First in the Banking Sector:
"Lower Monthly Payments" and
"Pay Interest Only Monthly" Services Now Available
Toss Bank announced on the 10th that approximately 74,000 customers have eased their delinquency burdens so far through its services "Lower Monthly Payments" and "Pay Interest Only Monthly," which help customers proactively manage risks before falling into delinquency.
Unlike traditional banking debt adjustments that mainly target customers who have already become delinquent, Toss Bank introduced the industry's first service that supports customers in actively managing risks from the stage of potential delinquency. This helps reduce the loan repayment burden for customers vulnerable to economic downturns and prevents delinquencies. The representative programs are "Lower Monthly Payments" and "Pay Interest Only Monthly."
Toss Bank has been operating the "Lower Monthly Payments" service since October 2022, the first of its kind in Korea, with about 46,000 customers having used it to date. The core feature is extending the loan repayment period to reduce customers' monthly repayment burden. The repayment period can be extended up to 10 years, including the original loan term. Considering that the typical repayment period for unsecured loans is 3 to 5 years, this service supports customers in economically vulnerable situations to adjust their repayment burden more flexibly.
For example, if customer A, who has a 50 million KRW loan with a 3-year term at a 5% interest rate, experiences unexpected financial difficulties and extends the repayment period to 10 years through the "Lower Monthly Payments" service, the monthly repayment amount significantly decreases from 628,000 KRW to 312,000 KRW. Customers who have used this service have reduced their average monthly principal and interest burden by 316,000 KRW per person.
"Pay Interest Only Monthly" is a service that alleviates loan repayment burdens by allowing customers who are repaying both principal and interest to pay only the interest for a certain period if they face financial difficulties. When switching from an equal principal and interest repayment method to a lump-sum repayment at maturity method, customers pay only the interest monthly instead of both principal and interest.
Since its introduction in April 2023, about 28,000 customers have benefited from this service. The deferred principal amount totals approximately 600 billion KRW, and on average, each customer converted 21.4 million KRW of principal to a lump-sum repayment at maturity, reducing their burden even amid financial difficulties.
Both services are available to Toss Bank unsecured loan customers who use the equal principal and interest repayment method. When using the service, "Lower Monthly Payments" may slightly reflect a risk cost (liquidity premium) ranging from a minimum of 0.07 percentage points to a maximum of 0.3 percentage points depending on the extension period requested by the customer. The interest rate for "Pay Interest Only Monthly" remains the same or slightly decreases.
A Toss Bank representative stated, "Supporting customers who may become delinquent to repay stably is an important social responsibility of banks, and this will be a positive win-win model for both financial consumers and banks. We will continue to support customers in maintaining a more stable financial life through innovative financial services."
Meanwhile, Toss Bank provides a notification service that proactively offers interest rate reduction opportunities without customers having to exercise their right to request a rate cut. Toss Bank customers can receive proposals first from Toss Bank by agreeing to "Receive Notifications When Interest Rates Drop" within the app, even if they are unaware of their credit improvement status. The cumulative number of notifications sent so far is about 350,000.
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