In Incheon, South Korea's air and sea gateway, a peer-to-peer loan must respect the 20% annual cap, be put in writing and paid through a bank, with particular care for migrant workers and tenants.
A port and airport metropolis
Incheon has around 3 million inhabitants, a major commercial port and the international airport on Yeongjong Island. This openness multiplies money flows between residents, travellers and relatives abroad, and with them the opportunities for transfer scams aimed at people far from home.
Songdo, an international business district
Songdo, inside the Incheon Free Economic Zone, hosts international companies and the secretariat of the Green Climate Fund. Its foreign residents sometimes lend to colleagues: a dated bilingual contract prevents misunderstandings about which currency the debt is owed in.
Migrant workers in the industrial zones
Industrial zones such as Namdong employ many foreign workers recruited through the Employment Permit System (EPS). They often lend money to fellow nationals; our page on loans for immigrants sets out the precautions worth taking before handing over cash.
The Michuhol-gu jeonse fraud
In 2023 the Michuhol-gu district was hit by a vast jeonse fraud: hundreds of tenants lost their lump-sum deposits after heavily mortgaged buildings were seized. Before lending money towards such a deposit, consult the property register for the building concerned.
No local exception to the 20% cap
Since July 2021 the Interest Limitation Act has capped the rate on a loan between individuals at 20% a year. Incheon has no exemption: a lender who demands more, even when labelled as fees, is operating outside the legal framework.
Foreign residents and tax on interest
Interest received by an individual is taxed at 25%, plus a local tax equal to 10% of that amount, or 27.5%. A foreign resident of Incheon is in principle subject to it like a Korean citizen; the local tax office can confirm this.
Telling a genuine lender from a fraudster
A registered lender in Incheon shows a number issued by the metropolitan city, offers a readable contract and asks for nothing before paying out. Our method to check that a private lender is genuine adds to these basic criteria.
The fake parcel held at airport customs
A common script claims a parcel or transfer is being held at Incheon airport customs: the victim must pay clearance fees to receive the promised loan. No customs service ever collects duties through a private individual's bank account.
Sending money home without shady middlemen
Some migrants hand their savings to unauthorised middlemen to send money home more cheaply. In Korea, international transfers legally go through banks or registered remittance companies; informal channels leave the sender without any remedy if the money disappears.
Acting fast after a fraudulent transfer
After sending money to a fraudster, call 112 or your bank at once to have the receiving account frozen, then contact the FSS, the financial watchdog, on 1332. Our page on how to report a loan scam lists the evidence to gather.
Support for foreigners and legal aid in Incheon
Migrant workers can contact the foreign worker support centres and the multilingual 1345 helpline. For a loan dispute, the Korea Legal Aid Corporation offers legal assistance to people of modest means, foreigners included, subject to an income test.
Incheon and Seoul, one commuter belt
The subway links Incheon to the capital, where many residents work every day. Jeonse deposits and phone fraud affect both cities alike; our page on the peer-to-peer loan in Seoul gives further examples from the capital.
Sound habits before lending in Incheon
- Confirm the identity and residence status of a foreign borrower, along with the expiry date of their registration card.
- For a housing-related loan, consult the property register and mortgage history before paying anything.
- Draft a bilingual contract stating the sum in won, an annual rate below 20% and the schedule.
- Use a Korean bank transfer; to send money abroad, go through a bank or a registered remittance operator.
- Refuse any payment of customs or clearance fees presented as a condition for receiving a loan.
- Keep all evidence and declare interest received to the Incheon tax office.
Indicative cost grid in Incheon
| Loan item | Indicative benchmark | Point to watch |
|---|---|---|
| Maximum annual rate | 20% | Also applies to loans between foreign residents |
| Example in won | At most ₩600,000 a year on ₩3,000,000 | Calculated at the legal cap |
| Tax on interest | 27.5% in total | 25% withholding plus local tax |
| Transfer abroad | Fees vary by operator | Compare banks and registered operators |
| Fake customs fees | Money lost | No customs office collects into a private account |
Standard file for a loan in Incheon
- Alien registration card or Korean ID card
- Signed bilingual loan contract
- Property register extract and jeonse lease if housing is involved
- Borrower's employment contract or EPS permit
- Statements of transfers made
- Full contact details of any guarantor
Warning signs in Incheon
- Lending for a jeonse deposit without consulting the property register, when the building may already be mortgaged beyond its value.
- Paying clearance fees to release a loan or parcel supposedly held at Incheon airport.
- Entrusting savings to an unregistered transfer middleman promising a better exchange rate to the home country.
- Handing over a passport or alien registration card as security to a lender, which makes identity theft easier.
- Lending to a colleague whose work permit expires soon without setting a final due date before their departure.
Common questions on private lending in Incheon
Can a migrant worker in Incheon borrow from a fellow national?
Yes, a loan between foreign residents follows Korean law: in writing, below 20% and paid by bank transfer. Set the last instalment before the work permit ends and note the borrower's home-country address to help with any later recovery.
How can I avoid lending for housing caught up in jeonse fraud?
Before paying anything, consult the property register, compare the total mortgages with the value of the property and check the owner's identity. A licensed estate agent or a lawyer can confirm that the deposit will actually be protected.
Can Incheon customs charge fees to release a loan?
No. A loan is never held at customs, and the authorities do not request payment into an individual's account or by gift card. This message is a scam: pay nothing and report it to the police on 112.
What if my borrower leaves Korea without repaying?
Gather the contract, transfers and messages, then consult a lawyer or the Korea Legal Aid Corporation. Proceedings abroad are slow and expensive, which is why the repayment schedule should end before the borrower's planned departure date.