Toss Bank Resumes Loans, 'Loan Inquiry' Service Down for Two Days
Low Interest Rates and High Limits... Analysis of Pre-DSR Regulation Demand Impact
[Asia Economy Reporter Kim Jin-ho] As the new year begins and major banks gradually open their loan doors, a large number of actual loan demanders are flocking to the newly established internet bank, Toss Bank. It has attracted those in need of money by offering the lowest interest rates and the highest limits among all banks. In particular, it is analyzed that there is a considerable amount of 'speculative demand' to secure loans in advance ahead of the strengthened borrower-level Debt Service Ratio (DSR) regulations. However, there are also criticisms that Toss Bank has engaged in 'cunning business practices' by exploiting regulatory gaps, as major banks limit unsecured loan limits to within annual income.
According to the financial sector on the 3rd, the loan limit inquiry service of the Toss Bank application (app) was intermittently paralyzed from 11 a.m. on the 1st of this month until the 2nd. This was due to a large influx of actual loan demanders, such as office workers, trying to check their loan limits as unsecured loan operations, which had been suspended since October last year, officially resumed this month.
In fact, Toss Bank's unsecured loan products are gaining word-of-mouth popularity on major financial and real estate communities. This is because loans can be obtained more easily and quickly than at any other bank, with lower interest rates and higher limits. Toss Bank's unsecured loans boast interest rates in the low 3% range annually and a maximum limit of 270 million KRW.
Especially from the 1st to the 2nd of this month, being the last period to which DSR phase 1 applies, demand to secure loans under more favorable conditions seemed higher. This indicates that speculative demand occurred as people anticipated that loan thresholds would continue to rise this year following last year, prompting them to take out loans in advance while possible.
The strengthened DSR regulations, which take effect this year, officially began on this day. Therefore, those who executed loans between the 1st and 2nd of this month were subject to DSR phase 1, but loans executed from this day onward are subject to DSR phase 2. DSR phase 2 applies a 40% DSR to borrowers with total loans exceeding 200 million KRW. The Toss Bank loan limit inquiry service notice also specifies that limits may change from the 3rd due to DSR phase 2.
Toss Bank's unsecured loans are considered aggressive, befitting a new bank, among borrowers. On major financial communities, it is easy to find reviews of loans exceeding one's annual salary. Interest rates are generally rated as reasonable, mostly in the mid to high 3% to 4% range. The low interest rates and high limits clearly attracted actual loan demanders.
However, some criticize Toss Bank for cunning business practices by cleverly exploiting regulatory gaps. From this day, administrative guidance limiting unsecured loan limits to within annual income was implemented, but it is pointed out that Toss Bank engaged in excessively aggressive marketing between the 1st and 2nd. In fact, on financial communities, there are quite a few people who received limits far exceeding their annual salary. Unlike Toss Bank, major commercial banks have been limiting unsecured loan limits to within annual income since the second half of last year.
Meanwhile, consumers hoping to take out loans this year are expected to find internet banks somewhat more advantageous than commercial banks. This is because internet banks are relatively free from the total household debt volume regulations. Major commercial banks appear to have raised loan thresholds, such as quarterly limit settings, even higher since the new year.
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