Farewell to Hidden Fees! Personal Loan Comprehensive Financing Costs to Be Clearly Disclosed, Targeting Internet-Assisted Lending Chaos

Regulatory authorities are targeting issues of opaque and non-compliant disclosure of personal loan interest and fee information through new regulations, platform interviews, and risk alerts.

“Borrowed 8,000 yuan on the ‘Credit Fly’ app, repaid in 12 equal monthly installments of 803.65 yuan each. Upon checking the billing details, I found an additional service fee each month, with a rough calculation of an annualized interest rate reaching 42.56%. When trying to view the specific loan contract terms, I was told ‘system upgrade, unable to view.’” Mr. Li recently told reporters that the Credit Fly internet lending platform concealed contract and interest rate information beyond limits.

Investigations reveal that many borrowers like Mr. Li are confused about being charged various fees such as membership fees, service fees, guarantee fees, consulting fees, and collateral fees by internet lending platforms. In recent years, in the internet loan sector, borrowers not only bear interest costs but also face numerous opaque financing fees involving multiple fee-charging entities. Some fees are layered, leading to high financing costs for certain personal loans, and such complaints have remained high over the years.

In this context, the National Financial Regulatory Administration and the People’s Bank of China recently jointly issued the “Regulations on Clear Disclosure of the Total Cost of Personal Loan Business,” aiming to address the lack of transparency and standardization in the disclosure of interest and fee information. The regulations require lenders to provide borrowers with a clear “Total Cost Disclosure Form,” listing each interest and fee item, collection method, standard, and the involved parties, explicitly including all types of interest and fees in the comprehensive financing cost. Lenders must lawfully and reasonably determine the annualized level of the total financing cost.

Hidden Fees in Assistance Lending Drive Up Financing Costs

In recent years, internet assistance lending platforms have repeatedly been involved in violations such as forced bundling of membership, service, and guarantee fees.

Mr. Li disclosed that at the end of last year, he borrowed 8,000 yuan via the “Credit Fly” app operated by Shanghai Xiaotu Network Technology Co., Ltd., with a 12-month equal principal and interest repayment plan, paying 803.65 yuan monthly.

He found that each month, he paid 756.43 yuan in principal and interest, plus a service fee of 47.22 yuan, totaling 9,643.80 yuan annually, with an initial estimated annual interest rate of 42.56%. If repaid early, borrowing 8,000 yuan for one month, the repayment amount was shown as 9,270.55 yuan. When trying to view the contract in the app, a message said “system upgrade, unable to view contract.”

After reporting this to customer service, he was told the system issues prevented contract provision and that he should escalate the issue, but no further feedback was given within the promised timeframe.

Mr. Li believes that the platform’s behavior is not merely a service flaw but involves systemic infringement on consumers’ rights, using “system upgrade” as a pretext to long-term obstruct contract viewing and download, effectively concealing key transaction information and depriving users of their right to know and fair trading. The platform deliberately blurs the total financing cost by splitting “principal and interest” from “service fees,” a typical method to evade interest rate regulation and potentially illegal high-fee charges. Mr. Li demands that Credit Fly provide him with a complete, authentic loan contract and a clear written explanation of all fees, especially the basis, calculation method, and legal or contractual references for the “service fee.” As of the time of reporting, Credit Fly had not responded.

In fact, many borrowers like Mr. Li are confused about being charged various fees by assistance lending platforms. Investigations show that these platforms often introduce guarantee fees for added credit enhancement and “referral” service fees. In extreme cases, a single loan can be layered through multiple guarantees and referral channels, with multiple guarantee and service fees charged repeatedly. Searches for membership and guarantee fees on the Black Cat Complaint platform have yielded hundreds of thousands of complaints involving multiple banks, consumer finance companies, and assistance lenders.

Dong Ximiao, Chief Economist at Zhaolian, told reporters that some personal loans, especially internet loans, include certain non-interest costs beyond the principal and interest. These non-interest costs mainly refer to financing expenses such as collateral fees, guarantee fees, insurance, and intermediary service charges, involving multiple fee entities, with many opaque and layered charges, resulting in high financing costs for some personal loans.

The reporter’s tests found that high-interest online loans that circumvent the 24% rate cap still frequently appear. For example, a consumer installment mall charges a premium well above market prices, combined with a nominal annualized rate of 24%, making the overall borrowing cost high. Sometimes, goods are not shipped at all; instead, the platform’s buyback feature allows one-click buyback, converting “goods payments” into installments, but the repayment amount is far above the market price.

Another covert high-interest loan model involves lenders hiding behind multiple fake apps, using loan marketplaces for referral, providing short-term, high-interest loans to high-risk borrowers. These products often involve guarantee companies charging high “guarantee fees” to evade interest rate caps, with loan cycles around one month but multiple repayment installments, resulting in effective annualized rates of 300%–500%.

Five Assistance Lending Platforms Summoned for Interview

In response to issues in internet assistance lending, the National Financial Regulatory Administration recently summoned the operating entities of five platforms: Fenqile, Qifu Borrow, Niwo Loan, Yixianghua, and Credit Fly. An official involved in assistance lending told reporters that most of these platforms offer products with an annualized rate exceeding 24%, and many are frequent complainants on online platforms, making them key targets for regulation.

The summons require that platform operators, when collaborating with financial institutions to conduct lending, must strictly regulate marketing practices, clearly disclose interest and fee information, protect personal data, conduct lawful collection, improve complaint resolution mechanisms, and effectively safeguard consumers’ rights.

Alongside the summons, the regulator also issued case studies and risk alerts. For example, Mr. Ma applied for installment payments through a shopping mall platform but found he needed to upgrade to a specific membership level to qualify. He did not carefully read the service agreement or notices and overlooked the clause “no guarantee of successful installment.” He checked the box to activate paid membership, but ultimately, he neither borrowed money nor bought goods. Despite multiple refund requests, the platform refused, citing “agreement acceptance” and “no refunds for activation.”

This case highlights the importance of consumers being alert to bundled charges. When applying for paid services online, they should carefully read service agreements and notices, understand key terms such as scope, cancellation, refund rules, and billing cycles, and avoid blindly clicking “Agree” or “Quick Processing” buttons, which could lead to unintentional activation of additional services or permissions.

Senior researcher Su Xiaorui of Su Xi Zhi Yan told reporters that the first regulatory interview with platforms following the new assistance lending rules marks an important milestone. It reflects a shift in regulatory focus from licensed financial institutions to the internet platforms partnering with them, initiating a comprehensive, systemic governance effort across the industry.

Su Xiaorui pointed out that the content of the interviews—covering marketing, fee disclosure, information protection, compliance collection, and complaint mechanisms—primarily centers on protecting financial consumers. Past regulatory actions in consumer finance suggest that consumer protection has become a top priority in the internet assistance lending industry. It also signals that consumer protection is not only the responsibility of licensed financial institutions but also a core obligation of assistance lending platforms, which must comply fully in all stages—pre-loan, during, and post-loan—to ensure lawful operation. Only by developing independent customer acquisition, risk control, and collection capabilities can licensed institutions reduce over-reliance on assistance lending, ensuring healthier, sustainable growth in the long term.

Clear Disclosure of Total Cost Promotes Transparency in Assistance Lending

Amid frequent incidents of covert fees and opaque “black box” lending practices, the Financial Regulatory Administration and the People’s Bank of China recently jointly issued the “Regulations on Clear Disclosure of the Total Cost of Personal Loan Business” (the “New Personal Loan Regulations”). These specify that lenders must display a “Total Cost Disclosure Form” to borrowers when conducting personal loans. The form should specify the principal amount, itemize each interest and fee item, collection method, standard, and involved parties, and calculate the annualized total financing cost under normal repayment conditions. It should also list potential costs and involved parties in cases of default or misappropriation.

The regulations require lenders to clearly disclose the maximum total financing cost for personal loans at their physical outlets and official websites. For on-site transactions, borrowers must sign the disclosure form before signing the loan agreement or initiating installment payments. For online loans, the disclosure form must be displayed via a mandatory pop-up, with a reading time set, and confirmed by the borrower before signing or proceeding. The new regulations will take effect from August 1, 2026.

Regarding interest rates, a senior official from the People’s Bank stated that when disclosing the total financing cost, all interest and fees borne by the borrower under normal conditions should be converted into an annualized rate using the internal rate of return method, as per PBOC Announcement [2021] No. 3, and summed to determine the annualized total financing cost.

Dong Ximiao believes that setting an upper limit on the total financing cost and forcing reductions is not advisable. The core of the “disclosure” requirement is transparency, which can help guide costs downward to some extent. However, under market-based interest rate reforms, loan costs should be negotiated between lenders and borrowers. In practice, costs vary among borrowers. When personal loan rates are at historic lows, regulators should avoid directly setting specific costs or imposing mandatory reduction timelines.

Wang Pengbo, a senior analyst at Bocom International, told reporters that this move signals a continued effort to regulate the personal loan market and enforce disclosure responsibilities. The key breakthrough is to include all related costs in the annualized total financing cost calculation, providing full coverage of interest and fees and standardizing cost measurement. This prevents institutions from splitting or hiding costs, making costs comparable and verifiable, and promoting more transparent pricing mechanisms.

Wang Pengbo noted that the disclosure of the total financing cost upper limit will directly influence the pricing strategies and marketing approaches of banks, consumer finance companies, and internet assistance lenders. Institutions need to unify and regulate all fee items, avoid splitting or hiding costs, and strengthen management of partner fees. From product design to rate setting and marketing, all processes should be compliant. This will help shift the industry from aggressive customer acquisition to transparent, standardized operations, facilitate regular supervision, and maintain the long-term stability of the personal loan market.