[ad_1]
Reduction of the maximum interest rate in the second semester of next year through revision of the executive decree
Increased supply of financial products to the general public by more than 270 billion won per year.
[앵커]
Currently, the maximum legal annual interest rate is reduced from 24% to 20%. This higher interest rate cut is expected to ease the burden of excessive interest on vulnerable low-income and credit groups. Reports from reporter Park Byung-han. The maximum legal interest rate, which is currently 24% per year, will be reduced by 4 percentage points to 20%. The government and the ruling party held a party meeting in the National Assembly and made this decision. The plan to reduce the maximum interest rate to 20% has been lowered once again in about three years after President Moon Jae-in’s presidential election promise, which was lowered from 27.9% in 2018 to 24%. If the maximum interest rate is reduced to 20%, the interest burden of 2.81 million people, or 87% of the 2.39 million people who used loans at an interest rate above 20%, it will cut by 483 billion won annually. Currently 2.82 million people are using loans worth 1.42 trillion KRW. On the other hand, for the remaining 13%, or 316,000, the use of private financing is likely to decline in the next three to four years when the loan matures. The Financial Services Commission estimates that there is a possibility that some 39,000 people who received a 230 billion won loan will use illegal private financing. The maximum interest rate cut is expected to be implemented in the second half of next year through the review of the executive decree. The financial authorities also decided to promote the adjustment of the interest rate of policy financial products in line with the reduction of the legal maximum interest rate. We have decided to expand the offering of policy-based financial products to people with little credit, such as Sunshine Loan, by more than KRW 270 billion per year, and to strengthen debt adjustment and support for credit recovery for the vulnerable and delinquent borrowers. We also decided to review ways to offer incentives to companies that have made loans to people with little credit. This is YTN Park Byung-han.
