[Credit] Tax Loan 2005

The purpose of this article is to summarize the tax loan offered by major banks in Hong Kong.

Before listing the figures, it is critical to understand the various tricks used by banks to "make their offer attractive":

1. Most banks would impose a handling fee as a percentage on loan amount on a yearly basis. The calculation of the repayment amount would then be based on the principal plus the handling fee. However, some banks (like Bank of China and Bank of Communication) would assume an upfront payment of handling fee and thus the subsequent repayment would exclude the handling fee from the principal. This makes the monthly repayment amount relatively lower. Our calculation would thus have to include both handling fee and interest as the total finance cost.

2. Although all banks would quote annualized percentage rates (APRs), due to the tricks as mentioned above or others such as deferred repayment (as in Bank of China's case the repayment can be delayed for 3 months), the APRs can also be manipulated. Thus the APRs are still a reference figure only.

The following comparison would assume an application of $50,000 tax loan in January 2006:

Bank                  Upfront  Monthly   Total    Annualized
                      Handling Repayment Finance  Percentage
                      Fee                Cost     Rate
--------------------- -------- --------- -------- ----------
Bank of East Asia              4,297.50  1,570.00   5.90%
Fubon Bank                     4,304.50  1,654.00   6.21%
DBS                            4,310.00  1,720.00   6.48%
Bank of Communication   750    4,256.50  1,828.00   7.00%
Dah Sing Bank                  4,320.00  1,840.00   6.94%
Hang Seng Bank                 4,331.00  1,972.00   6.40%
Bank of China           500    4,296.50  2,058.00   5.98%
HSBC                           4,355.00  2,260.00   8.36%
Wing Lung Bank                 4,365.00  2,380.00   9.10%
Standard Chartered Bank        4,460.00  3,520.00  13.52%

Reference
Bank of East Asia 東亞銀行
Fubon Bank 富邦銀行
DBS 星展銀行
Bank of Communication 交通銀行
Dah Sing Bank 大新銀行
Hang Seng Bank 恆生銀行
Bank of China 中國銀行
HSBC 匯豐銀行
Wing Lung Bank 永隆銀行
Standard Chartered Bank 渣打銀行