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Frequently Asked Questions
  • Besides interest rates, you should also take the following factors into account:
    Read the terms & conditions carefully-check if there are any other costs and/or hidden fees;
    Ease of application and approval turnaround time,
    Convenience of the bank's branch network & application channels.
  • Generally, for applications for a Hang Seng Handy Cash Personal Instalment Loan made online, via the 24-hour Application Hotline or in person at a Hang Seng Bank branch, the customer can enjoy same-day approval and cash disbursement if Hang Seng receives all required documents by the designated time, (subject to the actual situation and circumstances at the time of application). For the related terms and conditions of the Hang Seng Handy Cash Personal Instalment Loan, please click here.
  • A Hang Seng bank account is not a prerequisite when applying for a personal loan. If the customer does not have a Hang Seng bank account, he/she will be required to open one for loan disbursement and repayment upon loan approval. The customer can go to any Hang Seng Bank branch for account opening.
  • Generally, in order to assess the creditworthiness of the customers, banks will check with a CRA which collects information about individual's indebtedness and credit history. In the event that customers wish to access credit reports, the bank will provide the contact details of the relevant CRA.
  • In general, no. Saving money from your monthly income is of course a good way to get accumulate sufficient cash to buy or do the things you want. However, this involves a "time cost" - you have to wait until you have saved enough money. What's more, you have to take inflation into account when purchasing things - for example, a car. In addition, this "time cost" may mean you sometimes miss something - for example, a timely investment opportunity or bargain sale season. And there may be times when emergencies arise and you need extra cash immediately. Sometimes, people let their budget out of control and they keep increasing their debts - in such cases, debt restructuring or refinancing debts may be needed.

    So there are many good reasons for taking out a loan. There are many different kinds of loan to suit individual needs. The trick is to know which one is best for you.
  • Only borrow what you actually need, not what you might want. It is unwise to spend more than 30% of your gross monthly income on loan repayments (in the case of a home mortgage, this figure can be up to 50%). You must also calculate your other commitments and make sure you can afford to repay the loan without leaving yourself short of money each month.
  • You should balance the amount you borrow with the period of the loan and the amount you can afford to repay each month as the tenor affects the monthly repayment amount. You must have enough left of your income after loan repayments to live and save some money. In most cases, you should make sure that the period of your loan is not longer than the duration of whatever you are buying or doing.
  • Yes. A regular monthly income makes repayments easy and allows you to plan your budget. However, you may have an irregular income and be unable to budget for a fixed monthly repayment, or you may require a standby facility for use only when you need it. In these cases, you can choose a loan with flexible repayment options, such as a revolving loan or an overdraft facility.
  • An instalment loan requires you to repay the principal and interest regularly, usually monthly. Interest is calculated at a predetermined interest rate according to the loan tenor you selected.

    A revolving loan or an overdraft is a credit limit granted to your revolving or current account, usually for standby purposes. Interest is calculated on the drawn amount on a daily basis. The main difference between the two is the money withdrawal method. A revolving loan involves an ATM card or credit card to withdraw cash at an ATM machine or make transactions at merchants by EPS.

    An unsecured overdraft facility involves the current account and the transactions made through this account. No withdrawal fee will be charged for an unsecured overdraft facility.
  • With Asset Link Secured Overdraft Facility, you can pledge a wide range of assets (e.g., deposits, shares, bonds or investment funds) held at Hang Seng Bank to obtain a revolving credit line and transform them to enjoy extra liquidity. You can also transfer additional assets from other financial institutions to Hang Seng Bank for consolidation to enjoy convenient financial management.
  • Yes, the pledged assets remain freely tradable providing that you settle any outstanding balance with the sale proceeds.
  • Yes, we have a top-up arrangement which lets you reborrow your repaid principal amount.

    For a revolving loan or overdraft facility, if you feel that the credit limit is not sufficient, you can request an increase on your credit line.
  • Monthly flat rate is the common method adopted by financial institutions to calculate the monthly repayment amount for an instalment loan, as illustrated below:

    Principal
    =
    Loan Amount + Handling Fee
    Handling Fee
    =
    Loan Amount x Handling Fee % p.a. x Tenor / 12
    Interest
    =
    Principal x Monthly Flat Rate x Tenor
    Monthly Repayment Amount
    =
    (Principal + Interest) / Tenor (up to 1 decimal)
    APR is calculated in accordance with the relevant guidelines referred to in the Code of Banking Practice. Interest is calculated on the basis of a 365-day or 366-day year, including all payable fees/charges such as the handling fee, premium fee, etc.

    APR is a tool for comparing interest rates, and expressing the repayment amount and loan amount ratio.
  • Some common additional costs include:
    Application fees
    Service fee
    Unauthorised overdraft penalty
    Special administration fee
    Overdue handling fee and interest
    Early repayment fee
  • Generally the bank needs the following for processing a loan application:
    HKID card
    Income proof, e.g. bank account monthly statement/passbook showing your latest one month’s salary
    Current residential address proof, e.g. utility bills, bank statement
    Any other documents or certificates deemed appropriate
  • Example Regarding the Breakdown of Principal and Interest in the Monthly Repayment of Hang Seng Personal Instalment Loan*
    Same practice as most of the other financial companies and banks, Hang Seng uses “Rule of 78” method to breakdown of principal and interest in the monthly repayment of Personal Instalment Loan. This method allows the interest payments decrease disproportionately during the course of the loan period.
    Demonstration of “Rule of 78”:

    Using 12 months tenor loan as an example, the interest charge is divided into 78 portions. The denominator of a “Rule of 78” loan is the sum of the number of monthly payments in the loan. For a 12 month loan, the sum of numbers from 1 to 12 is 78 (12 + 11 + 10 + . . . + 1 = 78). 12/78s of the interest is assessed as the first month’s portion of the total interest, 11/78s of the interest is assessed as the second month’s portion of the total interest and so on until the 12th month at which time 1/78s of the interest is assessed as that month’s portion of the total interest. Following the same pattern, the sum of 1 to 36 is 666 (36 + 35 + 34 + . . . + 1 = 666), hence 36/666s of the interest is assessed as the first month’s interest portion of a 36 months loan.


    Example of calculating interest portion of each month:


    A customer borrows a 36-month loan of HKD50,000 at a monthly flat rate of 0.65%, with 1% p.a. handling fee added on to the principal. Therefore, the total loan principal is HKD51,500.


    Monthly interest = HKD51,500 x 0.65% = HKD334.75


    Interest for the full term = HKD334.75 x 36 (instalments) = HKD12,051


    Monthly repayment amount = (HKD51,500 + HKD12,051) / 36 (monthly payments) = HKD1,765.31


    Based on the Rule of 78, the amount of interest paid each month


    = Interest for the full term x Remaining number of monthly payments
    Sum of the number of monthly instalments in the loan
    (For 36 monthly payments, it will be=36+35+…+2+1=666)

    The calculation is as follows:


      Interest Principal repaid
    The 1st month HKD12,051 x 36/666 = HKD651.41 HKD1,765.31 – HKD651.41 = HKD1,113.90
    The 2nd month HKD12,051 x 35/666 = HKD633.31 HKD1,765.31 – HKD633.31 = HKD1,132.00
    :
    :
    :
       
    The 35th month HKD12,051 x 2/666 = HKD36.19 HKD1,765.31 – HKD36.19 = HKD1,729.12
    The 36th month HKD12,051 x 1/666 = HKD18.09 HKD1,765.31 – HKD18.09 = HKD1,747.22

     

    The above example shows that nearly 10% of the interest for the full term is repaid in the first two monthly payments.


    The above example is for reference only. For enquiry, please call our Personal Loan Service Hotline 2997 3882.


    * Including Hang Seng Handy Cash Personal Instalment Loan, Hang Seng Debt Consolidation Instalment Loan and Hang Seng Tax Comforter

  • Generally speaking, the earlier a borrower makes loan repayment, the more outstanding interest payments are likely to be saved. Nevertheless, borrowers should consider the early repayment charges involved before deciding whether to pay off their loans early or not. Borrowers need to be aware that individual banks use different ways to apportion interest and principal in the monthly repayment amounts. Hang Seng uses “Rule of 78” to calculate the apportionment of principal and interest in the monthly repayment of personal instalment loan. Even though the monthly repayment amount is the same throughout the loan tenor, more interest will, in general, be included in earlier repayments, and less on principal. In other words, where a borrower has been making repayments as scheduled for some time, the amount of outstanding interest is likely to be small. If the borrower chooses to pay off the loan early at this point of time, the loss may outweigh the gain as the amount of interest saved may not be enough to cover the relevant charges for early repayment. The borrower is advised to first check with the bank about the total amount involved in early repayment (including outstanding loan balance, early repayment charges and other fees, etc.) and the amount of outstanding interest. He/she should then compare different scenarios and consider carefully before making a decision of repaying early or not.

    For the illustration example of "Rule of 78", please refer to "Personal Instalment Loan Repayment Schedule Sample" under "Smart Tips" of Personal Instalment Loan or our Bank’s website (Personal Banking>Loans>Personal Instalment Loan>FAQ).

    To check the amount of early repayment penalty and outstanding interest of your personal instalment loan, please call our Personal Loan Service Hotline 2997 3882.
  • Illustration Examples of Repayment Schedule and Early Repayment for Hang Seng Personal Instalment Loan*

    This illustration is intended to show the apportionment of principal and interest in the monthly repayment of Hang Seng Personal Instalment Loan based on the “Rule of 78” method and assumptions as stated below. This method allows the interest payments decrease disproportionately during the course of the loan period.


    This illustration below is for reference only which does not reflect the actual repayment process and the allocation of principal and interest regarding individual loan account.


    Assumptions

    A 24-month loan of HKD150,000 at a monthly flat rate of 0.20%, with 1% p.a. handling fee added on to the principal.

    Therefore, the total loan principal is HKD153,000. The Annualised Percentage Rate (APR)# is 6.68%.

    Monthly interest = HKD153,000 x 0.20% = HKD306.00

    Interest for the full term = HKD306.00 x 24 (instalments) = HKD7,344

    Monthly Repayment Amount= (HKD153,000 + HKD7,344) / 24 (monthly payments) = HKD6,681.00

    Based on the Rule of 78, the amount of interest paid each month

    = Interest for the full term x Remaining number of monthly payments
    Sum of the number of monthly instalments in the loan
    (For 24 monthly payments, it will be 24+23+…+2+1=300)

    Example of Repayment Schedule of each month:


    No. of Instalment Monthly repayment Amount (HKD) Interest Payment (HKD) Principal Repaid Payment (HKD) Outstanding Principal (HKD)
    1 $6,681.00 $587.52 $6,093.48 $146,906.52
    2 $6,681.00 $563.04 $6,117.96 $140,788.56
    3 $6,681.00 $538.56 $6,142.44 $134,646.12
    4 $6,681.00 $514.08 $6,166.92 $128,479.20
    5 $6,681.00 $489.60 $6,191.40 $122,287.80
    6 $6,681.00 $465.12 $6,215.88 $116,071.92
    7 $6,681.00 $440.64 $6,240.36 $109,831.56
    8 $6,681.00 $416.16 $6,264.84 $103,566.72
    9 $6,681.00 $391.68 $6,289.32 $97,277.40
    10 $6,681.00 $367.20 $6,313.80 $90,963.60^
    11 $6,681.00 $342.72^ $6,338.28 $84,625.32+
    12 $6,681.00 $318.24+ $6,362.76 $78,262.56
    13 $6,681.00 $293.76 $6,387.24 $71,875.32
    14 $6,681.00 $269.28 $6,411.72 $65,463.60
    15 $6,681.00 $244.80 $6,436.20 $59,027.40
    16 $6,681.00 $220.32 $6,460.68 $52,566.72
    17 $6,681.00 $195.84 $6,485.16 $46,081.56
    18 $6,681.00 $171.36 $6,509.64 $39,571.92
    19 $6,681.00 $146.88 $6,534.12 $33,037.80
    20 $6,681.00 $122.40 $6,558.60 $26,479.20
    21 $6,681.00 $97.92 $6,583.08 $19,896.12
    22 $6,681.00 $73.44 $6,607.56 $13,288.56
    23 $6,681.00 $48.96 $6,632.04 $6,656.52
    24 $6,681.00 $24.48 $6,656.52 $0.00

    Scenario 1) Early settlement after repayment on 10th instalment (i.e. remaining tenor is 14-month)


    Items Amount (HKD) Remarks
    Early repayment fee $1,819.27 2% of outstanding principal on 10th instalment (i.e. 2% of HKD90,963.60^)
    Next instalment interest $342.72^ Interest payment on 11th instalment
    Total early repayment fee $2,161.99
    Amount of interest saved by early repayment = $2,227.68 Sum of interest payment from 12th to 24th instalment

    In the above scenario, the total early repayment penalty is HKD2,161.99 while the amount of interest saved by early repayment is HKD2,227.68. The amount of interest saved by early repayment is enough to cover the relevant charges for early repayment.


    Scenario 2) Early settlement after repayment on 11th instalment (i.e. remaining tenor is 13-month)


    Items Amount (HKD) Remarks
    Early repayment fee $1,692.51 2% of outstanding principal on 11th instalment (i.e. 2% of HKD84,625.32+)
    Next instalment interest $318.24+ Interest payment on 12th instalment
    Total early repayment fee $2,010.75
    Amount of interest saved by early repayment = $1,909.44 Sum of interest payment from 13th to 24th instalment

    In the above scenario, the total early repayment penalty is HKD2,010.75 while the amount of interest saved by early repayment HKD1,909.44. The amount of interest saved by early repayment is not enough to cover the relevant charges for early repayment. Thus, if customer chooses to fully pay off the loan early after repayment on 11th instalment, the loss may outweigh the gain.


    The above information is for reference only. Customer is advised to pay attention on whether interest expenses are saved by making early repayment of personal instalment loan. For enquiring the relevant fees & charges of loan account, please call our Personal Loan Service Hotline 2997 3882.


    *Including Hang Seng Handy Cash Personal Instalment Loan, Hang Seng Debt Consolidation Instalment Loan and Hang Seng Tax Comforter

    #The annualised percentage rate is calculated using the Net Present Value Method in accordance with the Code of Banking Practice. The annualised percentage rate is a reference rate which includes the basic interest rate and other fees and charges of a product expressed as an annualised rate (if applicable).

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