Personal Loan Frequently Asked Questions

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

• DBS Website
• Any one of our branches
• Our Customer Hotline at 2290 8118 (Monday to Friday, from 9am to 6:30pm)

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

(See Note 1)

• HKID card
• Latest 3 months’ income proof
• Address proof (issued within 6 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.

(See Note 2)

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.

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.

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$60,000 at a monthly flat rate of 0.50% for 24 months

You are charged 0.50% of HK$60,000 = HK$300 interest per month for 24 months

Total interest will be 24 x HK$300 = HK$7,200

The above shows that if you borrow HK$60,000, you will pay back HK$67,200

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$60,000 at a monthly flat rate of 0.50% for 24 months.  You pay a loan set up fee of 2% of the loan principal upon draw down of the loan.

You are charged 0.50% of HK$60,000 = HK$300 interest per month for 24 months

Total interest will be 24 x HK$300 = HK$7,200

You are charged 2% of HK$60,000 = HK$1,200 loan set up fee upon draw down of the loan.

You receive loan proceed of HK$58,800 after deducting the loan set up fee of HK$1,200. You repay the principal of the loan and interest monthly over 24 months at a monthly instalment of HK$2,800 (i.e. (HK$60,000 + HK$7,200) / 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 13.99%.

The Bank uses the Rule of 78 to apportion each monthly instalment covering principal and interests. You may refer to information on HKMA website (www.hkma.gov.hk>Smart Consumers>Personal Credit) for details about Rule of 78.

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

Example:

Loan amount = HK$60,000

Monthly flat rate = 0.50%

Loan tenor = 24 months

Total interest = HK$60,000 x 0.50% x 24 = HK$7,200

Monthly instalment = (HK$60,000 + HK$7,200) / 24 = HK$2,800

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

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 (if applicable), interest up to the next repayment date and an early settlement administrative fee.

The early settlement administrative fee is calculated at 2% 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$60,000

Monthly flat rate = 0.50%

Loan tenor = 24 months

Total interest = HK$60,000 x 0.50% x 24 = HK$7,200

Monthly instalment = (HK$60,000 + HK$7,200) / 24 = HK$2,800

Sample repayment schedule