By now, you would have received your tax return bill of 2018, recently sent from the Inland Revenue Department of Hong Kong. The competition between banks to acquire new customers via tax loans is at full-tilt. Banks are looking for creative ways to draw customers’ attention, and often times offer perks such as a shorter repayment period, lower interest rates and cash rebates. We’ve compared various tax loan plans to help you get the best tax loan for your tax return needs.
What sort of incentives are banks offering?
As an example, Bank of China’s latest strategy is to offer an APR of 0.5% for civil servants. Applicants must be a Payroll Account holder with a monthly salary of HK$10,000 or above. Wealth Management customers can enjoy a low rate of 1.5%. Other customers can also enjoy the low rate of 2.1% with a valid Payroll Account. For microcredit loans (a special loan for smaller amounts), you may consider visiting Dah Sing Bank. At just HK$5,000, they offer the lowest minimum loan amount requirement.
Standard Chartered Bank offers a “Lower Cost Guarantee” with a 10% discount on the lowered APR offered by other banks. This year, OCBC Wing Hang Bank launched a “Lowest Interest Rate Guarantee Plan” for the first time. They offer 20% off the interest rate if the APR of the loan drawn by the customer at other competing banks within 15 days is lower than the one originally locked and confirmed by them.
Bank of East Asia has chosen to attract customers in a different way with the highest cash rebate. Cash rebate for new customers is offered at up to HK$2,600 with a repayment period allowance of up to 60 months and a prime APR of 1.48%. The loan amount has to be a minimum HK$800,000 to HK$1,200,000.
What should you look out for when choosing a tax loan?
Useful tips for tax loans:
- Be aware of the APR’s terms and conditions. You typically have to meet strict requirements such as minimum deposit or loan amount.
- Pay attention to the monthly flat rate and APR to see whether the interest rate is fixed or variable.
- Determine if you can afford the monthly repayment amount. If the repayment period exceeds 12 months, that might take a toll on your finances because of the longer period of interest repayment.
- Submitting all necessary loan records helps to speed up high loan amount approvals.
- Having high cash flow enhances the chance of high loan amount approvals.
Here’s a breakdown of the different tax loans offered and the corresponding details:
|Bank||Loan Amount||APR||Repayment Tenure||Most Favorable Customer||Current Offers|
|Hang Seng||$50,000 – $3M (or up to 12X monthly salary)||Low to 1.54%||6 / 9 / 12 / 24 / 36 / 48 / 60 months||Privileged customer with loan amount of $800,000+||Up to $500 cash rebate for online or mobile application|
|HSBC||$50,000 – $3M (or up to 12X monthly salary)||Low to 1.77%||6 / 9 / 12 / 18 / 24 months||Loan amount of $1,500,000+||Earn $100 cash rebate for online application; submit supporting document(s) and earn extra $100 cash rebate|
|Dah Sing||$5,000 – $1M (or up to 10X monthly salary)||Low to 0.68%||12 / 24 months||360° Easy Payroll Services||N/A|
|DBS||$10,000 – $1.5M (or up to 12X monthly salary)||Low to 1.86%||12 / 18 / 24 / 30 / 36 months||Privileged customer with loan amount of $1,500,000||Earn up to $800 cash coupon and extra $300 when applied via iBanking or DBS Loans App|
|Citibank||At most $2M (or up to 12X monthly salary)||Low to 0.99%||6 / 12 / 18 / 24 / 30 / 36 / 42 / 48 months||Enjoy up to $4,288 interest rebate (i.e. APR low to 0.99%) for Citigold client with loan amount $1,000,000+||Enjoy up to $1,588 cash coupon for loan amount $200,000 – $1,000,000|
|Bank of China||At most $2M (or up to 6X monthly salary)||Low to 1.5%||6 / 12 / 18 months||N/A||Enjoy $50 – $150 BOC Credit Card Free Spending Credit|
|BEA||$5,000 – $1.2M (or up to 12X monthly salary)||Low to 1.57%||12 / 24 months||Loan amount of $800,000 or above||Earn $300 – $700 cash rebate for loan amount >$20,000 for online application|
|Bank of Communications||$10,000 – $2M (or up to 10X monthly salary)||Low to 1.85%||6 / 12 / 18 / 24 months||Privileged customer with loan amount of $1,000,000+||Extra $200 credit card free spending credit for loan amount of $100,000 and repayment tenor of 12 months|
|Standard Chartered||At most $2.5M (or up to 9X monthly salary)||Low to 1.85%
Low to 1.85%
Low to 0.88%
|Fixed 12 months||Premium / Mortgage / Payroll Client
Priority Banking client
New Priority Banking client
|Earn cash coupon of $200 for online application|
The APR shows the actual borrowing cost. It includes interest and related charges (e.g. processing fee of loan, service charges and cash rebates, etc.) In most cases, you must be the bank’s privileged customer and borrow a large loan amount in order to qualify for the lowest APR.
Ready to review tax loan plans in Hong Kong? Shop around for the best rates so that you can borrow money with confidence.
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