Loan Ads Must Clearly Show Annual % Rate to Protect Borrowers, China’s Central Bank Says
Liao Shumin
DATE:  Apr 01 2021
/ SOURCE:  Yicai
Loan Ads Must Clearly Show Annual % Rate to Protect Borrowers, China’s Central Bank Says Loan Ads Must Clearly Show Annual % Rate to Protect Borrowers, China’s Central Bank Says

(Yicai Global) April 1 -- The annual percentage rates of all loans must be clearly marked on all advertising materials, from websites and mobile apps to posters, to avoid misleading borrowers, the People’s Bank of China said yesterday.

The APR rate must consist of all costs payable by the customer each year including interest rates and service charges to prevent any hidden costs, it added. The new rules apply across the board and include car financing, mortgages, micro loans and other forms of personal borrowing, it added.

This is an important approach to strengthen the management of internet loans, online news outlet The Paper reported, citing consumer finance expert Su Xiaorui.

Some financial institutions and internet platforms do not fully disclose the costs of borrowing, which harms the healthy development of the consumer financial market, Su said.

There can be a big difference between the advertised rate, or the nominal interest rate, and the APR, which includes any additional costs or fees, said Han Yifeng, an internet finance expert. For a one-year loan, the difference can be as much as 10 percent, he said.

The new rules adjust how the interest rate is shown to borrowers and will not have much impact on how the interest is calculated, another industry insider said.

Editor: Kim Taylor

Follow Yicai Global on
Keywords:   Loan Interest Rate