[Get 1% More Interest and Pay Less] Use Loan 'Transfer' and 'Request for Interest Rate Reduction'

Refinancing Loans Using Fintech Apps
Exercise the 'Right to Request Interest Rate Reduction' via Mobile
Also Check Out Perks Like Internet-Only Banks' 'Interest Rate Guarantee Service'

[Image source=Yonhap News]

#Customer A, who borrowed 3 million KRW at an annual interest rate of 19.9% from the secondary financial sector, borrowed 9 million KRW at an annual interest rate of 6.89% from a regional bank through the refinancing loan service of the loan comparison platform Finda. The loan interest rate was reduced by 13.01 percentage points. Assuming the credit limit remains the same at 9 million KRW, Customer A saved about 1.17 million KRW in interest annually.

#Customer B, who had loans totaling 10.6 million KRW from card loans and savings banks, repaid the debt by borrowing 14.2 million KRW through Kakao Bank’s Mid-Credit Plus loan product launched in August last year. Since then, their credit score increased by 91 points. Customer B also applied for the right to request a lower interest rate, reducing the loan interest rate by 7.54 percentage points and saving about 1.07 million KRW in interest costs.

According to the financial sector on the 4th, as the interest burden on low-income earners increases due to the base interest rate hikes, interest in methods to save even a single penny on loan interest, such as 'loan refinancing,' is growing. The fintech industry advises developing a habit of checking loans and utilizing benefits like the right to request a lower interest rate. For those with mid to low credit scores, using loan products from internet-only banks can also be helpful. Comparing deposit and savings products of internet-only banks with those of commercial banks is another option.

According to Finda, from August last year to last month, customers who accessed the application through the 'refinancing loan diagnosis' notification service lowered their interest rates by an average of 3.8 percentage points and increased their credit limits by 13.6 million KRW. Finda advises that it is important for users to develop a habit of checking once a month whether they can switch to a lower interest rate and higher credit limit. For example, Customer C, who borrowed 3 million KRW at an annual interest rate of 16.9% from a capital company, refinanced through Finda at 6.52% with a credit limit of 12 million KRW. Assuming the credit limit remains the same, this saved 1.59 million KRW in annual interest.

Repeated refinancing through Finda has also led to increased credit scores. According to Finda, customers who used refinancing twice had a 7 percentage point higher credit score increase rate than those who used it once, and when the number of times increased from twice to three or more, the increase was 3 percentage points higher.

It is also important to pay attention to the 'right to request a lower interest rate,' which many have postponed after only receiving text messages. This right allows borrowers to request an interest rate change on their loans if their credit status changes. Kakao Bank was the first in the banking sector to enable mobile applications for requesting lower interest rates. Customers can apply for the right to request a lower interest rate without restrictions through the app. According to Kakao Bank, about 400,000 cases of interest rate reduction requests have been accepted, with the total reduced interest amounting to 10.8 billion KRW. The customer who received the largest reduction lowered their interest rate by 8.23 percentage points.

The small but valuable deposit and savings benefits of internet-only banks are also worth checking out. For example, K Bank was the first in the banking sector to introduce the 'Interest Rate Guarantee Service.' This service applies the increased interest rate retroactively from the date of increase if the interest rate rises within 14 days after subscribing to the 'Code K Time Deposit.' It eliminates the hassle for customers of having to cancel and re-subscribe to their deposits to receive the higher interest rate. This system is especially worth noting during the current period of rising interest rates.

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