How do I know if the interest rate I am being offered on my loan is legal?

According to Hong Kong law (The Money Lenders Ordinance), a loan with an effective interest rate that exceeds 36% per year is presumed to be extortionate. This means that before a court will enforce repayment of the loan, the lender must prove that charging such a high interest is not unfair or unreasonable. Loans with interest rates above 48% are illegal.

The following types of fees are also illegal and, if charged, the loan cannot be enforced: 

• fees for processing or establishing your loan;

• most types of late charges.

If in doubt, contact us for a free confidential one-to-one financial counselling session to receive impartial financial advice. You can seek legal advice from charities HELP for Domestic Workers or Mission for Migrant Workers, or visit a district office of the Duty Lawyer Service for free legal support.