Getting financing has never been easier for Hong Kong residents. Most banks and other licensed money lenders provide loans to people to fund virtually anything, ranging from emergencies to large loans. What is more, most banks can process online loan applications and approve qualified applicants within a very short time.

If you are experiencing some financial problems, you may want to consider a quick loan from a bank. Borrowing loans in banks can help you ease your financial burden and consolidate your high-interest debts before they become a serious issue. The advantage of bank loans is that they come at a lower interest than loans from other lenders. MoneySmart makes it easy for loan applicants to compare bank loans in Hong Kong so they can pick a loan plan that best suits their needs.

For Hong Kong residents applying for a bank loan for the first time, it is extremely important to understand the different types of bank loans and all other aspects related to them. This post will cover more on loans to help you make an informed decision when borrowing.

What are bank loans?

Bank loans are what they sound like — loans offered by banks. They come in different types designed to address different needs that borrowers may have.

Whether you need money to take care of an emergency, pay debts, or settle large expenses, there is a bank loan that would help you do just that. When it comes to borrowing bank loans, the most important thing is to meet the eligibility criteria for the loans you are applying for. Of course, different banks have different requirements, including a good credit score, that loan applicants need to meet to qualify for a loan.

Types of bank loans in Hong Kong

There are many different types of bank loans available in Hong Kong. If you are unaware of what type of loan you need, here are some common bank loans:

Fixed instalment loan

Fixed instalment loan is an umbrella term that refers to an overwhelming range of personal loans. The identifying characteristic is that the loan is set to be repaid with regularly scheduled instalments. The exact loan you get depends on the financial problem you want to cover and could range from quick to substantial loans. As the name suggests, the payment amount remains the same during the life of the loan. And the interest rate cannot be changed unless refinanced.

Debt consolidation loans

Debt consolidation loans are loans meant to help the borrower consolidate high-interest debts into a single, low-interest debt. With this loan, you borrow enough money to pay off all your current debts. In other words, it helps you get out of debt quickly and save on interest with just one loan.

Revolving loan

Best suited for paying off credit card debts or for those in need of extra cash. A revolving loan is a loan that gives the borrower the ability to borrow, re-pay, and re-borrow. It is one of the most flexible financing solutions Hong Kong residents have access to and is considered an excellent alternative to overdrafts. One good thing about this type of bank loan is that it provides you with money as many times as you need it. On the other hand, the rates are higher compared to fixed instalment loans.

Tax loan

If you want a loan whose interest rate is considerably lower than that of ordinary fixed instalment loans, you may want to borrow a tax loan. Hong Kong residents can use part of the loan to offset taxes and settle other financial burdens.

By now you should have a better idea on the types of bank loans one can apply for in Hong Kong. Though the advantage with bank loans is that you get lower interest than if you borrowed from other lenders, the stricter requirements could be an issue.

Qualifying for bank loans in Hong Kong

For anyone in Hong Kong to qualify for a bank loan, you must be at least 18 years of age. But this is not the only requirement. Different banks have different set of requirements for different types of loans. Therefore, it is always advisable to find out more from the respective banks before you apply for a loan.

The bottom line

Borrowing a bank loan in Hong Kong is an excellent way to raise cash quickly. Particularly if you need money for unexpected medical expenses, financial emergencies or for making large purchases. There are many types of loans. And depending on your credit score, among other things, you are likely to qualify for one of the different types. Before you proceed to borrow from a bank, always read the fine print. Most importantly, understand all the terms, conditions, limitations and repayment details based on your loan amount and tenure.

Remember, avoid the pitfalls and borrow wisely!