Question

Hi, can you answer this question in more detail?

Subject: Hong Kong Personal Financial Planning Practice

Q6. C

In Hong Kong, there are four major types of loans related to personal financial planning, namely, “Personal loan”, “Revolving loan”, “Personal installment loan (Balance consolidation)” and “Secured loan”. Analyze the elements and characteristics of each of these loans.

(Words: 700 - Don't direct copy)

Answer 1

Solution:-

Major Types of Loans Available In Hong Kong

Personal Loan

   It is unsecured loan provided by the bank.That means the person who takes loan from the bank need not secure any collateral security to the bank for suplying loan.However,Interest rate will be higher since the loan term shall be based on the previous credit history,current fincial status.And it may be a smaller amount.

  Charecteristics of personal Loan

a)It is a Unsecured loan,no need to secure any collateral security to the bank to supply loan.

b)Interest rate of tend to be higher

c)Personal loans tend to have shorter period and smaller amount

Revolving Loan

Revoilving loan is a type of credit provided to the loanee.under this system bank will give loan amount to the loanee and he can withdraw the loan amount when he needed instead of recieving full amount.under this loan the loanee shall be required to repay the amount he withdrawn from the loan account and he shall pay the interest only to the extend of his withdrawed amount not in full amount of loan.when loanee repaid the amount he can withdraw this amount again as per the requirements.

Charecteristics of Revolving Loan

a)It is type of Credit provided by the bank

b)Loanee can withdraw amount as per his requirement instead of withdrawing full amount

c)Loanee Required to pay interest only to the part of withdrawed amount

d)This loan is more flexible

Personal Installment Loan

Personal Installement loan is an another type of loan provided by the banks in hong kong.Under this type of loan ,the repayments are made in a regular intervels for a period of time.The payment made are calculated based on the amount of money that is lend to the loanee,the interest and how long your tenure is.once the loanee has paid the final payment of loan then the loan shall be considered as closed.Installment loans are of two types,such as Fixed rate loan and Variable rate loan.Fixed rate loan means payment shall be fixed amount and in regular intervels.Variable rate loan means the loans repaid in monthly,weekly or in lumpsum.

Charecteristics of Personal Installment Loan

a)Installments are made in a regular intervels

b)Once tha last installments were paid ,then it shall be considered as loan were closed

c)There are two types of loans availabel:-Fixed rate and Variable Rate Loan

d)Interest on loan shall be inclusive of the repayment amount

e)Borrowed amount shall be HKD 15,00,000 or 12 times of monthly salary which ever is lower

f)Redraw the amount you have repaid erlier again in future without needing to reapply

g)He must be a Hong Kong Resident and above 18 year old person

Secured Loan

There are two types of secured loans were provided in Hong kong.That is Property loans and Car Loans.Under Property loan the loanee shall secure his property as collateral security to get the loan .The main quality of a property loan is the fact that the collateral ussually the real estate property.Under the scheme of car loan the bank will provide you car loan to the certain percentage of his car amount.For getting the loan collateral security is must.the collateral may be car or any of the property.If the loanee fails to pay the loan amount the bank will sieze the property he used as collateral.

Charecteristics of Secured Loan

a)For Getting loan ,there must be a collateral security

b)Bank will not provide loan to the 100 % of property he used as collateral

c)Bank will sieze the property when loanee defauls the repayment of loan