#. Ms. Lee agreed to receive a 0.2 percentage point (P) reduction in interest rates on a housing deposit loan from one bank on the condition that she transfer her monthly salary of over 1 million won. However, although she deposited 1 million won into her bank account every month, she did not include words such as "salary," "wages," or "pay" in the transaction description, so she failed to receive the interest rate discount. Even when transferring funds to qualify for a loan interest rate discount, if salary information is not registered with the bank or if the transfer details are not marked accordingly, the interest rate reduction may not be applied.
The Financial Supervisory Service (FSS) provided these "consumer precautions when using banks" on the 21st based on financial complaint cases.
To receive an interest rate discount for salary transfer conditions when applying for a loan via non-face-to-face channels, salary information such as employer name, salary payment date, and salary deposit account must be registered in the bank's app. Even if transferring a certain amount from another bank used as the salary account to the loan bank account, the account description must indicate that the funds are for wages, salaries, or bonuses (e.g., "salary," "wages," "pay," "bonus") so that the bank system can recognize it as a salary transfer.
When taking out a loan, borrowers must also select a repayment method suitable for their situation. A lump-sum repayment at maturity requires paying only interest during the loan period, which reduces the burden, but the principal must be repaid in full at maturity. Equal installment of principal and interest allows for easy expense management by repaying the same amount monthly, but results in higher total interest costs compared to equal principal repayment. Equal principal repayment involves a relatively larger initial payment but offers the lowest total interest burden among the three methods.
There were also complaints where borrowers were not notified by banks that missing payments could lead to loss of grace period benefits and significantly increased interest. In the case of household loans, if interest is not paid for one month or if monthly installment payments are missed for two consecutive times, the borrower may lose the grace period benefit. Once the grace period benefit is lost, overdue interest is generally applied to the entire outstanding loan balance.
For housing collateral loans, the grace period benefit is lost if interest is not paid for two months or if monthly repayment amounts are missed for three consecutive times. If the loan principal is less than 50 million won, overdue interest is charged only on the monthly repayment amount until maturity. Banks must notify debtors of the loss of grace period benefits at least seven business days prior to the effective date.
When extending a loan term, the interest rate may change by a larger margin than expected. One consumer had renewed a 60 million won personal loan annually for years; when the Bank of Korea base rate increased by 0.25 percentage points, the loan interest rate rose from 4.8% to 5.5%. Variable-rate loans consist of the base rate plus an added margin, and both rates are recalculated when extending the maturity date.
If a borrower's creditworthiness deteriorates significantly at the time of extending the loan term, the bank may refuse the extension or demand an interest rate increase, a shortened maturity period, or partial repayment of the loan amount.
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