Financial regulator lowers cap on loans for people with low credit scores

SEOUL: The financial regulator has lowered maximum rates for loans extended by secondary lenders, such as savings banks, to people with mid- and low-level credit scores, market sources said Saturday. According to the sources, the Financial Services Commission has cut the maximum rate on loans from mutual finances to 10.22 percent in the second half of the year from the 10.5 percent applied in the first six months. The maximum rate for midrange interest rate loans from savings banks has also been reduced to 17.25 percent from 17.5 percent. Midrange interest rate loans refer to credit loans extended to people with credit scores in the lower 50 percent. The financial regulator began putting caps on such loans in 2016 to protect those with low credit scores. The rates are adjusted every six months based on the cost of funds for lenders. The maximum rate on loans from capital firms will remain unchanged at 15.5 percent in the second half, while that for loans from credit card firms will be raised to 12.47 per cent from 12.25 percent. Source: Yonhap News Agency