'100 Million Won Living Expense Loan' for Those with 'Credit Score Below 700 and Annual Income Under 35 Million Won'

Financial Services Commission to Implement 'Small Livelihood Loans' on 27th to Prevent Illegal Private Loans
If You Borrow 500,000 KRW Initially, Monthly Interest is 6,416 KRW
Loan Maturity Can Be Extended Up to 5 Years by Paying Interest Only

On the 9th, officials were busy moving in the corridor of the Financial Services Commission at the Government Seoul Office in Jongno-gu, Seoul, where financial authorities decided to include mortgage loans (Judaemdae) in the 'debt refinancing' infrastructure scheduled to launch in May by the end of the year. Financial authorities explained that they aim to reduce the interest burden on mortgage loans by establishing a debt refinancing platform that allows users to compare financial sector loan interest rates at a glance and switch loans easily. Photo by Dongju Yoon doso7@

The Financial Services Commission will provide a 'small living expense loan' of up to 1 million KRW to individuals with a credit score in the bottom 20% or lower (KCB 700 points, NICE 744 points) and an annual income of 35 million KRW or less, starting from the 27th. The Commission stated, "We will provide small living expenses immediately on the same day to people who are at risk of illegal private loan damage because they find it difficult to receive support not only from the formal financial sector but also from existing policy-based low-income financial support."

Loans provided on the same day by visiting the Integrated Low-Income Financial Support Centers in person

According to the Financial Services Commission on the 21st, the maximum support limit for the 'small living expense loan' is 1 million KRW. After an initial loan of 500,000 KRW, additional loans can be obtained if interest is paid faithfully for more than six months. If the purpose of funds such as hospital bills can be verified, up to 1 million KRW can be borrowed even at the initial loan. The Commission explained, "The so-called 'durable goods loan' (a loan to rescue oneself) is made in small amounts around 500,000 KRW, and considering that the mode of loan amounts on online loan advertisement sites is 400,000 KRW, the scale was set accordingly." The average interest rate estimated by the Korea Financial Investment Association is 414%, and this is a low-income financial system to prevent people from turning to private lenders due to lack of 500,000 KRW.

The small living expense loan can be used by visiting one of the 46 Integrated Low-Income Financial Support Centers nationwide in person. After counseling on the borrower's situation, such as the purpose of expenditure and willingness to repay, the loan is executed on the same day. The loan can be repaid at any time without a prepayment penalty. If interest is paid steadily, the maturity can be extended up to five years at the borrower's request.

The supply scale for this year is 100 billion KRW, and the monthly interest for an initial loan of 500,000 KRW is about 6,416 KRW. If interest is paid without fail for six months, the monthly interest burden will be reduced to 5,166 KRW, and after an additional six months, it will be further reduced to 3,916 KRW as an incentive. The budget for this system was created with donations of 50 billion KRW each from banks and the Korea Asset Management Corporation.

Anyone who meets the credit and income requirements, including those who are delinquent or have no income, can receive support. However, loans may be denied to those registered with the Korea Credit Information Services for delinquent national or local taxes, loan or insurance fraud, or other financial disorder information. If a delinquent borrower applies for a small living expense loan, the loan will be supported on the condition that debt adjustment is carried out.

Beware of voice phishing impersonating the system... All loan product advertisements via text or phone calls are false

The Financial Services Commission stated, "During loan counseling, depending on the applicant's situation, we plan to strengthen counseling linked to various self-support programs that have not been accessed before, such as debt adjustment, welfare, and employment support."

Accordingly, counseling will also include debt adjustment, welfare systems, and start-up support. For debt adjustment, one-stop comprehensive debt adjustment counseling applications are supported through credit recovery committee counselors working together within the Integrated Low-Income Financial Support Centers. Welfare systems are linked through the social security information system connected to more than 3,500 administrative welfare centers nationwide, and in 11 centers, local government welfare officers will conduct one-stop counseling directly. Start-up support provides guidance on about 160 employment support programs and offers job placement and interview coaching through consultations with professional career counselors, along with operating employment success allowance support.

Meanwhile, victims of illegal private loans can use the 'free support project for debtor representatives.' Lawyers affiliated with the Korea Legal Aid Corporation respond to collection activities by illegal private lenders on behalf of low-income people exposed to illegal debt collection risks.

To prevent initial congestion in this system, a reservation system for counseling schedules from Monday to Friday of the following week will operate every Wednesday to Friday. The first counseling reservation application period is from the 22nd to the 24th of this month and can be made online (sloan.kinfa.or.kr) or by phone (Low-Income Financial Call Center, no area code, 1397). Those who apply will receive counseling according to the reserved schedule from the 27th to the 31st of the following week.

The Financial Services Commission emphasized the need for special caution as cases of text messages or voice phishing impersonating policy-based low-income financial services have recently increased. A Commission official said, "There are cases where the logo of the Korea Inclusive Finance Agency is forged or policy-based low-income financial products like 'Haetsal Loan' are impersonated to approach people and induce high-interest loans through phone consultations," adding, "The Korea Inclusive Finance Agency does not advertise loan products via text messages or phone calls at all."