Loans – Frequently Asked Questions

From application to repayments, here is what you need to know about loan processes.

Why should I take a loan?

You could use a loan for covering many possible expenses, from unexpected short-term ones to large purchases to be paid over in a certain period. You can take out a loan to buy a car, to pay taxes, to cover costs of home improvements, to go on a vacation or to cover emergency costs.

The important thing while taking a loan is that you are choosing the right loan according to your needs and you are able to repay the loan.

Can I use any other repayment method apart from fixed monthly repayments?

Since monthly repayments ease your budget planning, you may choose other methods in case it does not suit your needs. Therefore, although you are usually required to repay a fixed amount on a monthly base, it is impossible to set a more flexible repayment plan, which includes revolving loan or an overdraft facility.

How much money should I request?

Determining the amount of money you will borrow according to (1) the amount you need to borrow, and (2) the amount you are able to repay. Our advice for you is not to borrow more than the amount you actually need. You don’t have to borrow large amounts of money, just because you are eligible to.

Consider your budget thoroughly while planning your repayments. Your total monthly repayments should not exceed 30% of your gross monthly income- an exception for it may be mortgage payments, since they may take up to 50% of your income.
Guarantee that you won’t confront any financial difficulties in case you have to pay any extra cost of loan repayments.

Which loan term should I choose?

The wiser option is not to borrow for longer than the life of the thing you are paying for. That is, a loan of 12 months or less would be the best choice in case you have an annual expense. To balance the amount you borrow and the amount you can afford to repay each month, plan your budgeting carefully.

What documents should I submit when applying for a loan?

Generally, the documents you are required to submit in the process of applying for a loan are identity documents and proof of income documents. Proof of income documents may include your bank account statements showing your monthly salary or monthly deposits. Keep in mind that we hold the right to require more documents during your application process.

What if I can’t make my repayments in a timely manner?

In case you have difficulties in repaying your loan, the first thing you should do is to inform your us  of your circumstances. We may help you make your monthly repayments in more flexible conditions.

What does “Monthly Flat Rate” mean?

A monthly flat rate refers to a method which is used in determining the monthly repayment amount for a loan. This method is adopted by most banks and financial institutions in providing fixed monthly repayments.

What does “Annual Percentage Rate (APR)” mean?

The annual percentage rate refers to an index of borrowing cost which is calculated on a yearly basis, including interest and all related fees/charges. APR is calculated in accordance with the applicable guidelines of the Code of Banking Practice, and is a method of comparing interest rates for customers.

Why do interest rates of loans vary?

Different loans are offered with different rates since the amount of risk they carry for the lender is relatively different. An unsecured loan is usually offered with a higher interest rate than a secured loan, since it carries a higher risk of the lender losing its money if you can’t make the repayments in a timely manner.

The borrowed amount also affects the interest rates. A large loan is more likely to have a lower rate of interest than a small one, since the administrative costs of a lender are lower for a single large loan compared to those for several small loans. When confirming your application for a loan, don’t forget to check the total amount you’ll pay.