Things To Look Out For When Applying For A Personal Loan
Applying for a personal loan can help you make ends meet; it may be one of the most viable courses of action that can help you quickly secure funds. However you have to carefully consider some things and pay close attention to how figures are calculated so you can land yourself with the best deal in town. Here are a few tips that might help you narrow down your choices in case you are looking for the best personal loan offers in the Philippines.
Personal Loan Eligibility Criteria. All credit providers have strict eligibility requirements and in order for your loan to be processed you must meet these requirements. Here are some of the Eligibility Criteria set by banks in the Philippines:
- You need to be a Filipino Citizen or married to a Filipino Citizen.
- At least 21 years old at the time of application. Some banks would require a borrower to be below 60-70 years of age upon the maturity of the loan depending on the bank.
- Applicant must have a monthly income of P20,000 for employed individuals, P30,000 for Overseas Filipino Worker and P50,000 for Self-employed individuals.
- Working for at least two years with present company or employer. If you own a company you are required to show positive income for at least 2 years.
- Must be residing within the lending area of the credit provider.
- Good credit standing, and have a working bank account
- You must not be involved in any outstanding court cases associated with failure to pay for a debt.
Flat Interest Rate. This is the interest charged on a borrower’s loan without taking the periodic payments into consideration. Say for example you borrowed P10,000 with an interest of 10% which you need to pay within five equal installments. The total interest charge for an entire term would be P5,000 (P1,000 a year). However the debt will not be reduced by the paid amount. With a flat rate computation borrowers are still required to pay the interest in full as calculated at the beginning of the loan because the interest is charged on the initial amount of the loan.
Early Repayment Penalty. Lenders will lose money from interest rate earnings if a borrower decides to pay his loan in full before the maturity date. As a borrower you may think it’s a great idea to pay back your loan before the term ends, but you have to be aware that lenders will charge you for that because they will be losing money for missing out on interest earnings that may have incurred during the whole term. When applying for a personal loan in the Philippines be sure to look out for these terms in your loan policy: early repayment penalty, early redemption fee, redemption charge and financial penalty.
Some banks in the Philippines usually allow a borrower to pay their loan balance in full anytime without any charge, while others charge a fee as a percentage of the outstanding balance. Be sure to read to the full terms and conditions because they vary from bank to bank.
Late Payment Penalty. In case you forget to pay your monthly installment on time, the unpaid amount will be charged a late payment penalty of 5% per month. Penalty charges can be incurred if a borrower fail to make their monthly payments or miss out a payment due date. In an event a borrower forgets to pay his monthly installment on time the unpaid amount will get a 5% penalty each month.
The lender can also take legal action or deduct the credit balance from the borrower’s account to compensate for the amount owed during the term. Finally, the bank can repossess the borrower’s assets if he applied for a secured personal loan.
You know those terms and would like to take out a loan now? Check out this article about the process of getting a car loan.