A 45-year-old employee at a large company, identified as A, was quoted an annual interest rate of 11.5% while extending the maturity of a "Woori WON Salaried Worker Loan." With an outstanding balance of about 73.8 million won, repayment was not easy. But under Woori Bank's cap on personal credit loan rates, the rate was lowered by 4.5 percentage points to 7%, saving 3.22 million won in interest a year.
B, a 44-year-old who had worked at a small or mid-sized company, found it difficult to extend an existing salaried-worker loan after losing the job. In need of living expenses, B borrowed 35 million won through the "Woori Sangsaeng All-Care Loan (New Hope Holssi II)," a loan program for low-income and low-credit borrowers. The calculated rate was initially 8.19%, but the 7% cap lowered the final rate by 1.19 percentage points. B's annual interest burden fell by 420,000 won.
By capping personal credit loan rates at 7%, Woori Bank has cut interest costs for more than 60,000 customers so far this year. The measure limits the burden at a time when higher policy rates could further raise financing costs for vulnerable borrowers.
A total of 64,553 Woori Bank customers had the cap applied from the start of this year through the end of last month, according to financial industry sources on the 27th. Loans covered by the cap totaled 705.4 billion won, and customers saved 2.41 billion won in interest.
Woori Bank said it will maintain the program through the end of the year despite policy rate increases and rising market rates. "As new loans are extended and interest reductions on existing loans continue, the cumulative scale of support will grow," an official at the bank said.
Woori Bank announced the cap on personal credit loan rates late last year to ease the burden on borrowers. From early January, it applied the ceiling first to customers who had used credit loans at the bank for at least a year and were extending or renegotiating them. From late March, it expanded coverage to new personal credit loans for customers who had held deposits, savings accounts, credit cards or housing subscription savings accounts for at least a year. New borrowers receive the 7% cap once, for up to one year.
Woori Bank is also expanding its supply of finance for low-income and low-credit borrowers. Such products totaled 421.8 billion won in the first half of this year. By program, New Hope Holssi — under which the bank lends to low-income, low-credit borrowers using its own funds and screening — accounted for most of the total at 412.3 billion won. Saitdol mid-rate loans came to 7.8 billion won, while Sunshine Loan special guarantees and general guarantees stood at 1.3 billion won and 400 million won, respectively.
In March, the bank launched the "Woori WON Dream Living Expense Loan," its own inclusive finance product for low-income vulnerable groups. Wage earners, freelancers and homemakers with annual income of 25 million won or less can borrow up to 10 million won. The rate is likewise capped at 7% a year. Repayment can be spread over as long as 10 years, including a three-year grace period.
Woori Bank is also considering launching a "mid-rate living stability loan" introduced by financial authorities within this year. Under that program, financial firms lend up to 10 million won to mid- and low-credit borrowers in the bottom 50% of credit scores, based on their own credit assessment and without a guarantee. "We will continue to expand inclusive finance that improves customers' access to financial services and eases their financing burden," an official at the bank said.
