UPDATE 1-S&P cuts Japan's Aiful and Takefuji to junk

* S&P says financing and higher credit costs a concern

* First time Takefuji hit with junk rating

TOKYO, June 15 (Reuters) - Ratings agency Standard and Poor's on Monday cut its ratings on the long-term debt of Japanese consumer lenders Aiful Corp (8515.T) and Takefuji Corp (8564.T) to speculative, or junk status, citing concern about financing and credit costs.

Giving the companies speculative ratings is likely to drive their funding costs higher. It is the first time that Takefuji has been hit with a junk rating and is the latest blow to an industry crippled by tougher regulation.

Japan's government has cut the maximum interest rates moneylenders can charge to around 18 percent from about 29 percent. In addition, courts have forced companies to return past interest charges now deemed illegally high.

Such refunds are unlikely to decline in the near future, the agency said in a statement.

Standard and Poor's said it cut its long-term senior unsecured debt rating on Aiful by two notches to BB from BBB-, and on Takefuji by one notch to BB+ from BBB-. [ID:nSPW7h4CL6]

The ratings change will likely also force funds that invest only in high-grade debt to sell their bonds.

Rival agency Moody's last month cut its rating on Aiful to speculative grade. (Reporting by David Dolan; Editing by Joseph Radford)