Applying for loans nowadays is straightforward; a few clicks on your mobile, or place a quick call is all you need. In spite of this, there are important matters you need to double check before applying, as they might stall the procedure or even affect your chances of approval!
1. Assess your payback ability
Manners maketh man, and paying back is good manners, therefore it is important you understand your ability on repayment. So, try listing out your monthly income and expenditures, to see if you really have the need to loan and the amount you wish. You can also make use of the “Monthly Repayment Calculator" on the bank’s website to understand the repayment you can afford as any late payment may result in penalties, overdue fees, as well as affecting your credit ratings. Just don’t take out a full loan when you don’t have the need, so as to avoid unnecessary interest payment.
2. Comparing APR
There are no free lunches in the world; you should be more cautious when coming across "$0 interest rate" or a super high rebate. In addition to interests, there may be other expenses such as handling and annual fees, or other hidden terms and charges. It is paramount that you consider all related expenses when calculating the cost of borrowing. At this time, you can compare the "Annual Percentage Rate" ("APR") of different loan schemes directly. APR is an annualized rate that includes all applicable interest rates, fees and charges. According to the guidelines of the Hong Kong Association of Banks, banks must always apply the same formula when calculating the APR, and comparing this rate can reflect the true cost of your loan.
3. Interest discounts
During tax season, you’ll notice those who normally aren’t into loaning, would toy with this idea due to low interest rates. In fact, banks launch various kinds of promotion from time to time, such as extra rebates for online application, interest discounts or fees waiver; and all these preferential offers could sometimes rival tax season loan. When choosing a loan, it is advisable to shop around in order to save more on costs.
4. Monetary habits affect your credit score
It’s all about personalised services and everyone has jumped on this bandwagon, including a personalised rate for lending. Did you know the bank usually determines the interest rate by your credit ratings? To process a loan application, your credit status on the report provided by the credit reporting agency – TransUnion will be one of the key assessment factors, which directly affects loan approval, amount and interest rates, therefore, develop good financial management practice to rehabilitate your credit profile is recommended. Few pointers for you to take note:
- Paying back on time
- Avoid excessive use of credit and maintain low balances
- Review credit reports regularly and dispute any potential inaccuracies
5. Preparation is key
It pays to cover all the bases. Ready your proof of income, address, and other necessary documents so you can submit immediately upon request. Update your latest salary proof with the bank may also facilitate your future credit applications. Some banks do not require loyal customers to provide any supporting documents, so check first before application.
To find out more about personal loans, feel free to call us on (852)2748 8080, or apply online now.
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