Up to 10 million won over 36 months for mid-to-low credit borrowers

Exempt from annual income cap on credit loans

Debt service ratio rules still apply; home purchase barred for one year

[Shinhan Card]
[Shinhan Card]

Shinhan Card has become the first card company in South Korea to launch a mid-rate lifestyle stabilization loan targeting mid-to-low credit borrowers. The product offers rates starting at 9.9 percent per year and lets customers borrow up to 10 million won ($7,510), and it is exempt from the regulation that caps credit loan limits at a borrower's annual income.

Shinhan Card announced Tuesday it had introduced the loan to help mid-to-low credit customers secure funds for daily living expenses. The product falls under a new category of private-sector mid-rate loans created in response to a mid-rate lending promotion plan financial authorities announced in April.

Customers whose credit scores fall in the bottom 50 percent are eligible to apply. The loan ceiling is 10 million won, the maximum term is 36 months, and interest rates range from 9.9 to 12.26 percent per year.

Unlike standard credit loans, this product is not subject to the regulation limiting loan amounts to within a borrower's annual income. However, debt service ratio rules still apply, meaning the actual amount a customer can borrow will vary depending on existing debt levels and income.

Because the loan is intended for everyday living expenses, borrowers must agree not to purchase a home for one year from the date the loan is disbursed. Applications can be submitted online through Shinhan SOL Pay or the Shinhan Card website.

The Financial Supervisory Service called in representatives from major card companies in August and urged them to actively offer mid-rate policy loan products. That same month, regulators introduced an incentive excluding the full increase in private-sector mid-rate lending by non-bank financial institutions from household loan volume tallies. Within the card industry, KB Kookmin Card is preparing to launch its own mid-rate lifestyle loan before the end of the year, while Samsung, Hyundai, Lotte and BC Card are also reviewing whether to introduce similar products.

"Drawing on our solid credit assessment capabilities, we were able to proactively launch this mid-rate lifestyle loan," a Shinhan Card official said. "We will take a leading role in Shinhan Financial Group's inclusive finance initiative and work actively to improve financial access for mid-to-low credit customers facing hardship."


snsd@heraldcorp.com