Loan interest rates are skyrocketing in South Korea as the Bank of Korea took the first "big step” of increasing the key interest rate by a whopping 0.5 percentage points on Wednesday. In response, a growing number of people are becoming desperate to find loans on low interest rates by comparing loan products on price comparison platforms.
According to the financial industry on Thursday, a total of 1.021 trillion won in loan money was taken out in June via a loan comparison service provided by mobile finance platform Toss, showing a double increase from 530 billion won in January. The monthly average of loan amounts executed in the first half of this year recorded 832.4 billion won, 91 percent up on a year-on-year basis.
As many as 14 fintech businesses including Toss are currently in operation to allow customers to compare a variety of loans provided by banks, insurers and credit card companies at a glance. Loan seekers have almost real-time access to information on loan interest rates and limits that may fit their personal needs and circumstances.
As of last year, 3.1 trillion won in loan money was taken out from banks via loan comparison platforms. With interest rates moving upward starting from this year, loan comparison platforms are gaining a growing popularity among loan customers. Loans approved this year via Finnq, another loan comparison platform, rose by more than five times compared to a year ago. Finda also saw a double increase in approved loans in six months.
"As the key interest rate has exceeded two percent, things are getting hard on loan seekers,” said Bestfin CEO Joo Eun-young, who operates loan comparison service Dambee. “A growing number of loan customers aspire to make well-informed decisions by thoroughly comparing various loan programs to find the best price.”