Types-of-Loans-Available-in-Philippines

Types of Loans Available in Philippines

d AThe Philippine lending sector (compare online lenders with Monily) in the years that cash loans started to become popular have made a careful study of the existing circumstances of Filipino borrowers. The Philippines has quite a reasonable number of citizens living a very diverse way of life, looking for immediate cash to fund immediate and unexpected expenses.

The lenders recognized the pressing inevitability to address these needs with appropriate solutions. Accordingly, they came up with different types of loans to match the individual living conditions of the Filipinos’ way of life as perceived.

From previous failed loans transactions, lenders and other credit and lending institutions took careful study of the existing conditions of Filipino households. Two pivotal factors were identified and used to design the basic structures of the different types of loan products that were eventually developed.

Factors such as; the kind of needs that the loans must cater to and the financial capacities of the borrowers. True to their visions the resulting loan products available in the Philippine loans market today are not only convenient but also utilitarian.

Find out from the different types of loans available in the Philippines, enumerated and defined below which is most suited to your needs and repayment capacity. This exercise may come in handy when you’re trying to choose the best loans Philippines options to use next or more often.

Different Types of Loans in the Philippines

All types of loans in the Philippines fall under two informal groups; loans used for or has specific purposes and loans that conform to requirements of collaterals.

The following are the major types of loans that fall under loans for specific purposes:

Consumer Loans

These loans as per definition are for buying or purchasing consumer goods and mostly are instalment based personal or business loans. Although sometimes these types of loans can be abused it doesn’t happen too often.

To curb mishandlings established credit and lending establishments will only release goods for this type of loans cash. Most borrowers that use these types of loans are business establishments looking to expand or start a business.

Cash Loans

These loans are released in cash, which many borrowers in the Philippines prefer because these can be used for whatever personal purpose they have an immediate need for.

The loans that fall under these types of loans are personal loans, salary loans or payday loans, cash loans (you may be interested – how to obtain quick cash loans online read here), emergency cash loans, and government loans for small business in the Philippines.

Usually, cash loans are taken without collateral, thus imposed with a much higher interest rate and a short and limited repayment period.

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These are the types of loans mostly offered by enterprising online lending services providers. No collateral, no documents, and credit score check requirements cash loans in an hour Philippines.

Works much the same as payday loans and are also offered by credit lenders which, Monily (learn more how Monily works) Philippines is one through online processing.

Payday Loans

The loans with the shortest loan repayment periods, typically 30 days or the next payday. This is the easiest loan for those who have paychecks they can use as guarantees of repayment to the lenders.

A no collateral loans no credit check but with the shortest repayment period and interest rates as high as 40%, this loan type is bad for fiscal budgeting although excellent in terms of convenience.

Pay Attention

Monily recommends choosing the lenders who offer 0% interest rate loans for first-time borrowers or look for loans with lowest APR on market.

If possible use only this type of loan option when you have exhausted all others. This is the type of loan that can possibly bury you in debt when used unwisely.

These loans are easy to access, and you can apply for one without leaving your home. The conveniences afforded by these types of loans are stacking up temptations.

Personal loans are available via Monily Philippines, an online lending services platform that offers easy access to a database of online personal loans services providers in the Philippines.

Monily has a loan comparison search tool that can compare different loan products offerings of loan providers within minutes.

When nothing else can provide the help, at the very least there is Monily loan comparison search tool that can help you pick the loans provider who can best serve your needs.

The most common purposes these types of loans in the Philippines are used for:

  1. Personal online instalment; the principal amount of the loaned money has to be repaid in instalment with interest (principal amount + a portion of the principal amount as interest), in a period from 12 to 48 months. The monthly instalment payments are in a fixed amount and will pay the loan plus the interest in full on the last instalment payment.
  2. School fees; loans cover children’s education or even personal educational enhancement via a postgraduate degree. Some lenders call these types of loans educational loans separate to student loans which cannot be used in any school of choice.
  3. Home Renovations: costs of home improvement funded by cash from loans. The loan amount is targeted to fully cover costs of repair, remodelling or renovation of homes.
  4. Funds for travel; fund travel expenses to dream destinations of a loved one or the whole family.
  5. Debt Consolidation; are loans that are used to pay other debts, also called debt consolidation. Debt consolidation means all loans and other debts like credit card debts are now managed under a fresh single personal loan with upgraded terms.
  6. Business Investment; building up financial resources for the future by investing in real estate, mutual funds, stocks and other types of business investments. The principal amount will be earning dividends while slowly repaid in instalment via fixed amount monthly amortizations. Funds from these types of loans are used to expand businesses or start new ones. The funds serve as working capital or used to purchase equipment for the business.
  7. Purchase of Consumable Goods; like electronics, gadgets, and equipment for personal use or for business. Included also are computers, tablets, and mobile phones.
  8. Medical Bill Payments; getting a loan to pay for costs of medical bills for surgeries and treatments. A big help during emergencies, medical loans can also be tapped to support costs of medicines and hospitalizations.
  9. Auto Financing, or car loans; are used to finance a purchase of a new or used car.

Types of loans that conform to requirements or non-requirements of collateral

  • Secured Loans; are loans that need the borrower to put up a collateral to act as a security for the lender. Collaterals can be a deposit account, vehicle or a property. The collateral can be used to recover the amount borrowed in case the borrower defaults on loan amortization payments.

The collateral lowers the risk of loses for lenders, thus secured loans tend to demand lower interest rates. One bank loan product from a respectable banking institution offers to OFWs a secured personal loan secured by a bank account deposit.

  • Unsecured Loans; are loans that require no collateral from the borrower or a non-collateral loan. Most of the different types of loans available in the Philippines are non-collateral or unsecured loans. These are available in a Php 10,000 to Php 1 million loans with repayment period ranging from 12 to 36 months.

Non-collateral types of loans in the Philippines are availed of by employees and self-employed borrowers. Interest rates range from as low as 25% to as high as 40% APR levied to any principal amount from Php 10,000 to Php 1 million. One loan product of this type is the bank loans Asenso Kabayan Program offered to OFWs.

Unsecured loans run a higher risk for loses, so the lender typically limits the loanable amount and demands higher interest rate. Although granted to borrowers without collateral, personal loans rely on the borrower’s creditworthiness, it follows that a good credit standing will give you a higher chance of approval than someone with a bad credit history.

Proof of stable income is needed for unsecured loans. An assurance that you can make monthly repayments. Most bank loans require proof of income, this will help determine your capacity to repay. Prepare the following supporting documents; pay slips, certificate of employment, income tax returns, when planning to apply for an unsecured loan.

Hope this article was helpful!

In case you are in need of fast online loan try Monily online loan search tool, compare the lenders and choose the one who has the lowest interest rate and the speed of loan approval to make sure you get the money funds as fast as you needed.