[Public Voices] Determined to Switch to Lower Loan Rates... Public and Private Sectors Must Help

Hyemin Lee, Co-CEO of Finda

“Why do we transfer subways every day, but not loans?” This is a common advertising slogan from fintech (finance + technology) companies that can be easily seen these days on subways or buses. It is an era of comparison and choice. Just as various public transportation methods are combined and proposed in multiple ways to reach a destination, shopping channels, OTT services, and even telecom providers have created an environment where switching to better options is easy, and consumers are fully willing to switch.

The habit of comparing and choosing is rapidly spreading to the financial sector as well. This is because new financial habits have become mainstream with the emergence of mobile-based personalized fintech services. The fintech company Finda, which I operate, recorded a monthly active user (MAU) count of 660,000 as of August this year, more than tripling compared to the end of last year, thereby shaping new loan habits among financial consumers.

Of course, there is still a long way to go. Financial products are so diverse that it is physically and temporally impossible for one individual to check all products and read all the details. Especially with loan products, the outcome is highly uncertain depending on the individual's situation and which financial institution’s product they choose. Sometimes the loan limit is lower than expected, or the loan is outright rejected... These situations often cause panic. Since loans involve borrowing future cash for immediate plans such as marriage, independence, or business, they should be a top priority in planning, yet it is difficult to get an estimate in advance.

It is already difficult to check new products, and it is even harder to individually assess whether one can switch to a loan with better conditions. Consumers often do not know if better products exist, and there is a severe lack of indicators regarding how much prepayment penalties might be. Also, to obtain a new refinancing loan product, a tedious process is required where a financial institution employee must accompany the borrower to verify that the existing loan has been repaid.

However, giving up is not an option. Since one’s income and credit status continuously change, and better financial products are being launched in a competitive environment, refinancing remains important. Through Finda, customers who executed new loans for refinancing purposes from August last year to June this year lowered their interest rates by an average of 3.8 percentage points.

The loan transfer system that financial authorities have been promoting since last year is also expected to reduce the interest burden on financial consumers in the same context. It allows consumers to compare at a glance whether there are refinancing loan products with better conditions than their current loans, and if, after considering fees and other factors, the new loan product is judged to be better, consumers will switch loans to save even a single penny. If the refinancing loan infrastructure currently being promoted by the government is established during the switching process, financial consumers are expected to have a positive loan transfer experience without procedural hassles or difficulties.

The current situation of rapidly rising interest rates increases the burden on financial consumers. The smooth introduction of the loan transfer system, which can quickly confirm the refinancing possibilities for consumers holding high-interest loans for a long time, may provide individuals with predictability and serve as a starting point for making rational choices from a wide range of options.

Lee Hyemin, Co-CEO of Finda

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