Under new regulations set to take effect in mid-January 2025, early repayment charges on loans will be reduced, according to statements from financial regulators on Wednesday.
According to Yonhap News Agency, the revised rules will restrict lenders to only recovering the actual costs associated with the origination and handling of loans paid off early, plus any real losses incurred due to the early repayment. This adjustment aims to alleviate financial burdens on borrowers who choose to settle their debts ahead of schedule. While early redemption fees are generally prohibited under existing laws, exceptions have been made for loans repaid within three years of issuance, which will now be curtailed under the new guidelines.