All You Need to Know About Annual percentage rate (APR)
What is APR ?
Annual percentage rate (APR) is expressed as a percentage of the loan amount and it reflects the cost of borrowing over one year. It does not only take into consideration the interest rate but also all the extra charges that come along with the loan like late charges, administrative fees, etc. Therefore, you can easily compare which lender offers a better rate.
How to calculate APR?
A simplified APR formula is as follows: Interst Rate x 12 monthsx1.9 （fixed number）
In general, the lower the APR, the lower the borrowing costs are. For example, a personal loan with a 17.5% APR is cheaper than the one with a 20% APR.
Is Monthly Flat Rate or APR More Objective When It Comes to Taking Out a Loan?
| Item | Monthly Flat Rate | APR |
|---|---|---|
| ItemDefinition | Monthly Flat Rate Calculate the total interest expense for an unsecured loan | APRCalculate all costs for an unsecured loan, including interest rate and extra charges |
| ItemBorrowing Cost | Monthly Flat Rate No,Cannot reflect all the costs of borrowing | APRYes Reflects the cost of borrowing over one year |
Example: If you are going to take out a HK$60,000 loan with interest rate of 0.5% and a loan set up fee of 2% for 24 months, you will need to pay:
Situation 1: Considering Monthly Interest
Monthly Interest=HK$60,000 x 0.5% = HK$300
Total Interest for the entire tenor：24 x HK$300 = HK$7,200
Situation 2: Considering APR
The APR is 13.99% in this case, according to the method specified in the guidelines set out in the Code of Banking Practice.
Monthly Interest=HK$60,000 x 0.5% = HK$300
Total Interest for the entire tenor: 24 x HK$300 = HK$7,200
Loan Set Up Fee：HK$60,000 x 2% = HK$1,200
Therefore, you can only get HK$58,800 (less the loan set up fee) instead of HK$60,000.
In the 24-month payment term, you will repay HK$2,800 monthly (See formula: HK$60,000 + HK$7,200/ 24= HK$2,800).
If you only consider monthly interest, you will not have taken the loan set up fee into account when comparing the costs of borrowing.
Are loans with 0% APR the Best Loans?
In general, the lower the APR, the lower the borrowing cost. However, it is important to read the terms and conditions that come with the offer. A really low APR usually only lasts for a limited period of time or it only applies to selected customers.
Disadvantages of Comparing APR
Sometimes, APR cannot accurately reflect the total cost of borrowing because the calculations are based on long-term repayment tenor. The charges are spread too thin with APR calculations for loans with short tenor.
Low APR Loans in Hong Kong
WeLab Bank Personal Instalment Loan (Promo Code "NLSMRT")
- APR as low as*
- 1.66%
- Total Amount Payable
- HK$206,720
- Total Interest Payable
- HK$6,720
- Monthly Payment
- HK$8,613
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From 8 October until 14 October 2026, successfully apply WeLab Bank Personal Instalment Loan via MoneySmart promo code 「NLSMRT」to enjoy:
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⚠️ APR as low as 1.66%
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To borrow or not to borrow? Borrow only if you can repay!
PrimeCredit Fixed Loan
- The Lowest APR
- 1.18%
- Total Amount Payable
- HK$202,400
- Total Interest Payable
- HK$2,400
- Monthly Payment
- HK$8,433
【PrimeCredit Offer 🎉】From 1 September until 31 October 2026, enjoy up to HK$18,000 Cash Bonus upon successful application and drawdown of a designated loan amount via MoneySmart, including: PrimeCredit Fixed Loan / Balance Transfer Loan / Civil Servant & Professional Loan / Property Owner Personal Loan.
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⚡ APR as low as 1.18% ✨ No handling fee ✔️ No income proof required for loans of HK$100,000 or below. Online application with 24/7 instant approval and loan disbursement
Only applicable to eligible customers. For more loan and offer details, please visit the PrimeCredit website.
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All examples are for reference only. Final approval is subject to the applicant’s individual circumstances.
Warning: You have to repay your loans. Don't pay any intermediaries
WeLend AI Personal Loan (Tax Season Applicable)
- The lowest APR
- 1%
- Total Amount Payable
- HK$205,760
- Total Interest Payable
- HK$5,760
- Monthly Payment
- HK$8,573
✨ HK$1,600 Application Bonus + Extra HK$200 Apple Store Gift Card 🍎
💰 HK$1,600 Cash Reward + extra HK$200 Apple Store Gift Card regardless of approval
⚡Up to HK$14,000 rewards upon loan amount of HK$300,001
💨 AI-Powered Ultra-Fast Processing – Get Cash Anytime, 24/7
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【📱Phone First, Work Later! HK$100K+ Worth of Prizes Up for Grabs🔥】
From 11 September 2026 (12:00 noon) to 11 October 2026 (11:59 pm), successfully apply for any designated product via MoneySmart and meet the eligibility requirements, you can participate in the "Phone First, Work Later" mini game on the campaign page ⏩ Top 100 Eligible Participants with the highest scores will win prizes worth over HK$100,000 in total, including iPhone Duo, iPhone 18 Pro Max, Apple Watch Ultra 4, and more! Visit the campaign page for details. T&Cs apply.
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Warning: You have to repay your loans. Don't pay any intermediaries.
Citi Speedy Cash(Tax Season Applicable)
- APR*
- 1.56%
- Total Amount Payable
- HK$203,360
- Total Interest Payable
- HK$3,360
- Monthly Payment
- HK$8,473
🤑 【Tax Season Pit Stop — Citi Tax Loan Annualised Interest Rate as Low as 1.56% + Early Bird Rewards Worth Up to HK$21,300】
Tax season is here again — let MoneySmart help you make a Pit Stop for smarter cash flow planning! From 1 October to 11 October 2026, customers who successfully apply for and draw down a Citi Speedy Cash / Citi Tax Season Loan / Citi Card Debt Consolidation Loan via MoneySmart can enjoy total rewards worth up to HK$21,300!
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New customers who successfully apply from 1 October to 11 October 2026 and successfully draw down the loan on or before 14 November 2026 can choose their favourite MoneySmart-exclusive reward: HK$16,300 Apple Store Gift Card / ParknShop e-Vouchers / HKTVmall e-Vouchers / Cash, or rewards worth up to HK$9,999, including a 360° drone.
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FAQ
What is an APR?
- Annual percentage rate (APR) reflects the cost of borrowing over a year, taking into account the interest rate and the additional charges that come along with the loan like late charges, administrative fees, etc.
What is the average APR of loans in Hong Kong?
- For bank loans, the APR is usually between 1.3%-3% and for loans provided by Money Lenders , the APR is usually 4-7%.
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