"Need Cash Fast?" Lender Charged 'Annual Interest of 20,000%' on Loans [True Story]

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[The Financial News] "I’ll lend you 8.32 million won. In return, pay back 2.08 million won every week for four weeks."On the surface, it looked like a simple loan. In reality, it was illegal private lending with a predatory interest rate far above the legal limit. From September 2022 to March 2024, A, 35, ran an unregistered lending business by lending money to unspecified borrowers and charging interest well above the statutory cap of 20% per year.
The method was simple but ruthless. For example, in September 2024, A lent 8.32 million won to victim B, deducted 2.4 million won in advance as so-called 'prepaid interest,' and then paid out a smaller actual amount. B was then required to repay a total of 8.32 million won in four weekly installments of 2.08 million won each. Although it appeared to be a structure in which only the principal was repaid, A effectively extracted high interest through the advance deduction and repayment scheme. Investigators found that A collected interest from B at a rate exceeding the legal maximum of 20% per year.
The treatment of another victim was even harsher. A lent 1.2 million won to victim C, who had been referred through another moneylender, and required repayment of a total of 2.73 million won over 32 days, charging interest equivalent to an annual rate of 1,454%. Through this method, A lent about 582.5 million won to 166 victims in total and pocketed about 287.49 million won in interest alone.
The interest rates applied in the scheme ranged from 27% to as high as 20,573% per year, far above the legal ceiling of 20%.
The court ruled that the case was clearly illegal private lending. The Seoul Eastern District Court's Criminal Division 5, Single Judge, presided over by Judge Chu Jin-seok, sentenced A to 10 months in prison, suspended for three years, on charges of violating the Act on Registration of Credit Business and Protection of Finance Users.
The court said, "The defendant's unregistered lending business continued for a considerable period, and the scale of the loans and the amount of excess interest were substantial, so the nature of the offense is not good." It added, "We considered that A admitted to the charges and is showing remorse, that unjust gains were returned to many of the debtors who could be contacted, and that those debtors expressed that they did not want the defendant punished."
yesji@fnnews.com Kim Ye-ji Reporter