Card issuers cut car loan sizes due to difficulty in raising funds

Cars driving on the Gyeongbu Expressway linking Seoul and the city of Busan in the southeast of this file photo. (Yonhap)

SEOUL, Nov. 8 (Korea Bizwire)A number of South Korean credit issuers and credit finance companies are reducing their auto installment finance offers due to the difficulty in raising funds in a prolonged high interest rate.

For these companies, tiered interest rates for new cars (based on a 60-month term period) were between 6% and 7% this month.

Hyundai Capital Services Inc., the nation’s leading auto finance company, offers installment financing at an annual interest rate of 6.1% when customers buy new cars from its subsidiaries Hyundai Motor Co. and Kia Corp. ., about twice as many as several months ago.

Other companies’ installment interest rates are higher than this, all over 6.5%.

The main factor behind the rise in interest rates on car installments is the surge in the market financing rate resulting from the increase in interest rates in and out from the country.

The interest rate on corporate bonds issued by credit card companies with a maturity of three years stood at 6.1% on November 4, up 3.7 percentage points from the end of 2021. .

Industry watchers said some companies are essentially demarketing – attempting to reduce consumption – by raising interest rates on installments.

JS Shin ([email protected])


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