[2021 National Audit] Top 20 Private Lenders Exceed Legal Maximum Interest Rate on Credit Loans by 4.1 Trillion Won

Assemblyman Jeon Jae-su "Need for Payday Loan Companies' Self-Regulation Efforts and Financial Authorities' Attention"

[Asia Economy Reporter Kwangho Lee] Although the statutory maximum interest rate was lowered to 20% per annum starting this July, most of the outstanding credit loan balances from the top 20 lending companies still showed high interest rates exceeding the cap.

According to data submitted by the Financial Supervisory Service to Jeon Jae-su, a member of the National Assembly's Political Affairs Committee from the Democratic Party of Korea, as of the end of June this year, the total outstanding personal credit loans from the top 20 domestic lending companies amounted to 4.4148 trillion KRW, of which loans with interest rates exceeding 20% per annum totaled 4.1834 trillion KRW, accounting for 94.8% of the total balance.

Loans with interest rates exceeding 24% per annum also reached 529.8 billion KRW.

The statutory maximum interest rate for financial institution loans was lowered from 27.9% per annum in February 2018 to 24% per annum. It was further reduced to 20% per annum starting this July.

Savings banks, capital companies, and card companies have agreed within the industry to retroactively apply the reduced interest rates to existing loan users. However, lending companies apply the maximum interest rate regulations only to new and renewed contracts.

Assemblyman Jeon pointed out, "Although this issue was raised during the last national audit, a significant amount of loan balances still exceed the maximum interest rate," adding, "Going forward, efforts for self-regulation by lending companies and attention from financial authorities are necessary to ensure that ordinary citizens do not bear interest burdens exceeding the maximum rate."

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