3 Jun, 2021
What are the common reasons of applying for personal loans in the case of HongKongers?
Why do HongKongers keen on borrowing money? Despite of the insignificant amount of the loan amount, most of them would borrow money either from family relatives or friends for a few thousand dollars or apply for personal loans from personal loan companies. However, the trend of borrowing money at a younger age can be observed. What are their reasons of borrowing money? There are mainly 3 reasons of borrowing money for Hongkongers;
- Borrowing money for paying taxes
- Borrowing money for paying medical fees
- Borrowing money for paying off credit card bills arisen from shopping
Instead of saying Hongkongers are keen on borrowing money, they are lack of the concepts and minds of managing their personal finance-after all, there isn’t sufficient education of managing own finance in Hong Kong, which is why many Hong Kong people do not have money-saving habits, in which such problem is worrying and has long-lasting negative effects: there is always unexpectedly expenditure in our daily lives, such as taxes or medical fees, and if you do not have habits of managing your finance or saving money, you will not have enough cash flow. At the end, you will have no any other choices but borrow money from family relatives or even apply for personal loans from banks or personal loan companies.
As an international city, Hong Kong’s commodity price is relatively high, which is why the daily expenditures are high. At the same time, under the great influence of materialism, the third reason of borrowing money ‘paying off credit card bills’ is the most common one. Apart from paying off credit card bills, some of them will borrow money for purchasing luxurious goods.
As mentioned above, there is the trend of borrowing money at a younger age, which is related to the popularity of social media: people will buy luxurious goods at all costs to show off on their social media accounts with their friends. Based on the phenomenon, the Education University of Hong Kong had conducted a research on the spending habits of secondary students, in which the results showed that nearly 60% of respondents had over-spending before, and 20% of them had unpaid debts for at least 3 months.
What are the consumption habits nowadays?
With the appearance of smartphones, surfing online is easier and we can do a lot of things online. The most common ones include shopping, ordering food takeaways, topping on Octopus card and making reservations at hotels, and these online payments are often settled by credit cards due to its great convenience. In addition, people are more willing to stay at home due to COVID-19, spending more time on their mobile phones and having more chances using their credit cards for online consumption.
Impulse buying at festive seasons
When it come to festive seasons, such as Christmas, numerous shopping promotions are launched by different brands. At the same time, Hongkongers always intend to buy something for themselves as a year-end treat, which explain why they are more willing to spend money at the end of the year. They are often taken aback when receiving the latest credit card bills and realized they are unable to pay off the bills. However, people who know how the minimum payment of credit card bills is calculated knows the interest is unexpectedly high: Compound interest method is used when calculating the minimum payment of the credit card bills, which is why we should never settle the bills lately or only pay minimum payment. The only thing we can do, is to borrow money from friends or apply personal loans at personal loan companies.
For the first method, most of us may feel embarrassed when borrowing a few thousand dollars from friends and family relatives… however, applicants are required to submit sufficient personal information, such as copy of HKID card, mailed address proof and copy of bank statements, when applying personal loans at most of the banks and personal loan companies. In order to better assess the repayment ability of the applicants, the applicants’ credit reports and trustworthy income proofs will be reviewed.
However, these traditional loan application procedures are extremely time-consuming and complicated, as some of the HongKongers may not be paid by autopay and cheques. They may work as freelancers or blue-collar workers who are unable to provide employment proofs, which restrict them from applying personal loans for solving their financial needs.
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