SEOUL, Jun. 23 (Korea Bizwire) — The National Pension Service’s low interest loan packages dubbed “Silver Loans” are a big hit among its target demographic of pensioners who are 60 and above.
Launched in May of 2012, the Silver Loan (officially titled “Rapid Loans for the Elderly Program”) initiative is still going strong with numerous applicants, large lending totals, and impressive repayment rates.
The reasoning behind the decision to roll out Silver Loans was to try to solve an increasingly pressing problem: elderly pensioners, faced with mounting bills thanks to living and medical expenses, were finding it extremely difficult to find ways to acquire funds to meet their short-term financial needs.
Data indicates that at 98.3 percent, an overwhelming number of the recipients are using their loans to pay for housing and medical expenses.
A brief look at the numbers shows that the popularity of Silver Loans was high from the start. In their first month of availability alone, 39.8 billion won was loaned out to 10,152 recipients. As of April of this year, 2,395 applicants had already successfully received loans totaling 12 billion won.
Over a period of five years, 175.6 billion won has been loaned out to 41,115 pensioners. Total amounts by year are as follows, and are indicative of consistently strong demand: 7,095 recipients, 27.2 billion won total (2013); 7,198 recipients, 27.6 billion won total (2014); 7,528 recipients, 34.1 billion won total (2015); and 6,747 recipients, 34.2 billion won total (2016). The jump in total loan amounts in 2015 and 2016 may be due to the upward limit on the loans being raised from 5 to 7.5 million won.
Silver Loan recipients boast an impressive repayment rate of 99.61 percent. A near perfect repayment rate appears to be a statistical aberration, until the details of the loan program are taken into account. As loans are only made out to pensioners, the NPS simply deducts the required payment per month from each borrower’s pension.
As of October 2013, the NPS also eliminated joint liability-backed loans and related fees to further ease the financial burden of loan applicants.
By S.B. Woo (email@example.com)