The “Online One-stop Loan Refinancing Service”, introduced by the Financial Services Commission (FSC) in 2023 to ease the pressure of loan interest rates on the public, is the first online financial service of its kind in the world.
Through this service, financial consumers are able to switch over from existing loans to other loans with lower interest rates, without the need to visit physical financial offices.
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■ Loans made Cheaper, with just a few Clicks!
“Do I have the lowest possible interest on my loan?”
“I wonder if I could switch over to a loan with lower interest rates?”
Any financial consumer who pays interest on a monthly basis is bound to have wondered the same thing Using the “Online, One-stop Loan Refinancing Service”, you can easily switch over from existing loans to loan products with better interest rate terms.
The “Online, One-stop Loan Refinancing Service” allows users to compare loan products from different financial institutions at once, discover the lowest interest rate products, and easily switch over to new rates on mobile apps without having to visit the bank in person. The service applies to personal credit loans, apartment mortgage loans, and "jeonse" (lump-sum deposit) loans up to the amount of one billion Korean won. However, as part of a measure to prevent excessive transfers of loans, apartment mortgage loans can only be refinanced six months after the existing loan was first activated, while "jeonse" loans can be refinanced beginning three months after the loan is activated and before half the 'jeonse' lease period has passed (1 year mark for a 2-year contract).
The “Online, One-stop Loan Refinancing Service” can be utilized on respective mobile apps of financial institutions used by each financial consumer, or on loan comparison platforms (Naver Pay, Bank Salad, Kakao Pay, Toss, Finda etc.). On the platforms’ apps, individuals can confirm their existing loans through MyData, compare loan conditions for various financial institutions, access the chosen institution’s app, and switch over to a new loan. In each individual financial app, consumers can look up existing loan records, compare them with other loan product candidates, and choose the right loan product that fits them. The service is active between 9 am and 10 pm for personal credit loans, and between 9 am and 8 pm for apartment loans and "jeonse" loans, with no limits to the number of uses.
■ The world’s first real-time loan refinancing system is established
The “Online, One-stop Loan Refinancing Service” is a groundbreaking attempt, introduced by the FSC for the first time in the world. While other overseas services do allow online comparison of loan products, this new Korean system is the first integrated service to provide real-time switching of loan products between key financial institutions. The loan refinancing service for personal credit loans was launched on May 31st, 2023, with support for apartment loans and "jeonse" loan services added in January 2024, continuing with active operations.
Prior to the establishment of this service, financial consumers had to visit financial institutions in person to search for better deals for their loans. Furthermore, consumers were tasked with first preparing documents necessary for loan activation, such as proof of income, and then submitting documents in person at physical financial offices. Even after their new loans were approved, financial consumers still had to repeat the inconvenience of visiting financial institutions in person to repay their existing loans.
However, with the “Online, One-stop Loan Refinancing” infrastructure in place, every step of the refinancing process, starting from applying for a loan to repaying the existing loan, could all be handled online at once.
Looking for lower Interest? Check out the Online Refinancing Service. ⓒ Korea TV (Broadcast on Feb. 15th, 2024)
■ In the first year of operation, 8 Trillion won of interest saved for Koreans.
After the personal credit loan refinancing service began in May 2023 for the first time in the world, in 2024, refinancing services for apartment mortgages and "jeonse" loans also successfully arrived on the market. This achievement can be accredited to the joint efforts of not just the policy-making financial authorities, but also of the financial industry and participating agencies that worked to reduce the pressure of interest rates on the public.
Over the course of one year, between May 31st, 2023 and May 24th, 2024, approximately 200 thousand citizens have utilized the refinancing service, resulting in the amount of 10 trillion won in loan assets being transferred to lower interest rate loan products.
For personal credit loans, a total of 168,254 users have refinanced 3 trillion, 972.7 billion won in loan funds since the launch of the service. Due to the refinancing of loans, interest rates on loan products were reduced on average by approximately 1.57%p, with annual interest savings per person at 580 thousand won.
For apartment mortgage loans, a total of 24,721 users have refinanced 4 trillion, 540 billion won in loans. Interest rates on loans were reduced on average by approximately 1.49%p, leading to annual savings per person on total interest at around 2.73 million won.
For "jeonse" loans, a total of 9,486 users refinanced 1 trillion, 593.1 billion won in loans, leading to an average reduction of approximately 1.40%p in interest rates, and annual interest savings per person at 2.35 million won. Overall, for all refinancing services on credit loans, apartment mortgage loans, and "jeonse" loans, the average interest rate reduction was approximately 1.52%p, and annual interest savings per person was approximately 1.62 million won.
[Finance News] Loan Refinancing led to 1.56M won in savings, supporting asset formulation ⓒ FSC (Published on May 9th, 2024)
■ Small Apartments and Officetels with price lookups, also eligible for Loan Refinancing.
In an effort to further expand the availability and convenience of the Loan Refinancing Service to more of the public, the financial authorities are making more improvements to the service.
In the case of apartment mortgages, current balance payment loans were not originally eligible for the refinancing service. However, beginning April 1st, 2024, once ownership was registered under the lessee’s name, any balance payment, if the lending financial institute’s collateral security right had been settled, was now eligible to utilize the refinancing service. Furthermore, beginning in September of 2024, the Loan Refinancing Service will broaden its mortgage loan reach beyond residential apartments to small apartments and ‘Officetels’, as long as their market value can be inquired in real-time.
Starting from June 3rd, 2024, "jeonse" loans were further allowed refinancing until six months prior to the end of the contracted lease period. while refinancing services for credit loans had operational hours extended (9am to 4pm, extended to 9am to 10pm) allowing usage of the service in the evenings.
