South Korea Sees Rise in Illegal Private Lending Reports as Younger Adults Seek Relief
Reports of illegal private lending and debt collection problems are increasing in South Korea, with people in their 30s and younger representing more than six in ten applicants seeking certain forms of legal assistance.
According to Financial Supervisory Service data provided to the office of National Assembly member Sohn Myoungsoo, reports and consultations submitted to the Illegal Private Lending Victim Report Center increased from 10,913 in 2022 to 17,538 in 2025.
That represents an increase of approximately 60.7% over three years. Another 10,037 reports and consultations had already been recorded by the end of June 2026.
The figures have raised questions about how younger consumers are encountering illegal private lenders and whether additional measures could help identify and reduce those exposure pathways.
Illegal Lending Reports Increase Over Three Years
Reports and consultations involving illegal private lending have increased each year since 2022. The center recorded 10,913 cases in 2022, followed by 13,751 in 2023 and 15,397 in 2024. The number climbed to 17,538 in 2025.
Reports related specifically to unregistered private lenders more than doubled over the same period, increasing from 4,617 in 2022 to 9,293 in 2025. The growth has not been limited to lending itself.
Reports involving debt collection increased from 1,109 in 2022 to 4,280 in 2025, representing nearly a fourfold increase. The data indicate that authorities are receiving more inquiries and complaints not only about access to illegal financing but also about collection activity connected with these arrangements.
Younger Adults Represent 63.2% of Relief Applications
The age distribution becomes particularly notable in applications for South Korea’s Free Support for Debtor Representatives and Litigation Lawyers program, which provides assistance to people dealing with illegal debt collection and related issues.
During the first six months of 2026, the program received 2,260 applications.
Of those, 664 applications, or 29.4%, came from people in their 20s or younger. Another 764 applications, or 33.8%, came from people in their 30s.
Together, those groups represented 63.2% of all applications during the period.
The concentration among younger applicants is not new. According to the figures provided by Sohn’s office, people in their 30s and younger accounted for 73% of applications in 2022, 61.3% in 2023, 62.5% in 2024 and 63.6% in 2025.
Applications for Assistance Also Rise
The number of younger applicants seeking debtor representation and litigation support has also increased substantially. Applications from people in their 30s and younger totaled 653 in 2024 before rising to 1,784 in 2025, an increase of approximately 2.7 times in one year.
Another 1,428 applications from these age groups were recorded during the first half of 2026. The data also show younger consumers making greater use of financing intended to prevent borrowers from turning to illegal private lenders.
Among recipients of the Korea Inclusive Finance Agency’s illegal private lending prevention loans, the share of borrowers aged 19 to 34 increased from 29.7% in 2023 to 36.9% in 2024 and 39.2% in 2025, according to reporting based on the data.
Questions Remain About How Borrowers Reach Illegal Lenders
Despite the available reporting data, Sohn’s office said existing information does not provide a sufficiently detailed picture of how younger borrowers are being exposed to illegal private lending.
Among the areas identified for further examination are whether bank loan rejections or deteriorating credit profiles contribute to borrowers seeking financing outside regulated markets and what types of financial transactions take place before borrowers turn to illegal lenders.
This difference could be important for understanding whether particular financial circumstances or channels are associated with greater exposure.
The available figures primarily measure reports, consultations and applications for assistance. They therefore do not, by themselves, establish the total number of people using illegal private lenders across South Korea.
Calls for More Detailed Analysis
Sohn, who serves on the National Assembly’s National Policy Committee, called on financial authorities to examine the pathways that lead younger adults into illegal private lending.
He said authorities should take seriously the consistently high share of younger people among those seeking relief and develop a more precise understanding of how they are encountering illegal lenders.
The latest figures add to broader concerns surrounding illegal lending practices in South Korea. Recent enforcement cases have included allegations of extremely high interest rates, threats and other coercive collection methods.
More detailed data on how borrowers first encounter illegal lenders could help authorities determine where preventive measures and financial assistance programs could be directed. For now, the figures show both an increase in reported illegal lending and debt collection problems and a persistent concentration of relief requests among younger adults.
