More transparent! The overall financing costs of personal loans will be clearly disclosed to borrowers.

Xinhua News Agency, Beijing, March 15 (Reporter Zhang Qianqian, Li Yanxia) The National Financial Regulatory Administration and the People’s Bank of China jointly released the “Regulations on Clear Disclosure of Total Financing Costs for Personal Loan Business” on March 15, requiring lenders to present borrowers with a clear disclosure form of total financing costs, transparently revealing the interest and fee costs of personal loans to promote “sunshine” and “transparency” in all loan-related charges.

Officials from the relevant departments of the Regulatory Administration and the People’s Bank explained that in recent years, China’s personal loan market has developed rapidly. At the same time, issues such as irregularities and lack of transparency in the disclosure of loan fee information have emerged, which can easily lead to financial consumer disputes, affect the effectiveness of interest rate policies, and weaken the quality and efficiency of financial services to the real economy. Therefore, it is necessary to establish regulatory rules to promote industry standardization and healthy development.

To accurately and comprehensively reflect the actual financing costs borne by borrowers in personal loan transactions, the regulations stipulate that all costs related to personal loans should be included in the total financing costs. This includes, but is not limited to, loan interest, installment fees, credit enhancement service fees, and other financing costs under normal performance, as well as overdue penalty interest and contingent costs in case of default.

The regulations adhere to a comprehensive coverage of lending institutions, applicable to banks, consumer finance companies, auto finance companies, trust companies, micro-lenders, and other types of lending entities.

The regulations require lenders to clearly disclose, when conducting personal loan business, each specific cost item, collection method, collection standard (converted to an annualized rate), and the collecting entity to the borrower. They should also explicitly remind borrowers that, apart from the disclosed cost items, the lender and its partners will not charge any other interest or fees related to the loan.

In practical operations, the regulations specify that for on-site personal loan transactions, borrowers must sign and confirm the comprehensive financing cost disclosure form before signing the loan agreement or proceeding with installment payments. For online personal loan transactions, the comprehensive financing cost disclosure form must be displayed via a pop-up window, with a mandatory reading period, and confirmed by the borrower before signing the loan agreement or proceeding with installments. In online installment payment scenarios, relevant information about total financing costs must be clearly and prominently displayed on the payment page.

The regulations will take effect on August 1 of this year. During the transition period, new and existing businesses must strictly follow the disclosure requirements for total financing costs according to the new rules. (End)