Banks Expand Mid-Rate Loans to Ease Interest Burden for Low-Credit Borrowers

Banks are intensifying efforts to reduce the interest burden for individuals with low credit scores by increasing the supply of mid-interest rate loans, in accordance with the government's policies to support low-income households. Major banks are focusing on lowering interest costs for struggling borrowers by sequentially introducing products like capped-rate loans, options to convert loans from second-tier financial institutions to bank loans, and small loans for living expenses.

Hana Bank has launched the 'Hana 1Q Safe Mid-Interest Loan,' offering up to 10 million won at a fixed annual interest rate of 5.5% to customers in the bottom 50% of the personal credit score distribution. This product is designed to reduce interest burdens by allowing borrowers to convert high-interest loans obtained from second-tier institutions, such as savings banks, into bank loans.

Shinhan Bank is implementing the 'Shinhan Mid-Interest Loan' for borrowers in the bottom 50% of external credit scores. Under this product, the maximum interest rate is capped at 6.9% per year if the calculated interest rate exceeds this threshold; if the calculated rate is lower, the actual calculated rate is applied. Shinhan Bank plans to introduce an additional mid-interest loan exclusively for 'Shinhan Super SOL' users in August.

Woori Bank has introduced an interest rate cap system, limiting personal credit loan rates to within 7% annually. It has also launched a product allowing borrowers to switch high-interest credit loans from entities like Woori Card, Woori Financial Savings Bank, and Woori Financial Capital to bank loans. This product is available at interest rates ranging from the mid-4% to within 7% annually, with a maximum loan limit of 20 million won.

KB Kookmin Bank plans to supply 1.53 trillion won worth of private mid-interest loans this year targeting customers in the bottom 50% of personal credit scores. It has also launched the 'KB Kookmin Leap Loan,' enabling borrowers to switch second-tier financial institution credit loans to bank loans.

An official from the banking sector explained that while mid- and low-credit individuals often relied on high-interest loans from second-tier financial institutions, the expansion of mid-interest loans by banks is proving effective in alleviating the financial cost burden for vulnerable borrowers. Shinhan Bank is also extending the repayment period for its Saehopeulssi loans from the previous maximum of 60 months to 84 months.