Online investment-linked finance (OILF) has reported that mid-rate loans account for 94.8% of personal credit loans. As investments from financial institutions ramp up, the volume of loans is also increasing rapidly.
On November 10, the Online Investment-Linked Finance Association analyzed the performance of six OILF companies (MoneyMove, Mooda, HonestAI, EightPercent, PFCT, and Hanpass Financial) participating in investments linked to financial institutions. As of the end of September, the share of mid-rate loans was recorded at 94.8%.
The average credit score of borrowers from these six companies was 686 according to KCB standards, with 45% of loans going to borrowers with credit scores below 675.
Despite the high proportion of low-credit borrowers, the delinquency rate remained low at 1.09%. Excluding personal rehabilitation claims, the rate was 0.76%. The average loan interest rate stood at 11.72%, which is 2.95 percentage points lower than the average interest rate for personal credit loans from savings banks (14.67%).
There have been cases where borrowers reduced their interest burdens by switching to OILF loans. According to the association, a 50-year-old employee with a credit score of 538 consolidated 22 credit card loans from two companies into one OILF loan, lowering his interest rate from 16.87% to 10.3%, a reduction of 6.57 percentage points.
With the expansion of investments linked to financial institutions, the scale of loan supply is also increasing. From May 2022 to September 2023, the cumulative amount of personal credit loans from the six companies reached 811.4 billion won, with 53,038 new borrowers recorded. The monthly new loan amount surged from 2.75 billion won in May 2022 to 99.94 billion won in September 2023, an increase of approximately 36 times. During the same period, the number of savings banks participating in linked investments grew from five to twenty.
OILF was established in 2015 to address the interest rate gap in the existing financial sector and was incorporated into the regulated financial industry with the enactment of the OILF Act in 2020. In July 2024, investments linked to financial institutions were designated as innovative financial services, leading to the launch of linked investment services with savings banks in May 2022.
Hong Jae-moon, chairman of the Online Investment-Linked Finance Association, stated, "Inclusive finance is the starting point and reason for the existence of OILF. We will work with the industry to create a fair competitive environment to ensure that the innovative spirit of the OILF sector is not dampened."
* This article has been translated by AI.
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