I was quite aware that loan sharks in Korea was widespread because it’s not unusual to get a text message from 현대 capital(apparently it is a private lender that uses 현대’s name without permission) every now and then, but I knew very little about the fact that it also involves a lot of risks. There are thousands of small lenders operating on the fringes of the law that target people desperate for money.
The presenter said that these loan sharks usually target households which are spending more than they earn and their ability to pay off debt is weak. If interest rates rise and debt grows, this will pose problems for their financial state and even their safety.
I heard that they account for about 85 percent of the country’s troubled debtors who are seriously behind in payments or on the brink of bankruptcy.
In a recent news article, I heard that earlier this year, South Korean media was saturated with the story of a young women who borrowed about 2,500 000 won to pay college tuition and was charged with illegal fees that put her interest rate at almost 350 percent, forcing her to take out more loans. The lender then forced the woman into prostitution to pay off her debt. Her father was dragged into the mess and also fell into debt. He ended up killing his daughter and then committed suicide. This is only one of many other horror stories surrounding Korea’s loan sharks.
Usually borrowers knew the risks involved when they borrow from loan sharks but did so because they were desperate for money. This is causing serious problems and I feel that the government should set up loan policies for people with low income and take severe measures in order to prevent such happenings.