Beginner's Guide to Personal Loan｜How to Choose between Instalment Loan, Revolving Loans & Balance Transfer?

Personal Loan (commonly referred to as "P Loan")
In life, financial needs can arise unexpectedly—whether it is for emergency cash, planning major expenses or consolidating debt. A Personal Loan may be one of the quickest solutions in urgent situations. With a wide range of personal loan products from banks and financial institutions such as instalment loans, revolving loans and balance transfers, how should a first-time borrower choose the most suitable personal loan option?

Instalment Loan
Instalment loans are among the most popular personal loan products offered by banks. They are typically unsecured, meaning no collateral is required. When a borrower makes an application, the bank assesses their income, repayment ability, and credit score to determine the approved loan amount. Once approved, the full amount is disbursed in a lump sum, and the borrower repays the principal and interest in fixed monthly payments over a set term.

Pros:

• Fast Approval: Applications can be processed and funds disbursed in as fast as 15 minutes to a few working days
• Flexible Loan Amount: Generally offer flexible loan sizes and lower interest rates
• Flexible Repayment Terms: Repayment periods typically range from 6 to 60 months, making budgeting easier
• Minimal Required Documents: Only ID is needed; no proof of address or income required

Cons:

• Penalty fees may incur for early settlement

Suitable for:

• Borrowers with specific financial needs such as home renovation, wedding, further education, children's education, investments, medical expenses, or short-term cash flow. Since both the repayment period and loan amount are fixed, this option is ideal for those who value financial stability and clear budgeting.

Balance Transfer
A balance transfer is a loan type designed for debt consolidation—particularly credit card debt. It is unsecured, requiring no collateral. Terms like "balance transfer loan" and "debt restructuring" all refer to debt consolidation. Banks offer these loans at lower interest rates to help borrowers pay off high-interest debts. After consolidation, the borrower repays the bank through a single loan with a lower interest rate and longer repayment term.

Pros:

• Significantly reduces interest expenses—balance transfer loans typically offers annual interest rates between 3% and 20%, compared to credit card rates that can exceed 30%
• Simplifies debt management by consolidating multiple debts into one, eliminating the need to track various repayment amounts and due dates
• Offers flexible repayment terms from 12 to 72 months, helping reduce the risk of late payments and supporting better credit health

Cons:

• Some banks may charge processing or administrative fees
• Without changes in spending habits, borrowers may risk accumulating debt again

Suitable for:

• Individuals with multiple high-interest debts, such as credit card balances or existing loans. This option helps consolidate debt, reduce interest burdens, and improve overall financial health.

Revolving Loan
A revolving loan provides borrowers with a pre-approved credit limit from the bank. Borrowers can repay the loan at any time without a fixed schedule or amount. A minimum monthly payment (e.g., 3% of the outstanding balance) is required. Once part of the loan is repaid, the credit limit may be restored, allowing for future re-borrowing.

Pros:

• Highly flexible—borrowers can withdraw and repay funds as needed, paying interest only on the amount used
• No need to reapply, making it ideal for those who need funds that are readily available

Cons:

• Typically carries higher annual interest rates, often ranging from 10% to 30% or more
• Without a fixed repayment schedule, debt can accumulate easily, potentially worsening financial difficulties

Suitable for:

• Individuals with frequent cash flow needs, unpredictable expenses, or emergency backup requirements—such as small business owners, self-employed professionals, or anyone needing flexible financial arrangements.

Guide for Loan Beginners

Dah Sing Bank offers flexible financial solutions to meet your cash flow needs with tailored loan products! With "Express Money", enjoy APR as low as 1.68%^ and receive up to HKD13,888 cash rebate*. For "Credit Mastermind Instalment Loan", borrow up to HKD2,000,000 or 23 times your monthly income (whichever is lower), plus a cash rebate of up to HKD18,000*.

New-to-bank customers who successfully apply for a loan and submit the required documents between now and 31 Dec 2025 will receive an extra reward of HKD200 in supermarket cash coupons*.

^An APR is a reference rate which includes the basic interest rate and other fees and charges of a product expressed as an annualized rate.
*The above service(s) / product(s) are subject to relevant terms and conditions.
To borrow or not to borrow? Borrow only if you can repay!
The service(s) / product(s) mentioned herein is / are not targeted at customers in the EU.