ENGLISH

· Principally, drafting a written Agreement for Consumer Cash Loan can prevent potential disputes that may arise later between the parties (refer to Seoul Central District Court - Communication - Accessible Legal Lectures - Contracts in Daily Life).

· After repaying the debt, the debtor should retrieve the original promissory note and also remember to get a receipt from the creditor (refer to Seoul Central District Court - Communication - Accessible Legal Lectures - Contracts in Daily Life).

· Specifying the Amount

√ The principal amount being lent should be specified here. For prevention of mistakes, it's safer to write the amount both in Korean Hangeul and Arabic numerals side by side.

· Recording Personal Details

√ The person lending the money is called the creditor (lender), and the person borrowing the money is called the debtor (borrower).

√ It can be more conclusive evidence to prevent potential disputes later if the debtor writes his/her personal details in his/her own handwriting.

· Interest

√ If interest isn't specified, you cannot claim interest in a loan. However, in a loan between merchants, even without a special agreement, the lender can claim the legal interest rate (6% annually). Moreover, if you've agreed to pay interest but haven't specified the rate, civil debt is charged at an annual rate of 5%, and commercial debt at 6%.

√ The interest payment can be structured in various ways: it can be divided and paid monthly, paid all at once when repaying the principal, or even received upfront (commonly known as pre-paid interest).

√ The past law that limited interest rates has been abolished, but under the current Act on Registration of Credit Business and Protection of Finance Users, the maximum interest rate for lenders lending to individuals or small corporations designated by the Presidential Decree is limited to 66% annually.

· How and when the debtor repays

√ The payment due date refers to the day agreed upon between the parties to repay the money. If the parties have agreed to repay the borrowed money in installments rather than in one lump sum, this should be noted.

√ Payment should be made at the current address of the creditor (the lender) unless otherwise agreed upon by the parties (however, the payment of business-related debts should be made at the current business location of the creditor). It would be convenient to specify a place that is convenient for both parties to repay the money in the contract or to note the creditor's bank account number.

※ Detailed information on how to draft a loan agreement can be found at <Seoul Central District Court – Communication - Accessible Legal Lectures - Contracts in Daily Life>.

· Using nicknames or pennames of the parties may be sufficient if the parties can be properly identified. However, it is advisable to specify legal names, national registration numbers, addresses, and telephone numbers.

※ A "Power of Attorney" means a written authorization given by one person to another to act on his or her behalf.

· In order to avoid typographic errors, it is advisable to use both words and digits when stating a number.

· The amount a creditor receives in connection with a loan, no matter how the items are referred to, such as a deposit, rebate, fees, deduction, or advance interests, shall be deemed interest. (Article 4-(1) of the Interest Limitation Act)

· Where a debtor agrees to bear a duty to pay money in connection with a loan, such payment shall be deemed interest when a creditor is presumed to bear the duty from the nature thereof, in light of causes of the occurrence of the duty, relevant Acts and subordinate statutes, of details of the duty, common principles of deals, etc. (Article 4-(2) of the Interest Limitation Act)

※ Notwithstanding the above, if the money transaction is by nature a commercial transaction, the statutory interest rate shall be six percent (6%) per annum. (Article 54 of the Commercial Act)

· A person who has received interest which exceeds the maximum interest rate shall be punished by imprisonment for a term not exceeding one (1) year and/or by a fine not exceeding KRW 10 million. The person may be subject to imprisonment and the fine concurrently. (Article 8 of the Interest Limitation Act)

· For example, if the parties enter into an Agreement for Consumer Cash Loan of a principal sum of KRW 10 million at an interest rate of twenty percent (20%) per annum, the debtor may receive KRW 8 million from the creditor after deducting the interest of KRW 2 million in advance from the principal sum of KRW 10 million

※ An "Additional Clause" means a clause which is contained in an agreement for the purpose of restricting the taking effect or nullification of a legal act.

· The purpose of the presumption for the benefit of the debtor is to allow the debtor to defer the repayment by entrusting his or her financial credibility during the fixed term.

· A circumstance where the debtor damages, diminishes or nullifies the security (Article 388-1 of the Civil Act)

· A circumstance where the debtor fails to discharge his or her obligation to provide for the security (Article 388-2 of the Civil Act)

· A circumstance where the debtor becomes insolvent (Article 425 of the Debtor Rehabilitation and Bankruptcy Act)

※ You may additionally expressly state the matter regarding debtor's loss of benefit resulting from the fixed term as a special condition in the agreement.

· You should not agree to any uncertain conditions, such as 'The debtor shall repay if he or she gets money'.