New Type of Illegal Lending Using 'Vehicles' as Collateral on the Rise; Financial Supervisory Service Issues 'Caution' Alert

[Economy 365]

The Financial Supervisory Service (FSS) has issued a "caution" consumer alert as a new form of illegal private lending, which uses installment or leased vehicles as collateral, is on the rise.

According to the FSS, 12 reports of related damages have been filed so far this year.

Loan amounts ranged from 2.5 million won to 30 million won. In some cases, the effective annual interest rate reached as high as 229% due to additional charges such as parking fees, travel expenses, and commissions.

The FSS warned that providing an installment vehicle as collateral without the consent of the financial company could lead to criminal punishment for both the debtor and the lender.

In the case of leased vehicles, the ownership belongs to the leasing company, making it impossible to use them as collateral in the first place.

The FSS advised that if you are asked to take out an illegal vehicle-collateral loan, you should report it immediately to prevent further damage.

*This article was produced using AI audio.
※ Please note: This article was translated by AI and may contain errors.