THE E-MAIL FORUM
Q Is the Hang Seng Bank charging too much for its Sars loans?
The short-term relief personal loan is offered as a commercial banking product aimed at providing relief to customers with short-term financial difficulties. The interest rate was decided after due consideration to the credit risk involved.
As we offer an interest-free repayment 'holiday' for the first three months, the annualised percentage rate (APR) is competitive. If we take a normal Hang Seng personal instalment loan of $20,000 as the basis for comparison, the APR based on a 12-month repayment period for the relief personal loan (at 18.94 per cent) is more preferential than the standard personal loan of the same amount and repayment period (at 22.23 per cent).
It is not true that it would be better for the target customers to borrow from a credit card than apply for the relief personal loan. There are credit card issuers charging 18 per cent interest (equivalent to an APR of 18.57 per cent). However, this rate is applicable only to the unpaid credit card balance of retail purchases.
If a customer of any of these credit cards issuers draws cash out of an ATM machine to cope with his or her living expenses which cannot be put on a credit card as retail purchases, he or she will bear interest ranging from 22.5 per cent to 30 per cent (equivalent to an APR of 27.09 per cent to 34.2 per cent respectively) in the market.