Soldiers Falling Into Debt After Taking Out High-Interest Loans

The number of active-duty soldiers falling into debt after taking out credit loans from private lending companies is surging.

With the increase in military salaries and the expansion of smartphone use within barracks, there has been a significant rise in active-duty soldiers borrowing money from private lenders.

According to the Financial Supervisory Service, the outstanding balance of credit loans taken out by military personnel from the top 30 private lending companies reached 44.4 billion won as of the end of last year.

Of this amount, 24.2 billion won, or 54.5% of the total, consisted of loans taken out by active-duty enlisted soldiers rather than officers.

The number of soldiers struggling to repay their debts is also on the rise.

According to the Credit Counseling & Recovery Service, the amount of debt restructuring for military personnel nearly doubled in four years, rising from 5.6 billion won in 2021 to 10.2 billion won last year.

Debt restructuring is a system that supports debtors who have difficulty repaying their loans by providing interest rate reductions or extending repayment periods.

The rise in loans taken out by active-duty soldiers is attributed to the significant increase in their monthly salaries.

The monthly salary for a sergeant has steadily increased from 676,000 won in 2022 to 1.5 million won last year.

Furthermore, the increased accessibility to online loans due to the freedom to use smartphones within barracks has also had an impact.

It is reported that some private lending companies have simplified their loan procedures by accepting copies of military salary bankbooks as proof of income.

It has been identified that soldiers took out these loans after seeing online advertisements from loan brokerage firms using names like "Loyalty Loan" and "Sergeant Loan."

The loan limits reached up to 15 million won, with annual interest rates ranging from 17.9% to 20%, which is close to the legal maximum interest rate.

In response, financial authorities are pushing for measures to restrict credit loans from private lenders targeting military personnel, such as blocking loans collateralized by military salaries.

However, there are concerns that if these loan channels are suddenly cut off, soldiers could be driven toward illegal private financing.

Reported by Jung Da-eun | Video by Seo Byeong-wook | Graphics by Lee Soo-min | Produced by SBS Digital News

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