Personal Loans

Frequently Asked Questions

How can I apply for a personal loan?

You can apply for a personal loan through any one of the following channels:

  • DBS Website at www.dbs.com/hk/loans
  • Any one of our branches
  • Our Customer Hotline at 2290 8118 (Monday to Friday, from 9am to 6pm)
  • DBS Loans App
      
     
What are the requirements?

To apply for different types of personal loans, the basic requirements are as follows:

 AgeResidencyMinimum Annual Income
Express Loan18 or aboveHong Kong residentHK$60,000
Personal Instalment Loan18 or aboveHong Kong residentHK$80,000
Debt Consolidation Loan21 or aboveHong Kong permanent residentHK$100,000
Cashline Revolving Loan18 or aboveHong Kong residentHK$80,000
What are the documents required?

(See Note 1)

  • HKID card
  • Latest 3 months’ income proof
  • Address proof (issued within 2 months)
  • Practicing certificate issued by relevant association, if you are a professional (e.g. medical doctor, accountant, lawyer or engineer)
  • Banking statement / passbook showing your name and account number

Note 1: The Bank reserves the right to request for additional documents to be submitted for its assessment.

How much can I borrow?

(See Note 2)

 Minimum Loan AmountMaximum Loan Amount
Express LoanHK$10,0004 times of monthly gross salary or HK$200,000 (whichever is lower)
Personal Instalment LoanHK$10,0008 times of monthly gross salary or HK$800,000 (whichever is lower)
Debt Consolidation LoanHK$10,00018 times of monthly gross salary or HK$1,200,000 (whichever is lower)
Cashline Revolving LoanHK$10,0008 times of monthly gross salary or HK$800,000 (whichever is lower)

Note 2: The loan amount that you can borrow within the above mentioned range for each type of loan is subject to the Bank’s assessment and approval.

How much should I borrow?

You need to have a clear understanding of your current and future financial situations, daily expenses and actual borrowing needs before you take on any new debt. As part of the assessment, you should look at your debt-to-income ratio and set a realistic budget for debt repayment and avoid over-borrowing. We recommend that no more than 40% of your monthly income should go to paying all of your debts, including mortgage payments.

What is the difference between an instalment loan and a revolving loan?

An instalment loan allows you to repay the loan within a planned time frame with fixed monthly repayment amount; whereas a revolving loan has no fixed repayment schedule.

In general, there are minimum monthly repayment amounts set for revolving loans.  You can draw down in whole or in part of the revolving loan facility and you can repay in whole or in part of such drawn amount any time at your discretion, provided that the minimum monthly repayment is made. 

Instalment loan interest is charged based on a monthly flat rate; whereas revolving loan interest is charged on daily basis on the amount drawn.
What is monthly flat rate? What is the difference between this rate and the annualized percentage rate (APR)?

Monthly flat rate is the interest rate used to calculate interest for each month, based on the original loan amount, throughout the entire loan tenor.

Example:
You borrow HK$50,000 at a monthly flat rate of 0.40% for 24 months

You are charged 0.40% of HK$50,000 = HK$200 interest per month for 24 months

Total interest will be 24 x HK$200 = HK$4,800

The above shows that if you borrow HK$50,000, you will pay back HK$54,800

 

Monthly flat rate does not reflect the actual cost of borrowing because it does not take into account of the fact that the principal amount is gradually reduced through repaying monthly instalments.

Annualized percentage rate (APR) is the annual rate charged for the loan. It represents the actual yearly cost of borrowing over the tenor of a loan.

The industry guidelines, issued in accordance with the Code of Banking Practice, provided that the “Net Present Value” (NPV) method should be adopted to calculate the APR. The APR should include interest on loan, as well as any other fees and charges associated with the loan; to reflect the total cost of borrowing.   Essentially, an APR is calculated based on a combination of factors – the actual interest charged, any other fees and charges for the establishment of the loan and the time when they are charged (i.e. upfront upon set up of the loan, weekly, monthly or yearly).

Example:

You borrow HK$50,000 at a monthly flat rate of 0.40% and an annual handling fee of 1% for 24 months

You are charged 0.40% of HK$50,000 = HK$200 interest per month for 24 months

Total interest will be 24 x HK$200 = HK$4,800

You are charged 1% of HK$50,000 = HK$500 handling fee per year for 2 years

Total handling fee will be 2 x HK$500 = HK$1,000

You repay the principal of the loan, interest and handling fee monthly over 24 months at a monthly instalment of HK$2,325 (i.e. (HK$50,000 + HK$4,800 + HK$1,000) / 24)

For the above example, the APR calculated in line with the relevant guidelines issued in accordance with of the Code of Banking Practice is 11.32%.

How long should I choose to repay an instalment loan?

As the loan tenor affects the monthly repayment amount, you should consider the amount that you would like to borrow and the amount that you can afford to repay each month.  After loan repayment each month, your remaining monthly income should be sufficient for your standard living and money saving. We recommend that no more than 40% of your monthly income should go to paying all of your debts, including mortgage payments.

How is the monthly instalment applied to repay the principal, interest and handling fee of my personal loan?

The Bank uses the Rule of 78 to apportion each monthly instalment covering principal, interests and handling fee.  You may refer to the “Consumer Education Programme – Personal Loans” page on the HKMA’s website (www.hkma.gov.hk > Other Information > Consumer Education Programme > Personal Loans) for details about the Rule of 78.

You can refer to the sample repayment schedule below showing the apportionment of the principal, interest and handling fee for each monthly instalment of a personal loan.

Example:

Loan amount = HK$50,000

Monthly flat rate = 0.40%

Loan tenor = 24 months

Annual handling fee = 1%

Total interest = HK$50,000 x 0.40% x 24 = HK$4,800

Total handling fee = HK$50,000 x 1% x 2 = HK$1,000

Monthly instalment = (HK$50,000 + HK$4,800 + HK$1,000) / 24 = HK$2,325

 

Sample repayment schedule

Instalment NumberMonthly InstalmentPrincipal RepaymentInterest RepaymentHandling Fee Repayment
12,325.001,861.00384.0080.00
22,325.001,880.33368.0076.67
32,325.001,899.67352.0073.33
42,325.001,919.00336.0070.00
52,325.001,938.33320.0066.67
62,325.001,957.67304.0063.33
72,325.001,977.00288.0060.00
82,325.001,996.33272.0056.67
92,325.002,015.67256.0053.33
102,325.002,035.00240.0050.00
112,325.002,054.33224.0046.67
122,325.002,073.67208.0043.33
132,325.002,093.00192.0040.00
142,325.002,112.33176.0036.67
152,325.002,131.67160.0033.33
162,325.002,151.00144.0030.00
172,325.002,170.33128.0026.67
182,325.002,189.67112.0023.33
192,325.002,209.0096.0020.00
202,325.002,228.3380.0016.67
212,325.002,247.6764.0013.33
222,325.002,267.0048.0010.00
232,325.002,286.3332.006.67
242,325.002,305.6716.003.33
Total55,800.0050,000.004,800.001,000.00

Please use the Repayment Schedule Calculator on our website to work out the above repayment schedule applicable to your specific case.

Do I save interest expenses by making early repayment of my personal instalment loan if my future financial situation allows me to do so?

According to the Bank’s Personal Instalment Loan Terms and Conditions, on early settlement of the loan, you are required to repay the outstanding loan principal, together with outstanding handling fee, interest up to the next repayment date and an early settlement administrative fee.

The early settlement administrative fee is calculated at 1.5% per annum on the original loan amount for the number of years of the remaining loan tenor (part of a year is counted as a year).  Given the imposition of such administrative fee, you need to assess whether such fee outweighs the interest saved. 

To facilitate your assessment, the example below illustrates a comparison between early settlement administrative fee payable and interest to be saved. You may refer to Scenario 1 and Scenario 2 for your reference.

Example:

Loan amount = HK$50,000

Monthly flat rate = 0.40%

Loan tenor = 24 months

Annual handling fee = 1%

Total interest = HK$50,000 x 0.40% x 24 = HK$4,800

Total handling fee = HK$50,000 x 1% x 2 = HK$1,000

Monthly instalment = (HK$50,000 + HK$4,800 + HK$1,000) / 24 = HK$2,325


 

Sample repayment schedule

Instalment NumberMonthly InstalmentPrincipal RepaymentInterest RepaymentHandling Fee Repayment
12,325.001,861.00384.0080.00
22,325.001,880.33368.0076.67
32,325.001,899.67352.0073.33
42,325.001,919.00336.0070.00
52,325.001,938.33320.0066.67
62,325.001,957.67304.0063.33
72,325.001,977.00288.0060.00
82,325.001,996.33272.0056.67
92,325.002,015.67256.0053.33
102,325.002,035.00240.0050.00
112,325.002,054.33224.0046.67
122,325.002,073.67208.0043.33
132,325.002,093.00192.0040.00
142,325.002,112.33176.0036.67
152,325.002,131.67160.0033.33
162,325.002,151.00144.0030.00
172,325.002,170.33128.0026.67
182,325.002,189.67112.0023.33
192,325.002,209.0096.0020.00
202,325.002,228.3380.0016.67
212,325.002,247.6764.0013.33
222,325.002,267.0048.0010.00
232,325.002,286.3332.006.67
242,325.002,305.6716.003.33
Total55,800.0050,000.004,800.001,000.00

 

 Scenario 1Scenario 2
AssumptionsYou early repay the loan after paying 7 monthly instalmentsYou early repay the loan after paying 17 monthly instalments
Early settlement administrative feeThe number of years in the remaining loan period (any part of a year is counted as a year) x 1.5% x original loan amount
= 2 x 1.5% x HK$50,000
= HK$1,500
The number of years in the remaining loan period (any part of a year shall be rounded up to a year) x 1.5% x original loan amount
= 1 x 1.5% x HK$50,000
= HK$750
Interest savedSum of interest repayment for the 9th to the 24th instalments
= HK$2,176
Sum of interest repayment for the 19th to the 24th instalments
= HK$336
ResultsThe early settlement administrative fee (HK$1,500) is lower than the interests saved (HK$2,176).
In other words, you will save interest in making early repayment in this Scenario.
The early settlement administrative fee (HK$750) is higher than the interests saved (HK$336).
In other words, you will not save interest in making early repayment in this Scenario.

Reminder: To borrow or not to borrow? Borrow only if you can repay!

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