Hyundai Grandeur Base Model Credit Card Installment Interest Rates 6.6~9.9%
Down from 11% Early This Year... Impact of Stabilizing Corporate Bonds
[Asia Economy Reporter Minwoo Lee] The auto installment loan interest rates, which had sharply risen since the end of last year, are slightly declining. This is interpreted as a gradual reflection of the stabilization of the interest rates on specialized credit finance bonds.
According to the Credit Finance Association on the 23rd, the range of auto installment interest rates from six major card companies?Shinhan, Samsung, KB Kookmin, Hana, Woori, and Lotte?is 6.6~9.9% (based on Hyundai Grandeur, 30% cash purchase ratio, 36-month loan period). Compared to the early-year peak of over 11%, the upper limit has entered the single-digit range for the first time this year. The lower limit also showed the 6% range for the first time. About half of the companies, including Hana Card (6.6%), Woori Card (6.7%), and Lotte Card (6.9%), offered the lowest interest rates in the 6% range.
There is also a view that the regulatory pressure to lower interest rates, spreading throughout the financial sector centered on banks recently, has influenced auto financing. However, card companies dismissed this as a mistaken analysis. A card company official explained, "Bank loans and card loans mainly target low-income people and are loans taken out in areas essential for daily life. Automobiles are not yet a necessity, and auto finance users generally have a certain purchasing power, so this is far from the regulatory pressure."
The industry sees this as an effect appearing with a time lag as bond market interest rates stabilize. According to the Bond Information Center of the Korea Financial Investment Association, the interest rate on specialized credit finance bonds (AA+, 3-year maturity), a major funding source for card and capital companies, was 4.196% as of the previous day. On the 14th, it dropped to 4.044%, approaching the 3% range. Compared to the surge to 6.088% in early November last year due to bond market tightening, it has fallen by about 2 percentage points. An industry official said, "The speed at which the specialized credit finance bond interest rate is reflected depends on how much of the already procured funds are used up. If auto purchase demand increases, newly procured funds will be injected, which can lower installment finance interest rates."
However, installment finance interest rates at capital companies still exceed 10%. In the case of Meritz Capital, the top interest rate under the same conditions still reaches 14.3%. BNK Capital (12.7%), Lotte Capital (11.5%), and Hyundai Capital (10%) also maintain double-digit upper limits. An industry official explained, "Capital companies do not have merchant fees unlike card companies, so there is a cost difference in loans compared to card companies, and the two industries apply interest rates differently, causing this gap. Capital companies apply the same interest rate by car model to customers who meet their product usage conditions regardless of credit rating, whereas card companies apply different interest rates based on customer credit ratings even for the same installment finance product and car model."
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