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It is becoming more and more difficult for the common people to borrow money.
As interest rates on card loans skyrocket and it becomes difficult to obtain loans from savings banks and lenders, the vulnerable are now being driven into the illegal private loan market.
This is reporter Jo Yoon-ha.
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Mr. Ahn, a freelance hagwon instructor in his 50s, recently received a text message from his credit card company.
She said that the interest rate on card loans would change to 19.9% from next year.
[Ahn Mo/Freelance Academy Instructor: It crossed the psychological bottom line of unacceptable high interest rates.
I don't want to take this (loan).
If people like me want to get a quick loan, they can only go to the 3rd financial sector and the loan industry...
.]
Self-employed person A was also surprised at the card loan interest rate, which is close to the legal maximum of 20%.
However, because of the credit card company loan history, I can't even dream of a bank loan.
[Mr. A/Self-employed: The real interest is often almost the same as the principal.
(At the bank) Because I used a card loan, (loan) was rejected and told me to get it from a second financial institution or a savings bank.]
As of the end of last month, when borrowing money from a credit card company, an annual average interest rate of 14.84% is applied.
It is the first time this year that the interest rate on credit card loans has exceeded 14%.
While raising interest rates, card companies drastically reduced their card loan balances by more than 500 billion won in one month as the risk of delinquency increased.
As the threshold for credit card loans rises, ordinary people in need of urgent money are increasing the use of revolving, which is to pay off only part of the card or cash advance payment.
Although the interest rate is higher than that of card loans, at the end of last month, the revolving balance exceeded 7 trillion won, the highest ever.
In addition, the majority of savings banks have tightened their loans due to raising the funding rate and managing soundness, and the number one company in the loan industry has suspended all new loans, including credit loans.
There are concerns that the vulnerable could eventually be forced into high-interest illegal loans.
[Mr. A/Self-employed: I'm in the bridle.
'Can I get away with borrowing this?
I also think that I might not be able to get out of here any longer.] The
financial authorities saw that there was a problem with the rapid suspension of loans, and ordered flexible responses such as strengthening screening standards.
(Video coverage: Kang Dong-cheol, video editing: Choi Hye-ran, VJ: Park Hyun-woo)
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