PeopleFund, "Secondary Financial Debt Refinancing Customers, Interest Rate Down 4.5%P, Limit Up to 12.55 Million Won"

[Asia Economy Reporter Song Seung-seop] It has been revealed that a significant portion of borrowers with unsecured loans from online investment-linked finance companies (On-tu-eop) are financial consumers refinancing loans from secondary financial institutions.

According to the ‘Mid-Interest Rate Refinancing Loan Handling Status’ recently released by PeopleFund on the 26th, as of the end of last month, the number of unsecured loan borrowers reached 8,013. Among them, more than half, 56.1%, stated that they refinanced to lower the interest rates or increase the limits of their existing loans.

Customers borrowed money at an average interest rate 4.5 percentage points lower than their original loans. Regarding limits, they increased by approximately 12.55 million KRW. Considering that the refinancing loan products were held for an average of 45 months with equal principal and interest repayment method, each customer reduced interest costs by 2.71 million KRW.

The main customer base using mid-interest rate refinancing loans was predominantly male at 80%. By age, those in their 30s accounted for the largest share at 52%. Among the existing secondary financial institution loans held, card loan users accounted for 48.5%, nearly half. This was followed by savings banks (26%) and capital companies (13.8%).

Mid-interest rate loans executed for mid- to low-credit borrowers (KCB score 831 points, grade 4 or below) accounted for 75.3% of the total. The loss rate for this segment was 2.49% as of last month. A PeopleFund official explained, “Considering that the average delinquency rate of savings banks with similar customer groups was around 5% (September 2021), this figure is less than half.”

The cumulative loan handling amount was 1.3122 trillion KRW as of the 24th, with a loan balance of 250.7 billion KRW. The personal unsecured loan balance was 94.6 billion KRW. Additionally, the number of customers who inquired about unsecured loans at PeopleFund last month was 516,835, with an application amount of 15 trillion KRW. This is more than ten times the scale compared to before On-tu-eop’s official registration. The estimated proportion of customers eligible for loan execution is about 42.5%, and PeopleFund estimates that the monthly loan waiting demand reaches 220,000 people.

Kim Dae-yoon, CEO of PeopleFund, stated, “The past seven years have been meaningful in bridging the interest rate cliff and contributing to providing better financial opportunities to mid-credit consumers,” adding, “Starting this year, we will do our best to achieve a leap beyond the past seven years and to fully activate mid-interest rate loans.”

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