Determining the true cost of a loan—whether it's a daily interest rate of 0.05% or a monthly rate of 1%—can be confusing. Some loans advertise a nominal annual rate as low as 8%, yet the final blended cost often exceeds 20% or even 30%. To address the hidden fees that have long plagued consumer borrowers, a new financial regulation directly impacting people's finances will take effect on August 1st.
This regulation, issued jointly by the National Financial Regulatory Administration and the People's Bank of China in March, leaves only a few days before its official implementation. Currently, major banks and consumer finance companies are accelerating system upgrades to comply with the requirement for transparent fee disclosure. The rule mandates that financial institutions provide borrowers with a comprehensive financing cost disclosure table, clearly outlining all loan charges and bringing hidden costs to light. With this regulation in place, the rules for disclosing personal loan fees will continue to improve, curbing common practices of vague pricing and hidden charges, and making the true cost of personal borrowing clear at a glance.
Several Institutions Complete Fee Disclosure Reforms
Since the regulation was issued on March 15th, the industry has had a nearly five-month preparation window, now entering its final week. The regulation requires commercial banks, consumer finance companies, and auto finance companies to fully disclose the comprehensive financing cost when extending personal loans. As the implementation date approaches, some institutions have already completed their business adjustments.
On July 20th, Xiamen Bank announced that from August 1st, all new personal loans, including residential mortgages, personal consumption loans, and personal business loans, will comply with the comprehensive financing cost disclosure requirements. For offline business, borrowers and co-borrowers must sign a "Personal Loan Comprehensive Financing Cost Disclosure Table" when signing loan documents. For online channels, the table will be displayed via a pop-up for customer confirmation, ensuring customers are fully aware of all loan costs.
On July 23rd, Jilin Bank published its personal loan comprehensive financing cost disclosure table and the upper limit for such costs on its official website. It set the annualized comprehensive financing cost for personal loans under normal repayment conditions at no more than 18%. The disclosure table clearly lists cost items, collection methods, and the collecting entity.
On July 24th, Hengfeng Bank issued a notice, detailing that it would fully disclose the loan principal amount, cost items, collection methods, annualized levels, and collecting entities through a disclosure table. Routine interest and fees are annualized per regulatory requirements, and potential fees for scenarios like overdue payments or misappropriation of funds are also listed.
Interviews by reporters indicate that many institutions have completed internal system overhauls and updated the display of personal loan financing costs during the loan signing process, though they have not yet released public announcements. Some institutions plan to release announcements at the end of July, while others will switch to the new disclosure model on August 1st concurrently.
Loup Feipeng, a researcher at the Postal Savings Bank of China, stated that the biggest challenge in the reform is the system restructuring of existing products and ensuring consistency of display across multiple channels, especially for complex scenarios involving installment payments and credit enhancement. Banks need to balance compliance requirements, customer experience, and customer conversion. They must optimize the front-end display logic to present comprehensive costs intuitively, enhance digital operations, win long-term trust through transparency, and strengthen product value and service differentiation.
Three Major Breakthroughs Reshape the Industry
The core logic of the regulation is to refine the scope, methods, and procedures for disclosing personal loan interest and fee information within the existing regulatory framework. It uses a single comprehensive financing cost disclosure table to cover all charges, clearly revealing the cost of personal loans and fundamentally eliminating information asymmetry in the credit market. Industry experts view this regulation as achieving multiple breakthroughs.
The first breakthrough is comprehensive coverage of fee items, including loan interest, installment fees, credit enhancement service fees, overdue penalties, and misappropriation compensation. The second is comprehensive coverage of lending institutions, applying to all types of lenders, including banks, consumer finance companies, auto finance companies, trust companies, and micro-loan companies. The third is establishing a hard rule of "single-table display," setting a clear boundary for fees. Financial institutions and their partners are prohibited from charging any loan-related fees not listed in the disclosure table.
For borrowers, the most direct change is that the benchmark for financing decisions will shift from nominal interest rates to the statutory comprehensive annualized cost. Previously, many users were attracted by low daily interest rates or low monthly fees, only to discover after signing that the true cost had significantly increased after adding guarantee fees, service fees, and membership fees. Under the new rules, all costs must be clearly disclosed in writing before signing. Borrowers can then compare the true annualized levels of different credit products horizontally, rationally choose suitable products, and effectively reduce irrational borrowing and excessive debt.
Tian Lihui, Dean of the Institute of Financial Development at Nankai University, believes that the implementation of the new rules will not directly push up actual interest rates, but will completely end the marketing model of "attracting with nominal interest rates and harvesting with hidden fees." The extensive model of profiting from traffic arbitrage will become unsustainable. Loan-assisting platforms and high-interest micro-loan companies that rely on information asymmetry will be forced to exit the market more quickly, while institutions with independent risk control and low-cost funding advantages will gain market share. The industry will shift from "scale expansion" to "quality cultivation." Transparent pricing will force institutions to improve their real service capabilities. After a short-term adjustment period, market concentration will tilt towards compliant entities, forming a healthier competitive environment.
Under the new rules, the previous model of institutions relying on splitting fees and using low nominal interest rates to attract customers is unsustainable, and the industry's competitive landscape is undergoing a fundamental shift. Tian Lihui believes that large banks will be the biggest beneficiaries. Their cost-of-funds advantage and proprietary capabilities will directly translate into pricing competitiveness. Consumer finance companies, with their relatively high average funding costs, will see their space for high-interest rate products squeezed. Joint-stock banks can partially offset the pressure through their ability to design scenario-based products. Regional small and medium-sized banks face a dual dilemma: they lack the national reach to spread compliance costs, and their customer base quality and risk control capabilities are insufficient to maintain profitability under transparent pricing.
Loup Feipeng also stated that by comparison, large banks and top-tier joint-stock banks will benefit more. Their own pricing transparency and low compliance costs will amplify their competitive advantages. "The most significant pressure will fall on small and medium-sized banks and loan-assisting institutions that rely on external traffic and outsourced risk control. Their original model of 'low-interest rate attraction—high-fee monetization' has been undercut by the policy. If they cannot build independent customer acquisition and precise pricing capabilities within 3 to 6 months, their market share will be eroded by leading institutions," Tian Lihui said.