Borrowed 63,000 yuan, paid insurance premiums of nearly 20,000 yuan. How did the loan come bundled with insurance?

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South China Financial Media Reporter Lin Hanyi, Intern Xu Ruoxuan

“If I hadn’t started checking old bills one by one, I might never have known that over the past few years, I’ve been paying for insurance I’ve never seen before.”

Recently, 21st Century Business Herald received a tip from consumer Mr. Zhao, who reported that during an online loan process, he was simultaneously charged high insurance fees linked to the loan, even though he had never purchased insurance, signed any contracts, verified his identity, or received any policy or notification from the insurance company.

Complaints about “loan bundling insurance” are not uncommon on online platforms. Some borrowers report being forced to buy credit guarantee insurance without their knowledge or under default selection, significantly increasing overall financing costs. Industry insiders point out that credit guarantee insurance was originally intended to provide credit enhancement support for borrowers, but in some practices, it has been involved in forced bundling and disguised charges.

Recently, regulatory authorities issued the “Regulations on Clear Disclosure of Total Financing Costs for Personal Loan Business,” which has reignited concerns about the legality of bundled sales of loans and insurance.

Invisible Policies Falling from the Sky

From April 2022 to January 2023, Mr. Zhao applied for and obtained loans from multiple online lending platforms due to cash flow needs.

According to his account, the loan disbursement process was very fast and smooth. However, during reconciliation and review of his personal debt history, he discovered that in multiple loans, he was inexplicably charged insurance fees simultaneously. As the nominal “policyholder,” Mr. Zhao was completely unaware of these eight policies.

He recalls that throughout the entire loan application process, there were no clear or independent options for insurance purchase, nor was there a separate confirmation step for whether to buy insurance. “I have never signed any insurance contracts, policies, or authorization documents by hand or electronically. I also never received any confirmation calls, texts, or other identity verification.” He emphasized.

Moreover, after the premiums were actually deducted, he received no policy documents or notifications. It was only years later, through detailed review of his historical bills, that he discovered these hidden charges.

Mr. Zhao’s experience is not unique.

On the Black Cat Complaint platform, there have been over 7,000 complaints related to “loan bundling insurance,” involving banks, insurance companies, consumer finance companies, and small loan companies.

One user posted a bill: a loan of 63,000 yuan was forcibly bundled with insurance, with a monthly insurance fee of 554.4 yuan, over 36 installments, totaling an additional 19,944 yuan in insurance fees.

Several other borrowers also reported being forced to purchase credit guarantee insurance without their knowledge or under default selection, greatly exceeding their expected total financing costs.

Additionally, a borrower on Black Cat Complaint reported that when applying for a 150,000 yuan loan, they were forced to buy guarantee insurance with a premium of 24,480 yuan. The salesperson did not inform them, and the platform system was down, making it impossible to issue an invoice.

If consumers are unaware, how is the insurance process completed, and how are the premiums deducted?

It is understood that the insurance quietly bundled in these online loan scenarios is mainly credit guarantee insurance, originally designed to provide “credit enhancement.” According to regulatory requirements, like other insurance, purchasing insurance is entirely voluntary. Before buying, full disclosure must be made, and insurance companies or online platforms must separately inform users about the insurance function, responsibilities, and default impacts. Real-name verification is required at the time of purchase, and an electronic policy must be issued after independent underwriting by the insurance company.

However, in multiple cases above, these disclosure requirements and procedures were hidden within the loan process, effectively concealed. Even the insurance fees were not paid directly to the insurance company by the individual but were deducted through the platform or third-party payment channels. As a result, consumers believed they only applied for a loan and were unaware they had also purchased insurance.

Raising Overall Financing Costs

Yang Xiang, senior advisor and lawyer at Beijing Hongfan Law Firm, told 21st Century Business Herald that in some practical operations, certain credit guarantee insurances have been controversially transformed from “credit enhancement” to “revenue channels,” with some even involving forced bundling and disguised high-interest charges.

“This not only violates the principles of good faith and fairness in civil and commercial law, deprives customers of their autonomous choice rights, but also causes the overall financing costs for borrowers to be excessively high, contradicting the essence of inclusive finance,” Yang said.

The Beijing Financial Court has formed a research team to analyze nearly five years of guarantee insurance cases across the country, as well as cases handled by the Beijing Financial Court over the past three years, from regional, level, subject amount, and case closure perspectives.

The court found that current financing guarantee insurance businesses generally face issues such as undisclosed bundling, forced bundling, disguised high-interest charges, and providing guarantees for subprime loans, which could pose systemic financial risks.

In May 2020, the former China Banking and Insurance Regulatory Commission issued the “Regulations on Supervision of Credit Insurance and Guarantee Insurance Business” (hereinafter referred to as the “Regulations”), which clarified that guarantee insurance refers to insurance based on credit risk arising during contract performance. Financing credit insurance refers to insurance that provides protection against credit risks arising during the performance of financing contracts such as loans and leasing.

In financing guarantee insurance, the policyholder is the obligor in the contract, the borrower, and the insured is the rights holder in the contract, the lender.

Currently, financing guarantee insurance mainly exists in personal consumer loan performance guarantee insurance, bank commercial loan guarantee insurance, internet financial platform loan guarantee insurance, and auto finance performance guarantee insurance.

The characteristic of financing guarantee insurance is to assist credit enhancement, helping underserved long-tail customers obtain financing, and is an important part of the inclusive finance ecosystem.

However, when lenders implement “bundled sales” of related insurance during credit loan issuance, requiring borrowers to purchase corresponding guarantee insurance from affiliated insurance companies, with additional charges such as interest, premiums, and penalty fees, some of which exceed reasonable limits, raising concerns about infringing on financial consumer rights.

On March 15, 2026, the China Banking and Insurance Regulatory Commission and the People’s Bank of China jointly issued the “Regulations on Clear Disclosure of Total Financing Costs for Personal Loan Business,” requiring all financial institutions engaged in personal loan business to clearly disclose the total financing costs to borrowers before lending, including but not limited to loan interest, installment fees, credit enhancement service fees, and potential costs under default scenarios such as late payment penalties.

Officials from relevant departments of the China Banking and Insurance Regulatory Commission and the People’s Bank explained that the regulations were developed in response to the rapid growth of the personal loan market, which has played a positive role in promoting personal consumption and business operations. However, some institutions have engaged in non-standard and non-transparent disclosure of interest and fee information, which can lead to financial disputes, affect the effectiveness of interest rate policies, and weaken the quality of financial services to the real economy.

In addition, the regulatory authorities have introduced multiple departmental rules and normative documents to regulate undisclosed and forced bundling behaviors.

As early as September 2020, the former China Banking and Insurance Regulatory Commission issued the “Guidelines for Pre- and Post-Operation Management of Financing Insurance Business,” which explicitly required insurance companies to safeguard consumers’ right to information and autonomous choice, prohibiting forced bundling or cross-selling of other insurance products against the policyholder’s will.