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Personal Loans FAQs

Processing time for a personal loan can vary for different banks. The time taken to process your loan is dependent on several factors, including: requirement of a valuation, complexity of your loan, availability of supporting documents i.e. your salary slips, credit card statements etc. How quickly you return your signed loan documents. On average, it takes 14 days from the date of application submission. However, some banks can process your loan within two to three days. Please note if applicants have previously taken a loan from a bank and have paid them back on time, then it's likely the applicants will get their loan application approved faster than someone who has never applied for a loan before.

Personal Loans can be used for a number of things including

  • Taking advantage of sales.
  • Paying tax bills (tax loans) ? this is rather common in Hong Kong.
  • Children Education fees.
  • Consolidating credit card debt to enjoy lower interest charges.
  • Going on a holiday.
  • Getting married.
  • Personal emergencies.

Generally, it is advisable to limit the amount of your loan that you require. The general rule of thumb is to limit you total loan repayments (including mortgages and credit cards) to not more than 30% to 40% of your gross monthly income.

Please check if you meet the bank's eligibility criteria. It varies by banks, but in general you should be a Hong Kong permanent resident aged 18 or above with a minimum monthly income of around HKD$5,000.00

Make sure all your application documentation is in order. A typical personal loan application in Hong Kong would require the following documents:

  • Proof of Identity: (HKID) card should suffice.
  • Proof of Address: (e.g. latest utilities bill, bank statements, tenancy agreement).
  • Proof of Income: (e.g. latest salary slips and mandatory provident fund statements.) Freelancers and self-employed individuals might want to produce their personal or company bank passbooks showing regular income over the last three to six months. The latest Tax Demand Notes are strong support documents for both employees and self-employed individuals.

Note that banks have access to your credit history report from credit reference agencies such as TransUnion as part of their evaluation process. Therefore, maintaining a good credit history and demonstrating an ability to repay the loan would be an important factor in ensuring successful application.

Banks, consumer finance companies and private money lenders all offer a wide range of personal loan products that are competitively priced. Banks in Hong Kong are tightly regulated by the Hong Kong Monetary Authority. Banks tend to be more selective about borrowers and have stringent credit screening processes in place. Consumer finance companies or Private money lenders are governed under the Money Lenders Ordinance. Private money lenders are licensed by the Licensing Court and closely monitored by the Hong Kong Police Force (Licensing Office). Private money lenders tend to be less stringent and might even accommodate borrowers with more difficult credit history. If you are considering borrowing from a private money lender, we suggest that you make sure that it is properly licensed before proceeding further. The Companies Registry - Money Lenders Unit publishes a current list of all licensed private money lenders, which can be found here. (http://www.cr.gov.hk/en/public/moneylender.htm)

Expatriates that have been living long in Hong Kong or holders of a Hong Kong Permanent Identity Card can easily apply for personal loans from the banks. If you're new in Hong Kong though, you should be realistic with your expectations in getting quick approval for personal bank loans after you've only been in Hong Kong for a while and have a limited credit history.

Since personal loans are unsecured lines of credit, local banks will carefully evaluate your assessment in terms of being financially responsible even if you have a stable job and a monthly income. Local banks generally prefer to deal with people that have prior banking relationships and have proven to be trustworthy. As such you should work on establishing and maintaining a good relationship with your local banks before applying for loans.

Alternatively, new expatriates could try applying for personal loans with consumer finance companies or registered private lenders that have higher risk appetites and specialize in personal loans to foreigners.

Before applying for a loan, it helps to first estimate the maximum loan amount you can borrow. While banks often have their own distinct standards of loan eligibility, they tend to use the same range of data to calculate how much they can lend you, which include your monthly income, repayment terms and interest rates.

No, it is not. It is only a reference point. The final interest rate varies due to several reasons. Before banks decide the final quote for each customer, they will first examine their past credit records and current cash flow.

If the customer has a good credit record, they may qualify for a lower rate. At the same time, banks can charge a higher interest rate to the customers with tarnished credit records. Since these customers are perceived as a higher risk investment, they are charged comparatively higher. Therefore, a healthy credit record puts you at a great advantage and makes you more likely to get a lower interest rate on a loan.

The formula for total interest amount:

Principal x Monthly Flat Rate x Tenor (months)

In Hong Kong, the monthly flat rate is the common method used by constitutes in computing the total interest expenses for an instalment loan.

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