Is South Korea loosening the rental cap now?
Not yet. South Korea's Financial Services Commission (FSC), the financial regulator, is still studying whether to raise the cap on car rental assets that capital firms may hold. Reporting on September 27, 2026 said the FSC was analysing the likely market impact and gathering industry views. Later reporting in October 2026 described regulators as still considering the change. No new rule has been announced.
What is the cap, and why does it exist?
Capital firms are specialised credit finance companies. They mainly lease vehicles, and they may also run car rental businesses on the side. The limit ties the two together: a firm's average outstanding rental assets may not exceed its average outstanding lease assets in the same category. In practice, a firm that wants to grow its rental business must also grow its leasing business.
The rule dates to 2005, when capital firms were first allowed into rental. Its supporters see it as a guard on the core business. Critics see it as a brake on competition.
Why do capital firms want the cap raised?
Capital firms say consumers are moving from leasing to long-term rental, so their rules should keep pace. They argue that more competition would widen choice and could push rental fees down.
The reports also point to the market for leases. The auto lease market fell to 12.8 trillion won in 2024, from 14.7 trillion won in 2022. Long-term rental cars are classed as commercial vehicles for tax purposes, which gives them lighter acquisition and ownership taxes than leases.
The Fair Trade Commission, the competition regulator, has also raised the rule. In January 2026 it blocked a proposed merger of Lotte Rental and SK Rent-a-Car, saying the cap was limiting competition with large rental companies. The two firms' combined share of the long-term rental market was 36.3% at that time.
Why is the rental industry pushing back?
The traditional rental industry says capital firms have already become major players, and that any expansion could squeeze smaller operators. Capital firms held 45.32% of the domestic rental market at the end of July 2026, ahead of dedicated rental companies at 43.08%. The rest is split among more than 1,000 small and mid-sized operators.
The industry's main worry is residual value, the estimated price of a car at the end of a rental contract. Rental companies use this figure to set monthly fees. A higher assumed residual value allows lower fees. If the car sells for less than assumed, the operator takes the loss.
The reports give an example. If a fee assumes a car will sell for 26 million won ($19,600) after four years, but it sells for 20 million won, the 6 million won gap is a loss for the operator. The industry also cites a case from last August, when a major capital firm raised residual values on some luxury sedans and large SUVs even as used prices for some of those models were falling.
Used-car exports add to the risk. According to the Ministry of Trade, Industry and Energy, September 2026 used-car exports totalled $450 million, down 56.8% year on year. The industry warns that cars that would have been exported could stay in the domestic market and push local prices lower.
Where do the two sides disagree?
The reports agree that the rule needs review, but they disagree on how to proceed.
| Party | Position |
|---|---|
| Capital firms | Ease the cap to match market change and widen choice |
| Korea Rent-a-Car Business Association / Cooperative Federation | Oppose easing until asset quality and residual values are checked |
| National Rent-a-Car Federation | Support easing, if capital firms offer financing and other help to smaller operators |
| FSC | Still analysing impact and gathering views |
The two reports name the rental industry body differently: one calls it the Korea Rent-a-Car Business Association, the other the Korea Rent-a-Car Business Cooperative Federation. Both describe the same opposition.
The industry also wants the Ministry of Land, Infrastructure and Transport involved. It says the car rental business falls under that ministry through the Passenger Transport Service Act, while talks so far have focused on financial regulators.
What could it mean for car renters?
Nothing changes for renters today. The reports do not describe any change to existing rentals or bookings.
If the cap is raised, the reports suggest two possible outcomes. Capital firms expect more competition and lower fees. The industry warns that fee cuts built on high residual value assumptions could later cost consumers, because losses on resale might flow back into rental finance. Neither outcome is certain, and the reports give no estimate of fee changes.
What should a traveller do differently?
For now, the best step is to keep comparing. Look at the full price of a rental, not only the headline rate, and read the terms before you book. Our pricing guide explains how rental prices are built. You can also search live offers to compare prices for your dates.
Bookings on this site are completed on DiscoverCars, and changes or cancellations must go through DiscoverCars support. Cars Renta is a comparison site and does not own vehicles or hold rental contracts. For background on the site, see about us.
Watch for an FSC decision. If the cap is changed, the first effects are likely to show up in which companies offer rentals and at what prices.
