[DigitalToday reporter Ji-young Lee (이지영)] A "mid-rate livelihood stability loan" has been launched for mid-to-low credit borrowers in the bottom 50 percent of credit scores. The product is an unsecured loan that borrowers can use for up to a combined 10 million won across all financial institutions. It is expected to ease difficulties in securing living expenses for vulnerable mid-to-low credit borrowers.

The Financial Services Commission said on Sunday that the mid-rate livelihood stability loan for mid-to-low credit borrowers would be launched and sold.

The product is a follow-up to measures to promote mid-rate loans announced at the fourth meeting on a "major shift to inclusive finance" in April. The FSC and the savings bank sector have prepared for the launch so that funding support can be provided within the repayment capacity of mid-to-low credit borrowers.

The first institutions to launch it are six lenders: KB Savings Bank, OK Savings Bank, SBI Savings Bank, Shinhan Savings Bank, Yegaram Savings Bank and Korea Investment Savings Bank.

Eligible borrowers are mid-to-low credit consumers in the bottom 50 percent of credit scores at the time the loan is issued. As of Sunday, that includes scores of 889 or below from NICE and 875 or below from KCB. Detailed eligibility requirements may vary by lender.

The loan limit is up to a combined 10 million won per borrower across all financial institutions. Lenders will set the final limit at the lower of the remaining limit, after subtracting existing balances of the product based on a Credit Information Service check, and the lender’s own calculated limit.

Interest rates range from 5.9 percent to 15.27 percent a year at the initial launch institutions. Rates are calculated based on the borrower’s creditworthiness and the lender’s credit evaluation system. The FSC said it lowered the product’s maximum rate by 1.24 percentage points from the maximum rate on existing mid-rate loans to reduce interest burdens for mid-to-low credit borrowers.

Borrowers must sign an agreement not to buy a home for 1 year or until the loan is fully repaid. If they violate the agreement, they must repay the loan immediately. They will also face restrictions for the next 3 years on home-related loans and use of the loan.

Borrowers can also compare rates and apply through online loan comparison platforms such as Toss, KakaoPay, KakaoBank, Naver Pay, Finda and BankSalad.

The FSC said, "We plan to additionally launch mid-rate livelihood stability loan products in the second half of the year through 14 savings banks as well as the banking, card and capital sectors."