If You Need Quick Cash... Remember 'This' When Using Loan Services

#Mr. A, who urgently needed cash, borrowed 5 million won from a private loan company. However, Mr. A met the credit rating and annual income requirements to use policy financial products. Unaware of these policy financial products, Mr. A ended up paying an additional interest rate more than 5 percentage points higher than the policy financial product.

#Mr. B saw a loan advertisement and was informed that '00 Bank's Saessal Loan is available, but consulting fees apply.' After borrowing 14 million won, he transferred 1.5 million won to that company. This is an illegal fee.

Cases of low-credit, low-income citizens who urgently need cash borrowing from illegal loan companies and suffering from high interest rates and illegal debt collection are continuously increasing. Because of this, the Financial Supervisory Service recently released '10 Precautions to Remember When Using Loan Companies,' also known as the Ten Commandments for Using Loan Companies.

First, it is important to check whether you can use policy financial products for low-income citizens through the Korea Inclusive Finance Agency. The Korea Inclusive Finance Agency and financial companies provide policy loans for low-credit borrowers, such as 'Special Guarantee for Lowest Credit Borrowers' and 'Small Living Expense Loans.' It is necessary to confirm availability through the Korea Inclusive Finance Agency call center or the Integrated Support Center for Inclusive Finance.

Also, you must verify whether the loan company is registered. If you urgently need cash and use unregistered illegal private loans, you may suffer from high interest rates and illegal debt collection. You must use loan companies registered with the Financial Services Commission or local governments.

After inquiring about loans from registered loan companies, if you receive calls from phone numbers not registered in the 'Registered Loan Companies Integrated Inquiry,' you should not answer or hang up. Be cautious as registered loan (brokerage) companies may illegally provide borrowers' personal information to illegal companies or it may be leaked through hacking.

Do not leave personal information such as your name or contact details on loan-related websites or social networking services (SNS) whose sources are unverified. Companies that request body photos, contacts of acquaintances, or installation of mobile phone applications (apps) are illegal and you should stop dealing with them.

There are also important points to remember when borrowing. Charging loan interest rates exceeding 20% per annum is illegal under civil and criminal law, and contracts for interest exceeding this rate are invalid. All payments related to loans, including gratuities, discounts, fees, deductions, and overdue interest, are considered interest. If interest exceeding 20% per annum is demanded, you can report it to the police or the Financial Supervisory Service.

Carefully check loan conditions and always request a loan contract. Do not open bank accounts or mobile phones and hand them over, nor entrust your ID card to loan companies or others.

If you suffer from illegal debt collection, actively use the 'Debtor Representative System' and report to the police or the Financial Supervisory Service. To prevent illegal debt collection, lawyers from the Korea Legal Aid Corporation provide legal services such as representing debtors throughout the collection process and reviewing illegality. You can apply through the Financial Supervisory Service website, Illegal Private Finance Reporting Center, or the Korea Legal Aid Corporation.

You can also use the 'Debt Adjustment System.' If you are experiencing financial difficulties due to excessive debt and credit problems, inquire about debt adjustment, personal rehabilitation, or bankruptcy systems. For debt adjustment, contact the National Happiness Fund or the Credit Recovery Committee; for personal rehabilitation and bankruptcy, contact the Korea Legal Aid Corporation.