A HSBC debt consolidation loan may be a smart way to manage multiple debts and make your repayments more affordable. But how does it shape up against other personal loan providers?
HSBC is regarded as the 6th biggest bank in the world and as of August 2020 it is the largest in Europe. It is a globally recognised bank with millions of customers in the UK. They offer UK residents a selection of retail banking products, and they also offer mortgages and loans, including the HSBC debt consolidation loan.
So, what are the details of these loans and are they better than loans offered by other big banks?
What’s the Purpose of Debt Consolidation?
Debt consolidation is when you consolidate multiple debts into one new debt. For example, you might have three small personal loans and one store card debt, and then take out a new loan to pay them all off.
But what is the purpose of this? It’s not just to put them in a single neat package. It is done only if the new debt has better repayment terms than all the other debts combined.
Note, debt consolidation has many pitfalls and potential mistakes. You should always learn more about debt consolidation and speak with a debt charity for guidance before committing.
HSBC Debt Consolidation Loan Overview
HSBC offer personal loans that are allowed to be used for debt consolidation. These loans are called personal loans, but seen as though they can be sued to consolidate debt, they often get termed based on their purpose. Thus, some people unofficially call them HSBC debt consolidation loans.
You can apply to borrow anything from £1,000 to £25,000 with these loans. Unlike other banks, HSBC has some more appealing APR rates and they do not make exclusions if you are not already a HSBC customer. Read on to learn the details.
HSBC Debt Consolidation Loan Eligibility
To apply for this personal loan, you will need to be at least 18 years old and live in the UK. This is the standard criteria for banks and is better than a couple of other UK banks that require you to be at least 21 years old.
Two other requirements are that you have at least £10,000 of income per year. This can be from employment, a pension or something else. You also need to have a bank account that is capable of setting up direct debits. If you have a basic bank account and cannot set up direct debits, you won’t be able to apply because direct debit is the method HSBC uses to collect repayments.
Do I Have to Be a HSBC Customer to Apply?
If you have searched the UK market for debt consolidation loans already, you will find that most of the well-known banks require loan applicants to already hold a bank account with the respective bank. Some banks require you to have had one of their accounts for three months before you can apply.
HSBC joins Santander by allowing non-customers to also apply for their debt consolidation loan. As long as you meet the eligibility criteria above, you can apply. Just like this Trustpilot reviewer explains:
“I did successfully get a loan through HSBC when my own bank wouldn’t even assist me in how to apply for one.”
Your application will be subject to a credit check.
HSBC Debt Consolidation Loan Interest Rates
HSBC isn’t just scoring points with us by making their personal loans accessible to non-HSBC customers. They’re also winning Money Nerd over with appealing interest rates.
Their representative APR rate is 3.3% for amounts between £7.500 and £15,000, which is better than all the other banks except Santander UK.
However, please note that representative rates are usually unachievable. This is the best-case scenario and most of the time the rate you are offered will be much higher. It all depends on your personal circumstances.
But there is more good news. Whereas other banks cap the APR rates they offer between 24% and 29%, HSBC’s maximum APR rate is considerably lower at 21.9%.
Overpay or Settle Your Loan with Zero Penalties!
Most of the UK banks offering personal loans will allow customers to make overpayments or clear the loan in full early. But to do so, you usually have to pay fees or be charged your interest rate of so many days (usually from 30 to 50 days).
The HSBC debt consolidation loan is different. As things stand, they will let you make overpayment or pay off the loan early and not charge you for it.
Is There a HSBC Debt Consolidation Loan Calculator?
There is a calculator to help you find out how much you could borrow and on what terms. This calculator will not tell you if debt consolidation is right for you and beneficial in relation to outstanding debts. For this type of service, you will need to speak with a UK debt charity for help.
Keep in mind that these calculators are not always accurate and often promote better terms than you can really obtain.
How to Apply for a HSBC Personal Loan
If you are a HSBC customer and have internet banking, you can make your application through there. If you are accepted you might even get the loan into your HSBC account in the same day.
Non-customers can also apply online through the HSBC website. You will have to declare your eligibility and then answer some questions. You can even receive a quote before getting your credit file assessed.
Our Opinion on HSBC Debt Consolidation Loans
Money Nerd is impressed with many aspects of HSBC’s loan product. They do not exclude people who are not HSBC customers and have one of the lowest representative APR rates on the market right now at 3.3%. Moreover, their maximum APR rate is one of the lowest at 21.9%. Another great feature of their loans is early repayment with no charges to pay.