DSR Avoided by Credit Card Companies in Car Installments... 3.5 Trillion Won Last Year

As credit card companies accelerate their entry into the automobile installment market, concerns have been raised that household debt amounting to tens of millions of won per person is falling into a blind spot in management. This is because long-term automobile installments by credit card companies are not included in the Debt Service Ratio (DSR), and when purchasing a new car using card installments, customers can receive generous installment periods and limits.

According to data requested by the office of Kim Han-gyu, a member of the Democratic Party of Korea, from the Financial Supervisory Service on the 11th, the amount used for automobile installments among installment services of eight full-fledged credit card companies (Shinhan, Samsung, Hyundai, KB Kookmin, Lotte, Woori, Hana, BC) reached 3.5041 trillion won last year alone. In particular, Hyundai Card's automobile installment usage last year was 1.5879 trillion won, making it the largest handler of long-term automobile card installments among the eight card companies.

Such long-term automobile installments by credit card companies can avoid being included in the DSR calculation. When purchasing a new car, if one uses automobile installments from installment finance companies or auto loan products from banks, these are included in the DSR calculation. Although credit card companies include installment finance accounts in the DSR, their long-term automobile installments are classified as 'additional services' and thus are not counted in the DSR.

An industry insider said, "Since automobile card installments, which can amount to tens of millions of won per vehicle, are excluded from the DSR calculation, it is practically difficult to individually assess the scale and asset soundness level of credit card companies' automobile installment assets, which are close to loans." He added, "As household debt is rapidly increasing and there is a gap in household debt management due to credit card companies' long-term automobile installments, financial authorities need to urgently prepare countermeasures."

Min Byung-duk, a member of the Democratic Party of Korea, also pointed out during the national audit in October that "credit card automobile installments evade DSR regulations and are not recorded as loan histories, effectively increasing the burden of household debt."