Emergency Loan Delinquencies Surge 3.4x Amid High Interest Rates, Deepening Economic Crisis for Low-Income Earners

As the high-interest rate environment continues, the burden of repayment on borrowers is increasing, leading to a sharp rise in delinquency on emergency loans.

According to data received from the Financial Supervisory Service by Representative Kim Hyun-jung of the National Assembly's Political Affairs Committee on the 25th, the delinquent balance of emergency loans at major commercial banks and internet banks has increased 3.4 times compared to the end of 2022.

As of the end of August, the delinquent balance of emergency loans at five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, iM Bank) and three internet banks (Kakao, K Bank, Toss Bank) amounted to a total of 47.67 billion KRW.

This represents a sharp increase from 13.99 billion KRW at the end of 2022 and had already reached 36.88 billion KRW by the end of 2023.

The delinquency rate for emergency loans is also on the rise. The delinquency rate, which was 0.59% at the end of 2022, rose to 1.07% at the end of 2023 and soared to 1.24% by the end of August this year.

In particular, delinquencies on emergency loans through internet banks stood out, with the delinquent balance at the three internet banks reaching 31.73 billion KRW, accounting for 67% of the total delinquent balance.

Emergency loan products are primarily designed to allow customers to borrow up to 3 million KRW at annual interest rates of 5–10% through a simple application process. Due to relatively lenient loan requirements, these loans are highly popular among young people.

However, with the recent high-interest rates and economic downturn, an increasing number of borrowers are unable to repay even these small loans.

Representative Kim stated, “The number of people unable to repay even small emergency loans is growing,” urging the government to “take special measures to alleviate the economic difficulties of low-income earners and overcome the economic crisis.”