Most Borrowers Of Loan Sharks Are Said To Be Office Workers

Jane Yoo, Jan. 3, 2018, 10:16 a.m.

Three out of five debtors of loan sharks are office workers rather than the jobbing poor, according to a study by the Financial Services Commission released Monday. The study shows that office workers account for 60.5 percent of people who borrowed money from loan sharks, followed by self-employed people (18.8 percent) and housewives (5.5 percent). Some 71.3 percent of the office workers used the loans to cover living expenses, which is also true for 83.7 percent of the housewives.

Short-term loans to be repaid within less than a year accounted for 62.6 percent of the total debt, up 3.3 percentage points from late 2016. As of June last year, the total loan balance at private moneylenders stood at W15.4 trillion, up 5.4 percent compared to the previous six months and surpassing W15 trillion for the first time (US$1=W1,063).

The amount of loans grew, but the number of borrowers remained unchanged at around 2.37 million. The average per-capita debt balance stood at W6.19 million, up around W330,000.

Yet the number of private moneylenders is decreasing due to the government's cap on interest rates, falling 6.7 percent from 8,654 in late 2016 to 8,075 as of June last year.

The FSC said the maximum legal interest rate will fall from 27.9 percent to 24 percent in February, which will send more small-scale private moneylenders to out of business.

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