How to Find the Most Optimal Loan Option

Albert Howard

Updated on:

How to Find the Most Optimal Loan Option

There are numerous mild and extenuating circumstances that may necessitate your needing to apply for a loan. Certainly, with platforms such as MoneySmart at your fingertips, it has never been easier to compare and apply for different Hong Kong loan products.

Nevertheless, you don’t want to apply blindly, especially if you are looking to get the most favourable offerings possible. Here are a few things you want to think about before opting to borrow any money.

Consider Affordability

Defaulting on a loan can have dire consequences, particularly if collateral is involved. Even in the absence of such conditions, your ability to repay should be one of your primary considerations.

To evaluate this effectively, consider your list of monthly expenses and come up with a figure that captures what you can realistically afford to pay. If the loan repayment requirement exceeds this amount, then it’s probably in your best interest to look for another product.

When your payment starts to slow down and late penalties get compounded with interest, a snowball effect is created. Beyond the current financial effect, there’s also your credit rating that takes a hit.

 Understand the APR

While regulation dictates that Hong Kong entities cannot alter the APR calculation formula initially used, ensure that you understand what it means before you commit to taking a loan. APR is an acronym that translates to “Annual Percentage Rate.”

Unfortunately, the real figure is not necessarily what you think it may be. For example, you may view APR as a percentage calculated as a portion of the principal loan amount. However, the actual formula used may also contain other fees and charges.

You don’t want any of these to be the reason that the repayment period goes well beyond what you would have liked.


You should always check to ensure that the entity you intend to borrow from falls under regulatory jurisdiction. If borrowing from a bank, the entity of focus would be the Hong Kong Association of Banks. However, there are also thousands of licensed money lenders that do not fall under the traditional banking system.

These entities instead submit to the regulatory umbrella of the Money Lenders Ordinance or MLO in Hong Kong. This body came to be back in 1980, and it aims to protect consumers from the potentially predatory activities that private lending entities may engage in otherwise.

The control framework established by the regulatory body covers clauses such as prohibiting the application of excessive interest rates. Note, however, that in the decades since the MLO’s establishment, there hasn’t been much of a reform in its policies. Nevertheless, it does provide some measure of consumer protection.

The main takeaway here is to do your due diligence to ensure that whatever lender you are considering is regulated, so your best interests are covered.

 Weigh Multiple Options

As the adage goes, you never want to put all your eggs into one basket. Remember that your objective is to find a loan offering that meets whatever need you have. For example, if you’re looking to purchase a vehicle, then your search is for a lender that has a favourable offering for this purpose.

Favourable, however, may not necessarily mean optimal. To ensure you are getting the best value, it’s always recommended to view and consider multiple lenders before making your final decision.

 Weigh Multiple Options

 Final Remarks 

With all that has been said, one question remains. Where do you go to find decent loan options? Well, you could search for companies individually and call around, which is tedious, and may not be fruitful.

Alternatively, you can allow MoneySmart to help you secure the optimal loan. At a glance, you can gain insights such as APR figures, total payable amounts, and monthly payment requirements. Additionally, you may notice value added limited time offers and other promotions that enhance the loan offering.

Beyond that, you can filter the information based on specific banks or loan features that you are interested in. Finally, it’s incredibly convenient to be able to see the requirements for each lender from within the web page, after which you can use the application option to be taken directly to the lender’s gateway.

Now, there’s no question about getting the best value.

Hong Kong loan options happen to be very vast. However, by making the right considerations, you can secure the right one. Here’s how you do it!