Microloans for Faithful Repayers: What to Watch Out for When Registering Automatic Transfer Accounts?

For those experiencing sudden financial difficulties, the microloans provided by the Credit Counseling and Recovery Service (CCRS) are a useful support measure. However, if one does not accurately understand the eligibility, repayment methods, and disadvantages that occur upon delinquency before executing the loan, it may instead increase the economic burden.

According to the microloan usage guide provided by the CCRS, the loan targets are users who are faithfully implementing the debt adjustment programs of the CCRS and are in need of emergency funds. However, specific support qualifications, loan limits, and interest rates may vary depending on individual circumstances. In particular, there may be restrictions if debt adjustment repayment is being delayed or if new debt exceeds the limit, so one must ensure eligibility through consultation before applying for a loan.

It is essential to use a repayment calculator before the loan to check 'repayment ability'

The first thing to do before receiving a loan is to accurately calculate the principal and interest that must be paid every month. The loan support limit according to the debt adjustment repayment period can be checked through the CCRS call center, and by using the 'Loan Calculator' on the Credit Counseling and Recovery Service Cyber Consulting website, one can pre-calculate the expected repayment amount by entering the loan amount, interest rate, and repayment period.

The repayment method for microloans is the equal installment method of principal and interest, where both are paid back together every month. As the loan period progresses, the proportion of the principal within the monthly payment gradually increases. Therefore, users must carefully judge whether they can afford the fixed monthly principal and interest payments by considering their current income and expenditure scale.

Beware of 'setting the same account' when registering an automatic transfer account

After the loan is executed, the bank account that received the loan must be registered as the automatic transfer account for repayment. At this time, the point to be careful of is that it must be an account under one's own name. Accounts protected against seizure or accounts with deposit restrictions cannot be used as automatic transfer accounts.

In particular, if one is already using a CCRS debt adjustment program, the automatic transfer account set for existing debt repayment cannot be set to the same account as the automatic transfer account for this microloan repayment. If the automatic transfer is not performed normally due to insufficient balance on the repayment date, it can lead to delinquency, so it is necessary to have the habit of checking the account balance in advance before the repayment date.

Delinquency leads to subrogation payment and disadvantages in credit information registration

Since microloans are executed through guarantees, the disadvantages in the event of delinquency are significant. If repayment is not made and delinquency continues, 'subrogation payment' occurs, where the guarantee institution pays the debt on behalf of the debtor. In this process, the guarantee institution registers delinquency information in the user's credit information, and subsequently, debt collection or legal procedures may proceed.

To prevent delinquency, managing contact information is important. If a mobile phone number or address has changed, information must be updated through the CCRS call center (1375). The Committee helps users not to miss the repayment date by sending repayment notices based on the updated information.

Meanwhile, users who are faithfully repaying existing microloans can use additional loans within the limit. However, if an additional loan is also decided in excess of one's repayment ability, the overall debt burden may increase, so one must carefully decide only on the necessary amount. The funds for the CCRS microloans are operated through financial institutions, private companies, donations from individuals, and borrowings from local governments.

Source: original video (YouTube)