In August, Personal Loans Will Enter an Era of Cost Transparency—What Changes Will the Industry See?

What survival challenges do AI, small and medium-sized lending institutions face?

On the surface, the loan interest rate is less than 24%, but in reality, they bear a comprehensive cost of over 40%. This hidden high-interest phenomenon behind guarantee fees and membership fees is now being strongly regulated.

On the evening of March 15, the National Financial Regulatory Administration and the People’s Bank of China jointly issued the “Regulations on Clear Disclosure of the Total Cost of Personal Loan Business” (hereinafter referred to as the “Regulations”), which will implement the “Comprehensive Financing Cost Disclosure Table” starting August 1. This means that consumers will be able to clearly see all costs, including interest and credit enhancement fees, before confirming a loan. The gray operations of loan platforms that previously used information asymmetry and fee splitting to hide true loan costs will be eliminated.

From the “New Regulations on Loan Assistance” setting red lines, to intensive investigations and interviews since the second half of last year, and now the requirement for a single table display of interest and fees in the “Regulations,” regulators are gradually closing every “hidden door” in the personal loan sector with a combination of measures.

Several industry insiders told Yicai that under the dual pressures of tightening funds and strict regulatory scrutiny, the industry is experiencing a transition anxiety. Previously considered a new blue ocean, installment shopping malls and car mortgage loans have recently been embroiled in public opinion issues, while returning to refined operations means long-term investment and internal competition. The industry is entering a new round of reshuffling.

Interest and fee items will be displayed in a single table

The “Regulations” require the implementation of a “Personal Loan Cost Disclosure Table,” which mandates that when conducting personal loan business, lenders must clearly disclose to borrowers each specific cost item, collection method, standard (converted to an annualized level), and the collecting entity. They must also explicitly remind that, apart from the disclosed cost items, neither the lender nor its partners will charge any other interest or fees related to the loan. The content emphasizes four principles: full coverage of interest and fee items, comprehensive coverage by loan institutions, single table display, and prior disclosure and confirmation. (See “Clear Pricing to Eliminate Hidden Charges, Personal Loan Interest and Fee Disclosure Under Strong Regulation”)

The Regulations will officially take effect on August 1, with about five months left for preparation.

This regulation targets the disguised usury phenomena existing in the market. Yicai has reported multiple times since 2023 that some loan platforms appear to have an annualized interest rate below 24%, but through guarantee fees, pledge fees, membership fees, and credit enhancement service fees, they covertly increase the loan cost, with some reaching as high as 40% to 126%. (See “Financial 3.15 | The Hidden ‘Lending Empire’: Paying Guarantee and Membership Fees? Interest Rates Up to 126%”, and “Financial 3.15 | Changing ‘Licensing’ and Layered Flowing with Hidden Guarantee Fees: What Role Do Guarantee Institutions Behind Loan Platforms Play?”)

“At the core, this new regulation consolidates all related costs into the annualized comprehensive financing cost calculation,” said Wang Pengbo, an analyst at Botong Consulting, to Yicai. Generally, compared to previous disclosures of nominal interest rates, this approach achieves full coverage of interest and fee items and standardizes cost calculation, closing the loopholes for institutions to split fees and hide true costs. This makes loan costs comparable and verifiable, promoting more transparent pricing mechanisms.

Wang Pengbo further pointed out that the new regulation can force institutions to reduce the occurrence of consumers unknowingly taking loans and being charged extra fees, strengthening consumers’ right to know and autonomous decision-making.

Regulatory measures to close the “hidden doors” of interest and fee manipulation

In fact, the issuance of the “Regulations” was anticipated within the industry. Since earlier this year, regulators have repeatedly interviewed relevant institutions, requiring clear disclosure of loan product interest and fee information. In January, the National Financial Regulatory Administration held talks with six travel platforms including Ctrip, Amap, Tongcheng Travel, Fliggy, TravelSky, and Qunar; on March 13, it interviewed five platform operators including Fenqile, Qifu Borrow, Niwo Loan, Yixianghua, and CreditFly.

Before these intensive interviews, the regulatory framework was already accelerating.

By early 2025, the National Financial Regulatory Administration issued the “Notice on Strengthening the Management of Commercial Bank Internet Loan Assistance Business and Improving Financial Service Quality” (hereinafter “New Loan Assistance Regulations”). The notice proposed several key requirements: banks should fully and accurately understand the actual charges of credit enhancement agencies to ensure that the comprehensive financing costs paid by borrowers for single loans comply with relevant regulations such as the “Supreme People’s Court Opinions on Further Strengthening Financial Trial Work.” If the borrower claims that the interest, compound interest, penalty interest, default damages, and other fees claimed by the lender significantly deviate from actual losses, and the total interest rate exceeds 24% annually, the claim for reduction should be supported. This means that any part of the total loan interest exceeding 24% annually is not protected by law, directly targeting gray operations like “dual financing guarantees” in the previous loan assistance market.

Subsequently, some platforms attempted to bypass the interest rate cap by launching “rights-based” fee models. For example, some linked membership rights fees directly to loan amounts, with single charges reaching thousands of yuan, triggering numerous consumer complaints. On July 15, 2025, Yicai learned that regulators recently sent questionnaires to several licensed consumer finance companies, focusing on how membership rights fees impact the overall financing costs for borrowers. By late July, industry insiders reported that the Beijing Financial Supervision Bureau issued a draft notice to local banking institutions, explicitly prohibiting disguised increases in comprehensive financing costs through membership or value-added rights.

Later, some institutions tried new models like “24% + notarization” or “24% + insurance,” but due to market conditions and business characteristics, these did not scale up. The current “Regulations” further implement the principle of “full coverage of interest and fees,” explicitly including interest, installment fees, credit enhancement fees, overdue penalties, and misuse penalties into the scope of comprehensive financing cost regulation. This is a continuation and deepening of the regulatory approach.

Impact on the industry

Yicai learned from industry sources that with the new regulations, the loan assistance industry faces dual pressures on funding and pricing, leading to further industry segmentation.

On the funding side, banks and other financial institutions are tightening cooperation. The Regulations specify that lenders should strengthen management of partner institutions, promptly correct violations, and, in serious cases, terminate cooperation, seek legal recovery, and pursue legal responsibility.

In this context, multiple banks closely cooperating with loan platforms have begun internal investigations, centralizing approval authority at head offices, and setting quantitative indicators for customer complaints, such as complaint volume and resolution rate.

Wang Pengbo told Yicai that the disclosure requirement of the upper limit of comprehensive financing costs will directly influence the pricing strategies and marketing models of consumer finance companies and internet loan platforms. Institutions need to unify and standardize all interest and fee items, avoiding splitting fees or hiding costs, and strengthen management of partner institutions’ charging behaviors.

Li Liang (pseudonym), a mid-tier industry insider, revealed to Yicai that since last year, many banks partnering with his institution have suspended loans to loan platforms with disguised high-interest risks. Small and medium-sized loan institutions mainly offering over 24% interest are finding it increasingly difficult to survive. Even those still lending have seen their funding costs rise by about 3 percentage points compared to last year, with peaks reaching a 5 percentage point increase.

“This year, it might get even stricter. Funding channels for small and medium-sized loan institutions are shrinking,” Li said.

On the pricing side, the “24% + X” model has become nearly impossible to sustain. Previously explored models like “24% + rights,” “24% + notarization,” or “24% + insurance” are difficult to scale under strict regulation, and profitability is gradually shrinking.

Wang Pengbo stated that the disclosure of the upper limit of comprehensive financing costs will directly impact pricing strategies and marketing approaches, requiring institutions to unify and regulate all interest and fee items, avoiding splitting or hiding costs.

Li Liang told Yicai that, under this background, loan platforms are generally in a wait-and-see mode, trying to find new models that can both increase profit margins and attract more customers. Currently, popular directions include installment malls and car mortgage loans. However, these models are also at the center of recent public opinion storms. Meanwhile, some institutions are shifting focus to refined operations and risk control, aiming to expand profit margins through detailed management and building autonomous full-process capabilities.

(This article is from Yicai)