Outstanding Balance of Private Lender Loans for Low-Income Borrowers Rises by 124.3 Billion Won in Six Months

At the end of last year, the outstanding balance of private lender loans reached 12.3 trillion won
Number of private lending users totaled 708,000
Delinquency rate dropped by 1 percentage point from the first half to 12.1%

The total amount of loans issued by private lenders, which serve as a source of emergency funds for low-income individuals, has increased by over 100 billion won in just half a year.

According to the "2024 Second Half Private Lending Industry Survey Results" released by the Financial Supervisory Service on June 29, the number of registered private lenders (including loan brokers) stood at 8,182 as of the end of last year, with an outstanding loan balance totaling 12.3 trillion won.

In the second half of last year, the outstanding balance of private lender loans increased by 124.3 billion won (1%) compared to the first half (12.2105 trillion won). This appears to be due to more people turning to private lenders as it became increasingly difficult to obtain loans from first-tier financial institutions, as a result of the economic downturn and declining credit ratings. However, during the same period, the number of private lending users decreased by 6,000 (0.8%) from 714,000 to 708,000.

Flyers related to private loan financing are placed at a closed store in Myeongdong, Seoul.

In the second half of last year, the average lending rate for major private lenders with assets of 10 billion won or more was 13.9%, up 0.2 percentage points from the first half. The interest rate for personal credit loans remained at a similar level to the first half at 18.1%. During the same period, the delinquency rate fell by 1 percentage point to 12.1%.

An official from the Financial Supervisory Service stated, "We will closely monitor the status of new loans and the supply of credit to low-credit borrowers in the private lending sector, given the increase in outstanding balances. We will also strengthen inspections of improper business practices by private lenders, such as illegal debt collection, and continue to provide guidance on precautions for users of private lending services to protect borrowers."