Shinhan Bank cut private mid-rate loan interest for mid-to-low credit borrowers by an additional 0.3 percentage point. It is keeping the existing maximum interest rate cap of 6.9 percent a year, meaning the actual benefit may differ depending on each customer’s calculated rate.

Shinhan Bank said on Oct. 18 it lowered the calculated rates for eligible mid-rate loan products by 0.3 percentage point from Oct. 16 to reduce financing costs for mid-to-low credit customers.

The rate cut applies to customers in the bottom 50 percent of NICE or KCB credit scores. It applies to unsecured loan products that have been operated with the maximum interest rate capped at 6.9 percent a year.

Under the interest rate calculation method, the bank first cuts 0.3 percentage point from each customer’s calculated rate and then applies the maximum interest rate of 6.9 percent a year.

For example, a customer with an existing calculated rate of 6.8 percent a year will receive a reduced rate of 6.5 percent. A customer with a calculated rate of 7.3 percent a year would still be above the cap after the cut, at 7.0 percent, so the final applied rate remains unchanged at 6.9 percent a year.

The same standards apply to non-face-to-face unsecured loans. To receive the revised rate, customers must apply for a new loan review after the implementation date of Oct. 16.

A Shinhan Bank official said, "We hope this interest rate cut will help ease the interest burden for customers who need mid-rate loans."