This photo, taken Aug. 1, 2022, shows bank officials providing consultations on loan programs to customers at a Hana Bank branch in Seoul. (Yonhap)
SEOUL, Aug. 22 (Korea Bizwire) — A growing number of young South Koreans are struggling to cover even modest monthly interest payments due to job instability, data showed Tuesday.
Some 24.5 percent of South Koreans in their 20s, who availed microloans for their sustenance, faced difficulties in meeting interest obligations as of Aug. 4, according to a report from the Korea Inclusive Finance Agency.
Out of 8,931 loans, interest payments were made on time for 6,581 loans, while 2,190 loans had unpaid interest. Merely 160 loans were fully repaid.
Among various age groups, individuals in their 20s in South Korea exhibited the highest likelihood of possessing overdue loans, almost double the average across all age groups.
Microloans, averaging 610,000 won (US$456), were commonly taken to cover living expenses. With an average annual interest rate of 15.9 percent, the initial month’s interest typically about 8,000 won.
The younger generation of Koreans confronts challenges arising from job instability and unemployment.
These obstacles, combined with steep interest rates and inflation, are eroding both their ability and willingness to reimburse the loans.
However, some attribute this situation to the tendency of young people to borrow without a comprehensive repayment plan.
“The presence of numerous young South Koreans unable to pay as little as 10,000 won monthly suggests a ‘refusal’ to pay rather than genuine ‘inability’ to do so,” an industry official said.
M. H. Lee (mhlee@koreabizwire.com)
