[Asia Economy Yeongnam Reporting Headquarters Reporter Yeo Jong-gu] DGB Daegu Bank will launch a 10-year maturity household credit loan product that extends the term of installment repayment credit loans from a maximum of 5 years to 10 years starting June 2.
Earlier in March, the term for mortgage loans was also extended from a maximum of 35 years to 40 years.
When the loan maturity is extended like this, the principal and interest payments that customers must pay monthly decrease, resulting in a lower Debt Service Ratio (DSR).
For example, an office worker A (annual income 50 million KRW) who already holds a 200 million KRW mortgage loan with a 40-year term at an annual interest rate of 4.00% (equal principal repayment) can get an additional credit loan at an interest rate of 5.0%. If the maturity is set to 5 years, the credit loan amount is about 29 million KRW. However, if the maturity is extended to 10 years, it becomes possible to borrow up to about 48 million KRW, increasing the limit by approximately 19 million KRW.
In particular, from July this year, the DSR regulation will be further strengthened, and if the total loan amount exceeds 100 million KRW, a DSR of 40% will be applied, which is expected to further reduce loan limits.
Accordingly, while longer maturity loan products may be advantageous for customers taking out loans, they should carefully consider the fact that the total interest to be paid increases.
Consultation and application for the newly launched 10-year maturity medium- to long-term credit loans are available at all DGB Daegu Bank branches.
A DGB Daegu Bank official said, “We launched the medium- to long-term credit loan product to reduce customers’ principal and interest repayment burdens and expand their options, thereby enhancing customer convenience. As a leading regional bank, DGB Daegu Bank will strive to improve customer satisfaction and financial services through various initiatives.”
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
