If you signed up for a loan or other financial product in Korea without a proper explanation, or through an unfair practice such as tying, you can ask to end the contract with no fee. Article 47 of the Financial Consumer Protection Act says that where a firm made the contract in breach of the suitability rule (Art. 17(3)), the appropriateness rule (Art. 18(2)), the duty to explain (Art. 19(1), (3)), the ban on unfair practices (Art. 20(1)) or the ban on improper solicitation (Art. 21), the consumer may ask in writing to terminate within a period set by Decree of up to 5 years. Decree Article 38 sets that at 1 year from learning of the breach, within 5 years of the contract date. The firm must answer within 10 days, and after termination it can’t charge fees, penalties or other termination costs. Learn on 2 November 2026 of a breach in a contract of 10 March 2024 and the deadline is 2 November 2027 (our sum).
1. Deadline: 1 year from learning, within 5 years of signing — whichever is earlier (Decree Art. 38(2)).
2. Termination request form + proof of the breach go to the firm (Art. 38(3)); it replies within 10 days with its decision and any reasons for refusal (Act Art. 47(1)).
3. Refused without just cause? You can terminate, and termination costs are 0 won (Art. 47(2), (3)).
Calculator
Updates as you type. Deadline = the earlier of 1 year from learning of the breach and 5 years from the contract, each counted from the next day by the calendar (Civil Act Arts. 157, 160, our reading). The firm’s 10 days are counted the same way. Only Saturdays, Sundays and the 2026 December–2027 Korean public holidays we listed (substitute holidays included) are applied; check temporary holidays and other years yourself.
What the Act says — Art. 47
| Type | What the source says | Worth noting (ours) |
|---|---|---|
| Who (1) | A financial consumer | Withdrawal says “ordinary” consumer; this doesn’t |
| Which breaches (1) | Contracts made in breach of Art. 17(3) (suitability), 18(2) (appropriateness), 19(1), (3) (explanation), 20(1) (unfair practices) or 21 (improper solicitation) | Limited to these five |
| Which products (1) | Contracts for products set by Presidential Decree | Decree Art. 38(1) below |
| Period (1) | A written request within a period set by Decree of up to 5 years | The Decree narrows it to 1 year from learning |
| Firm’s answer (1) | Within 10 days of the request, whether it accepts; if refusing, with reasons | “10 days”, not business days |
| You may terminate (2) | If the firm doesn’t comply without just cause, the consumer may terminate | — |
| Costs (3) | After termination the firm can’t ask for fees, penalties or other termination costs | A prepayment fee reads as a “fee” here (our reading) |
What the Decree fills in — Art. 38
| Type | What the source says | Worth noting (ours) |
|---|---|---|
| Products (1) | Products with ongoing dealings between consumer and direct seller or adviser that the Financial Services Commission lists | We didn’t read the list — ask the firm whether yours is on it |
| Period (2) | Within 1 year from learning of the breach, and within 5 years of the contract date | The earlier of the calculator’s two dates |
| Filing (3) | The Commission’s termination request form with documents proving the breach | Keep recordings, product sheets, texts (our gloss) |
| Just cause (4) | 1. No or false evidence of the breach, 2. no breach at signing but a later change of circumstances, 3. breach corrected with consent, 4. similar cases the Commission sets | Refusal is justified in these cases |
Counting the dates — our examples
| Case (our example) | Last day to ask | Worth noting (our sum) |
|---|---|---|
| Contract 10 March 2024, breach learned 2 November 2026 | Tue 2 November 2027 | 1 year from learning comes before the 5-year cap (10 March 2029) |
| Contract 20 January 2022, learned 2 November 2026 | Wed 20 January 2027 | The 5-year cap comes first — less than a year left |
| Request sent Mon 2 November 2026 | Firm replies by Thu 12 November | 10th day counting from the next day |
Counting “1 year from learning” and “5 years from the contract” by Civil Act Arts. 157 (first day excluded) and 160 (calendar), moving a Saturday or holiday end under Art. 161, is our reading. The Decree calls the 5 years a “range”, so don’t cut it fine. Period counting is in the legal period calculator.
How this differs from withdrawal and prepaying
Withdrawal (Art. 46) undoes a contract within 14 days for any reason, and for loans only once principal, interest and third-party costs are returned. Termination for breach needs a breach, runs longer and costs nothing. Without a breach only early repayment remains, which can carry a prepayment fee within 3 years of the loan (Art. 20(1)4(b)). See the loan cooling-off calculator and the prepayment fee calculator.
Checklist
- ☐ Which breach — missing explanation, tying, unfair collateral or guarantee demands — and which of the five articles it falls under
- ☐ Record the day you learned of it (date of the text or email)
- ☐ When the 5 years from signing run out
- ☐ File the request form with proof; note the filing date
- ☐ No answer in 10 days, or reasons that don’t hold? Give notice of termination
Questions that remain
Do I get back interest already paid?
Art. 47 only says the firm can’t charge termination costs. Whether interest already paid comes back isn’t in the articles we read.
Is a prepayment fee itself a breach?
Art. 20(1)4(b) makes charging a prepayment fee an unfair practice except for repayment within 3 years of the loan, cases other laws allow, and cases the Decree sets. We didn’t read the Decree’s exceptions.
Sources
- Korean law database (law.go.kr) — Financial Consumer Protection Act Arts. 20, 46, 47 — source (current text, effective 2 January 2026, Act No. 21065; checked 2 November 2026). Art. 47: the five breaches, the Decree period up to 5 years, 10-day answer with reasons, termination after refusal without just cause, no termination costs; Art. 20(1)4(b) prepayment fees.
- Korean law database — Enforcement Decree Art. 38 — source (current text, effective 28 April 2026, Presidential Decree No. 36287; checked 2 November 2026). Listed ongoing products, 1 year from learning within 5 years, request form and proof, just cause 1–4.
- Korean law database — Civil Act Arts. 157, 160, 161 — source (current text, effective 17 March 2026, Act No. 21454; checked 2 November 2026). First day excluded, calendar counting, Saturday/holiday move.
- Not read. The Commission’s notice (product list, request form), details of Arts. 17–21, the Decree’s unfair-practice details, case law.
- What we added. The “worth noting” column and the Korean everyday gloss.
Where to check further
- The firm you contracted with — whether your product is covered, the request form.
- Financial Supervisory Service — dispute mediation (we didn’t read its guidance).
Written on 2 November 2026. The content is from the source; the glosses are ours.
