that regulators also provide targeted guidance to platform operators. On March 13, the National Financial Regulatory Administration disclosed that it had held meetings with five platforms—Fenqile, Qifu Borrow, Niwo Dai, Yixianghua, and Credit Fei—regarding issues in internet lending operations.

The meetings required platform operators to strictly regulate marketing practices, clearly disclose loan product interest and fee information, comply with personal information protection laws, conduct lawful collection activities, improve customer complaint mechanisms, and effectively protect consumers’ legal rights.

Earlier, on February 13, the regulator announced that it had jointly held meetings with the Market Supervision Administration and the People’s Bank of China concerning six travel platforms—Ctrip (TCOM.US), Amap, Tongcheng Travel (00780.HK), Fliggy, Hanglv Zongheng, and Qunar Travel—to address issues in their cooperation with financial institutions.

These companies were asked to standardize marketing, avoid misleading language, clearly disclose the names of lending institutions and credit products, and explicitly remind borrowers to borrow rationally. They were also instructed to streamline complaint channels, respond promptly to disputes, improve service quality, and safeguard consumers’ rights.

Accelerating Standardization of Lending Practices

According to Zero One Think Tank, there are four typical violations that artificially inflate “overall borrowing costs”:

1. Forced bundling of charges. When issuing loans, platforms require consumers to purchase memberships, credit enhancement, or debt management products; otherwise, they refuse to disburse or increase interest rates, with related fees not disclosed as part of the total financing cost.

2. Hidden service fees. Fees such as management fees, consulting fees, or handling charges are collected before or during repayment under various names but are not fully disclosed to consumers. Some fees are deducted upfront, resulting in the actual amount received being much lower than the borrowed amount.

3. Disguised charges through scenarios like equipment leasing or installment malls. Some platforms conduct “rent-to-buy” or “installment consumption” under the guise of leasing or shopping, charging high rent or installment fees that significantly increase the effective annualized rate, often exceeding regulatory limits, without clear disclosure of fee structures or interest rate conversions.

4. Fees disguised as membership benefits. Consumers are required to recharge memberships or purchase rights to enjoy lower interest rates or higher credit limits, with membership fees non-refundable and no clear link between membership benefits and loan interest rates.

Yu Fenghui emphasized that personal loan regulation policies are evolving toward greater transparency, standardization, and stronger protection of consumer rights. The recent regulations and targeted meetings demonstrate the authorities’ commitment to creating a fair competitive environment and safeguarding consumers’ right to information and choice.

She believes that the new policies will significantly improve industry compliance, enabling consumers to better understand the costs involved in borrowing and make more informed, rational decisions. In the long term, these measures will help purify the market, promote healthy development of the financial services sector, and strengthen public trust in the financial system.