40% of Debt Defaulters in Their 20s Are Small Loan Borrowers with Less Than 5 Million Won

Average Debt Amount of Defaulting 20s: 15.8 Million KRW
Total Household Loans for 20s: 95.6 Trillion KRW...Bank Loans Decrease, Secondary Financial Sector Increases
Jin Sun-mi: "Policies Like Unemployment Assistance Needed to Prevent Defaults from Small Loan Repayment Failures"

[Asia Economy Reporter Oh Ju-yeon] The number of people in their 20s who failed to repay loans from financial institutions on time has reached 84,000. Among them, 41.8% became defaulters due to failing to repay loans of 5 million won or less.

According to the 'Status of Financial Debt Defaulters' data submitted by the Credit Information Service to Jin Sun-mi, a member of the National Assembly's Planning and Finance Committee from the Democratic Party of Korea, as of the end of June, the average registered amount (total principal and interest of overdue loans) for defaulters in their 20s was 15.8 million won.

Looking at the registered amount brackets for defaulters in their 20s, those with loans of 5 million won or less numbered about 35,200 (41.8%), the largest group, followed by those with loans exceeding 5 million won but not exceeding 10 million won at about 17,900 (21.2%). Borrowers with loans exceeding 300 million won were only about 200, accounting for 0.2% of the total.

As of the end of June this year, the total household loans for people in their 20s have been on the rise compared to last year, especially with the total loans from the secondary financial sector increasing sharply more than those from banks, leading to a deterioration in loan quality.

Jin Sun-mi’s office explained, "Although a decrease in household loans was expected due to the sharp rise in interest rates this year, the total household loans for people in their 20s briefly decreased but then increased again."

At the end of March, the total household loans for people in their 20s decreased by 0.2% compared to the end of last year, but by the end of June, it increased by 0.6% in three months, reaching 95.9503 trillion won.

The rebound in total household loans for people in their 20s is due to the rapid growth of loans from the secondary financial sector. At the end of June, the total household loans for people in their 20s increased by 3.1% compared to the end of March, reaching 27.669 trillion won.

By sector, savings banks, insurance, and mutual finance showed particularly steep increases. At the end of December last year, the total household loans from savings banks increased by 47% compared to the end of December 2019, reaching 4.2627 trillion won. Insurance and mutual finance increased by 24.3% and 23.6% respectively during the same period, reaching 1.2813 trillion won and 8.6164 trillion won.

Jin Sun-mi said, "To prevent young people from becoming defaulters by failing to repay small loans of 5 million won or less, it is necessary to improve their repayment ability by providing economic activity opportunities through unemployment assistance and other support."

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