Gyeonggi Province will significantly ease the requirements for the "Gyeonggi Ultra-Low Credit Loan," which has served as the last safety net for financially vulnerable groups amid the ongoing economic hardships faced by residents.
On December 28, Gyeonggi Province announced that, as early as the first half of next year, it will change the repayment period for ultra-low credit loans from the current five-year term to a maximum of ten years to reduce the repayment burden. Additionally, the province will provide integrated pre- and post-support, including counseling before the loan, as well as financial, employment, and welfare management to help recipients recover.
The Gyeonggi Ultra-Low Credit Loan program was first launched in April 2020. Until 2022, it provided emergency living funds of up to 3 million won at an annual interest rate of 1 percent to residents with low credit scores who had difficulty accessing institutional finance.
Recognizing the importance of the Gyeonggi Ultra-Low Credit Loan in supporting victims of illegal private lending, preventing people from falling into bad credit, and serving as a last-resort financial safety net, the province explained that it has prepared version 2.0 of the program. The new version aims to improve the system so that residents can use it more easily and effectively.
First, regarding the loan terms, the previous program required repayment of up to 3 million won within five years. The revised program will allow up to 2 million won to be repaid over a maximum of ten years.
Management of loan recipients will also be strengthened. Previously, after the loan ended, a dedicated team within the Gyeonggi Welfare Foundation focused on post-loan management. In version 2.0, counseling will be provided before the loan is issued, and after that, ongoing support will be offered in areas such as finance, employment, and welfare. The goal is to ensure that recipients do not simply receive a few million won and move on, but instead have a concrete foundation to rebuild their lives.
Gyeonggi Province is preparing to make the Gyeonggi Ultra-Low Credit Loan 2.0 available to residents in the first half of next year, following the necessary administrative procedures.
So far, 110,000 people have received support through the Gyeonggi Ultra-Low Credit Loan program. Among them was Mr. A, who, after borrowing 1.4 million won from an illegal lender to pay for treatment for a child with a rare disease, ended up paying 6 million won in interest alone, finding himself driven to the brink of despair.
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