Interest on money not repaid in Korea starts from the statutory rate. Civil Act Article 379 sets 5% a year where no other law or agreement applies; Commercial Act Article 54 sets 6% for debts from commercial acts; and Civil Act Article 397 says damages for non-payment run at the statutory rate, or at a lawful agreed rate if there is one. In court, the Act on Special Cases Concerning Expedition of Legal Proceedings, Art. 3, applies 12% from the day after the claim is served. Agreed interest can’t exceed 20% a year under the Interest Limitation Act. The calculator covers all four.
1. With no agreement: 5% civil, 6% commercial.
2. With a judgment ordering payment: 12% from the day after the claim is served (Decree).
3. Agreed interest is capped at 20% — the excess is void; loans under 100,000 won excepted.
Calculator
Updates as you type. Interest = principal × annual rate × days ÷ 365 (our method; days = end minus start). Simple interest only. The 20% cap warning applies to agreed rates on loans of 100,000 won or more.
Four rates — the text
| Basis | Rate | Worth noting (ours) |
|---|---|---|
| Civil Act Art. 379 | Interest-bearing claims: 5% a year absent another law or agreement | — |
| Commercial Act Art. 54 | Debts from commercial acts: 6% a year | — |
| Litigation Act Art. 3(1) + Decree | On a judgment ordering payment, from the day after the claim is served, a Decree rate within 40% — set at 12/100 a year | Not for claims under Civil Procedure Act Art. 251 (future performance) |
| Interest Limitation Act Art. 2 + Decree | Maximum contractual rate within 25%, set by Decree at 20% a year | Rate at the time of agreement |
Article 3(2) disapplies the 12% to the extent the debtor reasonably disputed whether or how much they owed. That’s for the court, so the calculator simply applies 12%.
Late-payment damages — Civil Act Art. 397
Damages for non-payment are set at the statutory rate, or at a lawful agreed rate where there is one. The creditor needn’t prove loss, and the debtor can’t plead lack of fault. Under the Interest Limitation Act, interest above the cap is void, any excess already paid is applied to the principal and can be reclaimed once the principal is gone, and where interest was deducted up front, the amount actually received counts as the principal (Art. 3).
Three sums — our example
| Case (our example) | Interest | Worth noting (our sum) |
|---|---|---|
| 10 million won, 5%, 365 days | 500,000 won | 10m × 5% × 365 ÷ 365 |
| 10 million won, 6%, 365 days | 600,000 won | Commercial |
| 10 million won, 12%, 100 days | 328,767 won | Rounded down |
Dividing by 365 and rounding down are our method; the articles set annual rates but not a day-count method. Leap years or a court’s calculation may differ. Interest on unpaid wages (20%) is in unpaid wage interest calculator.
Checklist
- ☐ Does the IOU set interest or late interest?
- ☐ Agreed rate within 20% (loans of 100,000 won or more)
- ☐ Between individuals 5%; commercial acts 6%
- ☐ In court, 12% from the day after service
- ☐ Interest deducted up front? The amount received is the principal
Questions that remain
Can interest compound?
Interest Limitation Act Art. 5 voids compounding agreements to the extent they exceed the cap. The calculator uses simple interest only.
When does late interest start?
That depends on the due date and default under the contract, which is outside this post. Enter the start date yourself.
Sources
- Korean law database (law.go.kr) — Civil Act Arts. 379, 397 — source (effective 17 March 2026, Act No. 21454; checked 20 October 2026). 5% statutory rate; damages for money debts (statutory or agreed rate, no proof of loss, no fault defence).
- Korean law database — Commercial Act Art. 54 — source (effective 10 September 2026, Act No. 21044; checked 20 October 2026). 6% commercial rate.
- Korean law database — Litigation Act Art. 3 and the Decree on its rate — Act (effective 2 June 2026, No. 21726) · Decree (effective 1 June 2019, No. 29768). From the day after service, within 40%, 12/100, the para. 2 exception.
- Korean law database — Interest Limitation Act and Decree — Act (effective 22 July 2025, No. 20714) · Decree (effective 7 July 2021, No. 31593). Within 25%, set at 20%; excess void and applied to principal; under 100,000 won excepted; up-front interest; deemed interest; compounding.
- Not read. Case law; due date and default rules.
- What we added. The “worth noting” column and the Korean everyday gloss.
Where to check further
- Korea Legal Aid Corporation or a lawyer — payment orders, lawsuits and rates.
Written on 20 October 2026. The content is from the source; the glosses are ours.
