'Haetsalron15' with 2%P Lower Interest Rate to Launch from the 7th of Next Month

Introducing High-Interest Refinancing Product 'Safety Net Loan'

[Asia Economy Reporter Kim Jin-ho] In line with the reduction of the statutory maximum interest rate from 24% to 20% starting next month on the 7th, a new loan product called 'Haetsalron15' with an interest rate 2 percentage points lower and a safety net loan for refinancing high-interest loans exceeding 20% annual interest rate will be launched.

The Financial Services Commission announced on the 27th that it will reorganize the policy-based financial supply system for low-income earners in preparation for the potential reduction in credit loans for low-credit borrowers due to the maximum interest rate cut.

First, starting from the 7th of next month, reflecting the interest rate reduction following the maximum interest rate cut, the existing Haetsalron17 will be changed to Haetsalron15, and the interest rate will be lowered by 2 percentage points from 17.9% to 15.9%. Additionally, to strengthen incentives for normal repayment, the annual interest rate reduction for faithful repayment will be expanded by 0.5 percentage points. The final interest rate upon faithful repayment is 9.9%.

The eligible users are those with an annual income of 35 million KRW or less, or those in the bottom 20% credit score bracket with an annual income of 45 million KRW or less. The loan limit is 7 million KRW, and the repayment period is structured as equal principal and interest installments over 3 or 5 years.

The loan can be accessed in a one-stop process from guarantee to loan at 15 major commercial banks. Six banks including KakaoBank and Shinhan Bank also offer online loan services through their own mobile apps without requiring a visit.

A refinancing product for loans exceeding 20% interest rate will also be temporarily supplied. Eligible borrowers are those who have been using high-interest loans exceeding 20% annual interest rate for more than one year before the maximum interest rate reduction date (July 7) or whose loan maturity is within 6 months.

The interest rate will vary between 17% and 19% depending on customer characteristics. The loan limit is up to 20 million KRW within the balance of the existing high-interest loan used.

After applying for a guarantee through the Korea Inclusive Finance Agency app or the Integrated Support Center for Low-Income Finance, loans can be obtained from 14 banks nationwide. The supply scale is expected to be around 300 billion KRW until 2022.