* S.Korea officials say GM charged too much for Korea unit loans
* Other Korean automakers paying less for loans - lawmaker
* GM told S.Korea unit it could not get "preferential treatment" - source
* Source says banks, including KDB, not willing to lend
SEOUL, Feb 28 (Reuters) - For years, General Motors resisted calls from South Korean officials to cut interest rates it was charging on nearly $3 billion in loans to its loss-making South Korean unit, according to three sources and documents seen by Reuters.
The U.S. automaker, which has announced plans to close one GM Korea plant, last week proposed swapping its debt for equity in exchange for financial support from the South Korean government to keep operating in the country.
But the interest charges remain a bugbear for Seoul, which wants an audit of what it calls GM Korea's "opaque" management before deciding whether to spend taxpayers' money to help the unit.
South Korean officials and politicians blame GM's high interest rates for exacerbating losses at GM Korea, which was already struggling with slumping exports to Europe.
"Board members asked for interest rate cuts at almost every meeting, but GM turned a deaf ear," a GM Korea board member told Reuters.
"From a South Korean perspective, it is not right for the biggest shareholder to receive such a high interest rate when lending money to its affiliate," said the board member, who declined to be named citing the confidentiality of the matter.
The U.S. parent company told the board it had to apply equal rates to loans extended to its affiliates and couldn't give GM Korea "preferential treatment", the board member said.
A spokesman for GM in Detroit said the company does not disclose specific details of its internal financial practices.
GM has lent its South Korean unit nearly 3 trillion won ($2.79 billion), charging interest of 4.8 to 5.3 percent per annum, GM Korea's latest regulatory filing shows.
That has riled some lawmakers who are now being asked to step in and help save GM Korea, and who say other automakers are paying much less in interest.
South Korea's Hyundai Motor borrowed money at interest rates of 1.49 percent to 2.26 percent, and Ssangyong Motor, a smaller player than GM Korea, paid 3.51 percent, lawmaker Ji Sang-wuk said, citing regulatory filings.
Over the past four years, GM Korea has paid GM 500 billion won in interest, according to GM Koreas filings. The South Korean unit has racked up a total of 1.9 trillion won in net losses in the three years from 2014 to 2016.
Some of the loans stem from 2012 and 2013, when GM Korea borrowed the funds to buy back $1.2 billion in preferred stock from former creditor and now No.2 shareholder, state-run Korea Development Bank (KDB), officials at GM Korea and KDB said.
"This has made GM Korea bear the financial burden from its borrowings from GM Headquarters, which was able to take interest," a former KDB executive involved in the matter told Reuters. He requested anonymity due to the sensitivity of the matter.
The buyback was made ahead of a 2017 deadline to reduce rising dividend obligations on the preferred stock, cutting GM Korea's costs.
"We made an early redemption to improve our financial structure and reduce our payments burden," a GM Korea official, who declined to be identified due to the sensitivity of the matter, told Reuters. "Local banks were reluctant to lend money because of our weak financial position."
A former GM Korea board member with direct knowledge of the matter said GM Korea's board had asked KDB for loans with lower interest repayments but KDB also refused to lend to the loss making firm.
"GM couldnt let GM Korea go bankrupt so it lent money with the same level interest rate that it charged other GM affiliates," the source said.
"If this is going to be a blame game over GM taking high interest, this wont help find a solution," he added.
KDB declined to comment.
In December, KDB's chairman delivered a letter to the head of GM Korea, demanding GM cut interest rates to help improve profits, according to a document seen by Reuters.
KDB had asked to review GM Korea's financial status but had been rejected by GM, a current KDB official said.
"We asked GM to find a real cause for the losses but they rejected our proposal twice for due diligence on GM Korea," the official said, who also requested anonymity due to the sensitivity of the matter.
"Also since 2016 we keep asking GM to lower the interest rate for its loans to GM Korea, but it is not happening." ($1 = 1,069.8100 won) (Reporting by Hyunjoo Jin and Ju-min Park in SEOUL; Additional reporting by Nick Carey in DETROIT; Editing by Lincoln Feast)