Loans Services FAQs

General FAQ

Besides interest rates, you should also take the following factors into account:

  • Read the Terms and Conditions carefully to check if there are any other costs and/or hidden fees
  • Ease of application and the required approval turnaround time
  • Convenience of the bank's branch network and application channels

Generally, for applications of 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).

Please view Hang Seng Handy Cash Personal Instalment Loan page for related Terms and Conditions.

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. Customers can go to any of Hang Seng Bank branches for account opening.

Generally, in order to assess the creditworthiness of the customers, banks will check with a CRA to collect information about individual's indebtedness and credit history. If customers wish to get credit reports, the bank will provide the contact details of the relevant CRA.

In general, no.

Although saving money from your monthly income is a good way to accumulate sufficient cash to buy or do the things you want, this involves a "time cost" - you have to wait until you have saved enough money and take inflation into account when purchasing things - a car for example.

In addition, this "time cost" can result in missing a timely investment opportunity or bargain sale season. Or when there is emergency, you will need extra cash immediately. If budget is out of control and debts keep increasing, debt restructuring or refinancing could be essential.

So there are many good reasons for taking out a loan. You can find 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 (except home mortgage 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 and the amount you can afford to repay each month, as the tenor directly affects the monthly repayment amount. You must have enough income left after repaying loan to live and save some money. In most cases, you should make sure that the repayment period 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, if you have an irregular income and unable to budget for a fixed monthly repayment, or you just need a standby facility for use. 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 have already settled any outstanding balance with the sale proceeds.

Yes, you can also apply for the Asset Link Secured Overdraft Facility.

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 (round up to 1 decimal place)

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: For regular income earners, please enclose the Bank account monthly statement / passbook showing your latest one month's salary (if you have maintained a payroll account with Hang Seng for the past one month, no income proof is required); as for irregular income earners, please enclose the Bank account monthly statement / passbook showing your latest 2 month's salary.
  • Current residential address proof, e.g. utility bills, bank statement
  • Any other documents or certificates (if applicable)

Examples regarding the breakdown of principal and interest in the monthly repayment of Hang Seng Personal Instalment Loan (Including Hang Seng Handy Cash Personal Instalment Loan, Hang Seng Debt Consolidation Instalment Loan and Hang Seng Tax Comforter)

  • 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 over / 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:

Number of instalment Interest Principal repaid
1 HKD12,051 x 36/666 = HKD651.41 HKD1,765.31 – HKD651.41 = HKD1,113.90
2 HKD12,051 x 35/666 = HKD633.31 HKD1,765.31 – HKD633.31 = HKD1,132.00
Ellipsis for the 3rd month to the 34th
35 HKD12,051 x 2/666 = HKD36.19 HKD1,765.31 – HKD36.19 = HKD1,729.12
36 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 (852) 2997 3882

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 "Useful Information" 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 (852) 2997 3882

Illustration Examples of Repayment Schedule and Early Repayment for Hang Seng Personal Instalment Loan (Including Hang Seng Handy Cash Personal Instalment Loan, Hang Seng Debt Consolidation Instalment Loan and Hang Seng Tax Comforter)

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:

Number 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 90963.601
11 6,681.00 342.721 6,338.28 84625.322
12 6,681.00 318.242 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) Note(s)
Early repayment fee 1,819.27 2% of outstanding principal on 10th instalment (i.e. 2% of HKD90,963.601)
Next instalment interest 342.721 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) Note(s)
Early repayment fee 1,692.51 2% of outstanding principal on 11th instalment (i.e. 2% of HKD84,625.322)
Next instalment interest 318.242 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 (852) 2997 3882

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).

About 100% Personal Loan Guarantee Scheme

100% Personal Loan Guarantee Scheme is guaranteed by Government for the unemployed individuals due to the pandemic. You may also browse The Hong Kong Mortgage Corporation Limited (“HKMC”)’s website www.hkmc.com.hk/plgs or contact HKMC Insurance Limited (“HKMCI”)’s enquiry hotline at (852) 2536 0392 for more details.

Hang Seng Bank’s 100% Personal Loan Guarantee Scheme is applicable for our existing customers who are maintaining a valid Hang Seng Bank personal account. The standardized Annualised Percentage Rate (“APR”) is fixed at 1% per annum. Loan amount is up to HK$80,000 or 6 times of the average monthly income during employment period (whichever is lower). Repayment period is 72 months with an optional 12-months principal repayment holiday.

The minimum application amount is HK$5,000. Each customer can apply and drawdown once only.

Please refer to the following for the eligibility:

  • Holder of Hong Kong permanent identity card aged 18 or above; and
  • Unemployed for at least two months at the time of application; and
  • Must not be undischarged bankrupts nor subject to any bankruptcy petition or proceedings at the time of loan application; and
  • Maintain valid Hang Seng Bank personal account; and
  • Not a sole proprietor, partner or a shareholder who is also a personal guarantor of any existing loan or credit facility under the HKMCI’s SME Financing Guarantee Scheme

For any one of the following supporting documents, any 3 months during the period between January 2020 and February 2021 in which the relevant incomes must be earned before the first unemployment month:

  1. Bank statements or passbook showing the autopay salary record (e.g. credit transaction with description of “salary”, “payroll”) of wage receipt entries of at least 3 months;
  2. Wage slips, wage receipts or other documents (such as tax return or any official documents, e.g. termination letter, statement of final/severance payment showing the last salary and period of employment to the Borrower) that can be relied on to confirm or deduce the daily or monthly wage in the 3 months (collectively, “wage confirmations”), issued by the former employer and supported by bank statement(s) or passbook showing record of bank transfer or deposits of cheque(s) or cash. For wage paid by cheques and the relevant wage confirmations are not available, a copy of the cleared cheques if there are means to prove the employment relationship with cheque issuer(s);
  3. Bank statements or passbook showing records of bank transfers or deposits of cheque(s) or cash, and supported by proofs of business activities of remunerated jobs or projects which generated the main recurrent incomes, such as sales or service contract(s), invoice(s), or other records or correspondence(s);
  4. Annual statements for 2020 or monthly contribution history of the MPF scheme or ORSO scheme;
  5. Tax demand note for financial year 2019/2020 with assessment details.

Customers must have been unemployed for at least 2 months at the time of loan application. You can provide the following documents as proof:

  1. Bank statements or passbook for 2 consecutive months issued within 3 months prior to the submission of loan application showing cessation of income entries in relation to the monthly main recurrent income from employment in Hong Kong, and (except for free-lancers, gig or casual workers) submit one of the following proof of unemployment for 2 months:
    Please note: Unless justified otherwise with proofs, the bank account shall be the same as that used to show the 3 months’ income proof mentioned in Question 5 above.
  2. Severance letter issued by the former employer;
  3. Letter of termination of employment, expired employment contract, tax return or any official document showing cessation of employment issued by the former employer;
  4. Proof of receipt of severance payment or long service payment pursuant to the Employment Ordinance;
  5. Proof of (i) receipt by the Labour Department of the Government of an application for, or (ii) the Borrower’s receipt of, ex-gratia payment from the Protection of Wages on Insolvency Fund;
  6. Proof showing the business close down of the Borrower’s former employer together with proof showing the employment relationship with the former employer (e.g. employment contract, wage receipt);
  7. Statements issued by an MPF scheme or ORSO scheme service provider showing cessation of contribution entries or termination of employment;
  8. Proof of filing of Notice of Cessation of Business to the Business Registration Office or completion of sale of sole proprietorship or partnership, or Form 1(a) or Form 1(c) of the Business Registration Office showing the Borrower ceased the business or ceased to be a sole proprietor or partner, as the case may be.

Customers can submit the application via Hang Seng Bank’s website www.hangseng.com/plgs or Hang Seng Bank branches.

Customer may enjoy full rebate of the interest after the loan and interest are fully repaid by the end of the scheduled repayment period. The interest rebate will be credited to customer’s repayment account within 2 months after Hang Seng Bank has received the relevant interest rebate from the HKMC. Please ensure that the account status is normal before receiving the interest rebate.

No. Customer may enjoy full rebate of the interest after the loan and interest are fully repaid by the end of the scheduled repayment period despite early settlement or any interim delinquencies. The interest rebate will be credited to customer’s repayment account within 2 months after Hang Seng Bank has received the relevant interest rebate from the HKMC. Please ensure that the account status is normal before receiving the interest rebate.

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