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| KEB Hana Bank sales division director Lee Jang-sung, right, holds an MOU with used car trading platform app Car Auction CEO Jang Young-soo at the bank's head branch in Seoul, Tuesday. / Courtesy of KEB Hana Bank |
By Jhoo Dong-chan
The nation's commercial banks are introducing a series of auto loan products with lower interest rates. Auto loans used to be an exclusive financial product for capital firms, but now lenders have joined the industry as part of efforts to diversify their business portfolio.
KEB Hana Bank said it signed an MOU with used car trading app Car Auction, Tuesday. This was the first time for a commercial bank to stretch its portfolio into the auto loan business for secondhand cars.
Apart from its partnership with the used car trading app, KEB Hana features the 1Q Auto Loan with a minimum 3.6 percent interest rate.
Shinhan Bank is promoting its My Car auto loan through sponsoring the Korea Baseball Organization this year. The My Car auto loan carries a minimum 3.2 percent interest rate.
Woori Bank recently rolled out the Woori Dream Car loan, offering a prime rate for customers who buy an eco-friendly car. NH NongHyup Bank is operating the NH Easy Auto Loan for car lovers.
According to data released by the Financial Supervisory Service (FSS), the nation's auto loans via 12 domestic banks totaled 5.74 trillion won ($4.87 billion) in February. It was up nearly 700 percent from its 2016 figure of 848.3 billion won.
"They are desperate to diversify their business portfolio. Auto loans are part of their efforts to overcome the nation's saturated financial market," said a NH NongHyup Bank official.
"The government introduced a series of measures to tighten housing loans. Firms are also reducing their investment. Banks are desperate to seek another revenue sources."
The delinquency rate of auto loans has also climbed along with the growth of the market. The data suggested the auto loan delinquency rate stood at 1.08 percent in February.
