Although we always advise planning ahead to avoid loans, sometimes a loan might be highly necessary. When you borrow money from a moneylender, you might often just think of your obligations, such as when to repay and how much. However, whether you are a borrower or a guarantor, remember that in addition to obligations, you also have rights according to Hong Kong law (the Money Lenders Ordinance). Know your rights!

Rights of a borrower

As a borrower you have a right to: 

• repay your entire loan early at any time at the same effective interest rate as if the loan was not repaid early

• repay the loan in instalments

• understand the terms of repayment

• understand if any asset has been pledged as security for the loan

• upon making a request in writing and paying a prescribed fee (for expenses incurred in providing the information), retrieve the following:

  • the date the loan was made

  • the amount of the loan

  • the interest rate

  • the amount of loan repayments already received

  • the amount of every sum due (but not paid) and the date it is due

• the loan should state the lender, borrower and guarantor’s name and address, state the place of signing and should be signed by you (the borrower)

• receive from the lender within 7 days a summary of the MLO provisions which sets out all your rights and obligations.

Rights of a guarantor

If you agree to be a guarantor on someone else’s loan you have a right to receive, within 7 days:

• a written copy of the loan (compliant with the requirements above);

• a copy of the guarantee

• a statement of the amount payable by borrower and payment due dates

Extortionate interest rates

The maximum annual interest rate that you can be charged on a loan is 48%-60%. A loan with an effective interest rate that exceeds 48% per year is considered to be extortionate. This means that the lender must justify why such high interest is not unreasonable or unfair before a court will enforce repayment of the loan. Loans with interest rates above 60% are illegal. 

Learn more about how to manage your debts and plan for the future to avoid needing a loan! Attend our Money Wise Migrants foundation workshop.