When Self-Employed Switch Low-Interest Loans, Annual Rate Won't Exceed 7%

On the 7th, a scene at a bank counter in downtown Seoul shows the ongoing trend among major commercial banks to lower loan interest rates while raising interest rates on regular savings and installment savings products. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Choi Dae-yeol] The interest rate applied when self-employed individuals refinance existing high-interest loans with lower interest rates is expected to be set at around 7% per annum.

According to the Financial Services Commission on the 10th, among the customized financial support measures prepared to alleviate financial difficulties for small business owners, the maximum interest rate for loan products when refinancing high-interest loans from non-bank institutions to low-interest loans has been virtually decided at 7%. The target group includes self-employed individuals and small-scale businesses among small business owners, with a convertible limit of about 50 million KRW. The implementation is scheduled for late September at the earliest, and by October at the latest.

This measure aims to prevent an expansion of loan defaults among vulnerable groups due to rising interest rates. Authorities expect that converting high-interest loans of small business owners struggling due to COVID-19 into low-interest and fixed-rate loans will help ensure a smooth loan repayment process for vulnerable borrowers.

The authorities have increased the support scale for refinancing loans from 7.5 trillion KRW to 8.5 trillion KRW. A financial official stated, "In addition to loans with extended maturities, other high-interest loans of small business owners are also eligible for refinancing," adding, "Small business owners who have received compensation for losses due to COVID-19 are also included in the target group."

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