Shopping for the best deals on personal loan can be a daunting task. There are more than a dozen banks that offer personal loans in HongKong, so before you decide to settle on the perfect bank, here are just a few tips that you should keep note of.
Personal Loan Eligibility criteria
Many personal loans have strict eligibility requirements. To pre-qualify for a personal loan in HongKong, amongst the requirements include:
- Above 18 years of age (this differs with different bank – some only accept loan applicants who are 21 years old)
- A HongKong citizen
- Have a regular income / salary,at least HKD6,000 per year(also differs with different bank-some require HKD10,000 per year)
Flat interest rate
A flat interest rate is essentially the interest charged on your full principal (amount borrowed) over the term of the loan.
Although the calculation is quite straight-forward, what borrowers tend to miss out is that with a flat interest rate calculation, interest is always charged on the initial amount of your loan. Hence, no matter how much of your loan has been paid up, you (the borrower) would still have to pay the full interest as calculated at the beginning of your loan.
An example of how flat interest rates work: Suppose you took out a HKD10,000 loan at a flat interest rate of 10% per year. The interest charges would be HKD1,000 every year until the entire loan amount is settled / repaid (i.e. the interest rate is HKD1,000 each year regardless of your loan balance).
Early repayment fees
Some lenders would charge a penalty for borrowers who wish to fully repay their personal loan earlier than the agreed upon term (as this would cause the lenders to miss out on the interest rate earnings had the borrower held the loan for the full term). Early repayment fees tend to be a percentage (around 2% to 3%) charged on the outstanding loan balance at the time of the full repayment.
Late Payment Charges
Should you fail to make your monthly loan repayment on time, you may be charged a late payment fee. In addition, there are also two possible consequences. One, the lender has the right to take legal action against you. Second, the bank could deduct any credit balance from your bank account (provided if it’s the same bank) to offset the amount you owe on your loan. If a borrower has applied for a secured loan, the bank could repossess the asset set as collateral.
Want to apply for a personal loan? Find out which bank offers the cheapest personal loan interest rate in HongKong here.