You've probably heard the term "instalment loan" before without understanding the breadth of its meaning. The principle can speak to both personal and commercial loans that are characterised by regular repayment intervals.
Before trying to secure one, it would be helpful for you to understand the underlying workflow and conditions that come along with it. That's the purpose of the guiding information provided below.
Understanding Instalment Loans
After a borrower has been approved for an instalment loan, a fixed sum of money is provided with the contractual obligation for regular repayments to be made. There are two elements of the loan that repayments cover, which are the principal amount borrowed and the interest that the debt generates.
The total that these figures create, as well as the term of the loan, come together to yield the total payment that is expected of the borrower whenever the stipulated recurring period elapses.
Typically, loan repayments of this nature are due monthly, and they do not fluctuate. Therefore, it's not too difficult to keep track of and prepare for meeting the payment requirement.
Instalment Loan Examples
Instalment loans come in a series of forms such as student loans, mortgage loans, auto loans, and personal loans. The characterization is much less about what the loan is for and more about the structure explained above.
Secured Vs Unsecured Loans
Your instalment loan agreement can be for either secured or unsecured loans. The former has a collateral-based approach. In essence, an asset or other measure of value is put up as security for the loan to be granted. Should the borrower breach the contract via payment default or otherwise, the lending entity can legally claim the collateral used.
For example, when an auto loan is granted, the vehicle being purchased is wagered as collateral. Therefore, if the borrower should be unable to make payments, for example, the bank can legally confiscate the automobile.
The unsecured counterpart does not have a collateral requirement. These kinds of loans tend to be based on creditworthiness. As expected, however, the interest rates on these tend to be much greater, which reflects the increased risk that lending entities take on by offering them.
Applying for a Hong Kong Instalment Loan
Applications for Hong Kong instalment loans typically follow a streamlined procedure. You may find a few variations, but the basic elements of the process remain intact. Considering that each loan has eligibility requirements, you must typically submit documentation that confirms these.
For example, a loan may mandate that borrowers be residents of Hong Kong. Your government-issued identification can help to confirm that you do indeed meet this requirement. Other verification documentation is usually required, as well as filling out a form to confirm necessary personal information.
Once you've submitted the data, there is also the confirmation of the payment terms including the schedule, amount, and period.
You must then wait for the application approval process. Realistically, each loan afforded to customers poses a risk. A lending agency wants to minimise this as much as possible.
Therefore, factors, such as your creditworthiness are taken into consideration and help to dictate if you'll be approved for the loan or denied.
Final Remarks - Choosing a Loan Provider
While there is a designated process for loan approval, it doesn't necessarily need to be as tedious as you may find it if you choose to apply directly. Instead, you may want to consider completing your application process through MoneySmart.
Not only are you given the ability to use a streamlined electronic application method, but you can also gather insights about the loans you want at a glance. For example, instead of calling DBS, Promise, or Citi, you can view loan stipulations and requirements across all three and compare them from within the MoneySmart web page.
You can then use the conveniently located application buttons to start the process quickly and efficiently. The site even allows you to use filters to ensure that you tailor the results you get. Some of the refinement options include your intended loan amount, monthly income, loan type, preferred banks, and desired loan features.
What's the benefit of going the long way to attempting to get the loan you want when you can leverage an existing partnership to handle the administrative overhead on your behalf?
Are you interested in an instalment loan in Hong Kong? Here are some essential insights, as well as information on where to find the best ones!