[Song Seungseop's Financial Light] Do Not Lie Down Due to Minor Car Accidents This Year

Minor Car Accident Victims Must Pay Treatment Costs Proportionate to Their Fault
Worker's Haetsalron and Haetsalron Bank Loan Limits Extended for One More Year
Policy Loans Increased, Real Estate Loans for Multi-Homeowners Eased

Editor's NoteFinance is difficult. Confusing terms and complex backstories are intertwined. Sometimes, you need to learn dozens of concepts just to understand a single word. Yet, finance is important. To understand the philosophy of fund management and consistently follow the flow of money, a foundation of financial knowledge is essential. Accordingly, Asia Economy selects one financial issue each week and explains it in very simple terms. Even those who know nothing about finance can immediately understand these 'light' stories that illuminate the 'light' of finance.

[Asia Economy Reporter Song Seung-seop] The new year of 2023, the Year of the Black Rabbit, has dawned. This year, changes in economic and financial systems that affect daily life are anticipated. We inform you about what policies are changing and how.

Minor Car Accidents: Drivers Must Pay Treatment Costs Proportionate to Their Fault

From this year, the number of so-called ‘naillong patients’?those who receive excessive medical treatment for minor car accidents?is expected to decrease. Until now, many have been troubled by people receiving excessive treatment despite not having serious injuries. This was because they received full compensation from the other party’s car insurance during treatment. However, starting in 2023, individuals must share treatment costs according to their degree of fault. If the injury is not severe but requires treatment for more than four weeks, a medical certificate must be submitted to the insurance company.

Additionally, it may become more difficult to receive certain car insurance payments. This is because the payment criteria for upper-class hospital room charges under car insurance are changing. Until now, if a hospital did not have a general ward, patients could use an upper-class room. Although the hospitalization fee was expensive, insurance payments were made. From now on, to have upper-class room charges recognized, the hospital must be a general or university hospital. ‘Clinic-level’ neighborhood hospitals are excluded. This is due to many criticisms that some clinic-level hospitals installed only upper-class rooms to inflate insurance premiums.

Financial Support for Vulnerable Borrowers Becomes More Robust

[Image source=Yonhap News]

Support policies for vulnerable borrowers are becoming more robust. So far, the Worker’s Sunshine Loan and Sunshine Loan Bank, used by low-income and vulnerable groups, have temporarily expanded their limits. The increased limits will continue next year. The Worker’s Sunshine Loan and Sunshine Loan Bank limits have each increased by 5 million KRW, allowing usage up to 20 million KRW and 25 million KRW respectively. The Sunshine Loan 15 limit has also been maintained at the increased amount from 14 million KRW to 20 million KRW.

Loan interest rates are rising, but the Korea Inclusive Finance Agency will partially or fully compensate. The upper limit interest rate for the Worker’s Sunshine Loan will rise by 1 percentage point from 10.5% to 11.5%, but the agency will cover 60% of the increased interest. For the Sunshine Loan 15 and the Special Guarantee for Lowest Credit Borrowers products, the interest rate also rises by 1 percentage point, but the increase will be fully borne by the borrowers. The interest rate and guarantee fee policies are scheduled to be implemented in early January.

Borrowers with low credit scores will not have to pay early repayment fees next year. The Korea Federation of Banks announced that the five major banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?are considering this temporary measure to ease the rapidly increasing interest burden. Specific exemption targets, scope, and implementation timing will be autonomously decided by each bank according to their management situation.

Expanding Policy Loans and Relaxing Regulations on Multiple Homeowners

Archive photo / Photo by Mun Ho-nam munonam@

Loan regulations related to real estate will be somewhat relaxed. For multiple homeowners, the loan-to-value ratio (LTV) in regulated areas has been applied at 0%, making loans practically impossible. The government plans to ease this to 30% within the first quarter. This means that even multiple homeowners can borrow money to buy houses in regulated real estate areas in Seoul and the metropolitan area. The loan limit for housing loans aimed at living stability and rental deposit returns (2 billion KRW) will also be abolished, and mortgage loans for high-priced apartments over 1.5 billion KRW will become possible.

The jeonse loan system will offer more benefits to young adults and early-career workers. This is because the limit for the ‘Youth Customized Jeonse Special Guarantee’ will be expanded. The Korea Housing Finance Corporation (HF) currently operates this guarantee product with a limit of 100 million KRW for non-homeowners under age 34 with an annual income below 70 million KRW. It is a favorable product for youth due to its low jeonse loan interest rate. This limit will be increased from 100 million KRW to 200 million KRW.

Also, a special BoGeumjari loan will be introduced in the first quarter. The special BoGeumjari loan is a policy financial product that integrates the Safe Conversion Loan, Qualified Loan, and BoGeumjari Loan into one. It is characterized by not distinguishing whether the house is newly purchased or refinanced. Benefits will increase with a house price limit of 900 million KRW and a loan limit of 500 million KRW, with no income requirements.