Financial Services Commission to Launch Special Guarantee Product for Lowest Credit Borrowers on 29th... Loans Up to 10 Million Won

For borrowers in the lowest 10% credit score bracket with an annual income of 45 million KRW or less
The applied interest rate is 15.9% by default, reduced annually during the loan term to 9.9% for timely repayment

[Asia Economy Reporter Song Hwajeong] A 'Special Guarantee for Lowest Credit Borrowers' product is being launched for the bottom 10% of credit scorers who have difficulty using institutional finance.

On the 27th, the Financial Services Commission and the Korea Inclusive Finance Agency announced that the Special Guarantee for Lowest Credit Borrowers policy finance product will be newly launched starting from the 29th.

The target beneficiaries are the lowest credit borrowers with credit scores in the bottom 10% or lower and an annual income of 45 million KRW or less, who find it difficult to use policy finance products such as 햇살론15 (Haetsal Loan 15).

The loan limit is up to 10 million KRW, initially providing support within 5 million KRW based on screening, and additional loans are possible after 6 months of faithful repayment.

The applied interest rate is basically 15.9%, and to encourage normal repayment, the rate is reduced annually depending on the loan period for faithful repayment. For a 3-year loan contract, the rate is reduced by 3.0 percentage points annually, and for a 5-year contract, by 1.5 percentage points annually, resulting in a final interest rate of 9.9%.

The repayment method is principal and interest installment repayment over 3 or 5 years, with a grace period of up to 1 year available, and there is no prepayment penalty.

A total of 240 billion KRW will be supplied, with 60 billion KRW planned for this year.

After applying for the guarantee and signing the contract through the Korea Inclusive Finance Agency, loans can be applied for through affiliated financial companies. On the 29th, loans will be available at two financial companies, Gwangju Bank and Jeonbuk Bank, and as system development and operational preparations are completed, the product will be sequentially launched at nine savings banks. In the fourth quarter of this year, it will be launched at Welcome Savings Bank, Hana Savings Bank, DB Savings Bank, and NH Savings Bank, and in the first half of next year, at Shinhan Savings Bank, Woori Financial Savings Bank, BNK Savings Bank, IBK Savings Bank, and KB Savings Bank, respectively.

Guarantee screening is handled by the Korea Inclusive Finance Agency, and loan execution inquiries can be made to the affiliated financial companies. To prevent voice phishing and promote sound loan use, financial education by the Korea Inclusive Finance Agency is mandatory when applying for the guarantee.

A Financial Services Commission official stated, "We support the lowest credit borrowers who had difficulty using existing policy finance products through repayment ability evaluation that reflects various non-financial and alternative information such as automatic transfer history and repayment willingness, as well as credit information," adding, "This will also contribute to preventing illegal private loans targeting lowest credit borrowers who have difficulty using institutional finance due to delinquency experience."

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