Question

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” in Hong kong. Analyze the elements and characteristics of each of these loans

Answer 1

There are mainly 4 types of loan related to personal financial planning. These are described below.

1. Personal loan

personal loan is money borrowed from a bank or online lender that you pay back in fixed monthly payments, or installments, typically over two to seven years. Personal loans are unsecured and these kind of loans have no mortgages. Here the amount is repaid on a monthly payment system at a fixed amount payments.The handling fee of the Generic Customer is 1%per annum and the APR of 3.41% is calculated based on monthly flat rate of 0.11%,. The loan amount is HK$800,000 and the loan tenor is 12 months at 0.5%per annum handling fee.

2. Revolving loan

These are some arrangements which allows to withdraw the loan amount, which again repaid, and redrawn again in some manner until the arrangement expires. Credit card loans and overdrafts are example of revolving loan. Here we can withdraw the loan and repay by making some arrangements for it.

3.Pesonal installment loan

  In personal Installment loans the borrowers have to repay the entire loan amount with the interest with regularly scheduled payments or installments. For each installment payment, the borrower has to repays a portion of the principal borrowed and also pays interest on the loan.The APR ranges from 2.44% to 8.29%. The minimum and maximum repayment period is 12 months and 60 months.

4. Secured loan

secured personal loan is a line of credit that is guaranteed against an asset you own or buy with the loan. You can usually apply for an amount up to HK$3,000,000 for terms up to seven years,

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