110,000 Loan Accounts Exceeding Maximum Interest Rate in Secondary Financial Sector... Loan Amounts Total '68.8 Billion'

Two Years After Legal Revision, Average Loan Balance Remains 580,000 Won Per Account
Assemblyman Hong Seong-guk: "Authorities Must Actively Encourage Refinancing to Mid-Interest Loans"

[Asia Economy Reporter Jo Gang-wook] It has been revealed that nearly 70 billion KRW in loan amounts exceeding the current legal maximum interest rate of 24% remain, primarily within the secondary financial sector.

According to data submitted by the Financial Supervisory Service to Hong Seong-guk, a member of the National Assembly's Political Affairs Committee from the Democratic Party of Korea, as of June this year, the amount of corporate and household loans from specialized credit finance companies (credit finance companies) exceeding the current legal maximum interest rate of 24% stood at 68.8 billion KRW. The number of accounts exceeds 110,000.

Among these, household loans such as personal loans accounted for 63.5 billion KRW, with 110,345 accounts. This means that on average, about 580,000 KRW remains per account.

Representative Hong pointed out, "There are still more than 110,000 accounts outside the bounds of the law, and the amount is approaching 70 billion KRW," adding, "Although two years have passed since the legal maximum interest rate was changed, excess loans still remain, and neither the scale nor the number of accounts can be considered small."

In February 2018, the legal maximum interest rate was lowered from 27.9% to 24%. Since then, any new loans or renewals/extensions of existing loans with interest rates exceeding 24% are clearly illegal.

However, no loans exceeding the legal maximum interest rate were found in banks. On the other hand, such loans still exist in credit finance companies.

Immediately after the change in the maximum interest rate standard in 2018, the balance of corporate and household loans exceeding the legal interest rate in credit finance companies was 489.2 billion KRW (185,536 accounts), 179.6 billion KRW (132,608 accounts) in 2019, and 68.8 billion KRW (111,225 accounts) as of June 2020, showing a significant decrease in illegal loans each year.

Representative Hong emphasized, "Although it is said that retroactive application to loans before the legal amendment is not possible, the fact that such loans still remain after two years is problematic," and urged, "The financial authorities should actively step in to encourage refinancing to mid-interest rates or conversion to financial products for low-income households."

This content was produced with the assistance of AI translation services.