Taking an advance loans Philippines is not difficult. There are many favorable offers from banks and other loan services. Find out more about it in the article.
The benefits of a loan are determined not only by the interest rate but also by the right targeting when choosing a loan program. Before borrowing money from a bank or microfinance company, it is important to make sure that the loan product you choose is really right for you.
Banks in the Philippines now offer a wide range of specialized programs. For example, within the mortgage or car loan category, detailed offers are available that are geared toward a specific task:
- secondary home mortgages,
- a program for used cars,
- mortgage offer for young families or entrepreneurs.
- Thus the bank takes into account the specifics of the purchase and offers favorable conditions.
Peculiarities of Target and Non-Target Advance Loans Philippines
The second important step in the proper selection of a loan offer is to choose the type of loan:
- Target type the bank gives money for a specific purchase, this condition is fixed in the loan agreement. Targeted loans include auto loans, mortgages, loans for appliances and furniture, services and recreation;
- Non-targeted type bank issues a cash loan and does not require itemization of spending, in some cases it may be more advantageous.
Calculate your total overpayment
Before you apply for a loan, you need to calculate the interest rate overpayment to choose the most favorable option.
You can calculate using the formula:
- Monthly payment × Loan period (months) – Principal amount = Overpayment
- Or use an online calculator.
In addition to the commission for using the bank’s money, you may have to pay other additional fees, which can also be considered an overpayment on the loan:
- withdrawal or transfer fees;
- document preparation costs;
- Insurance fees;
- Assessment of the value of your home – when applying for a mortgage;
- state fee;
- Fee for renting a safe deposit box;
- Services of notary and other experts.
Advice From the Philippine Bank
Overpayments, as expressed in the interest rate, can be managed. Most loan contracts offer an annuity repayment plan. If you pay the debt each month in the amount set by the agreement with the annuity system, most of the money will go to pay the interest, less – to pay the main debt.
In this case, it is advantageous to pay more than the schedule at the beginning of the loan term and send the extra money to pay off the principal. Such a strategy will help you quickly reduce the amount you owe, on which the overpayment interest is calculated.
Whether to Decline Insurance
Often borrowers agree to an insurance product solely for the sake of the loan or to improve the terms of the loan. And then they forget not only to use insurance in unforeseen situations but also to explore the possibilities of the policy, so many citizens are left with ambiguous impressions.
- In times of crisis, insurance is especially beneficial for both the borrower and the lender. Thanks to insurance products, citizens can get protection against delinquent support for loss of income, as well as secure their property.
- The bank, in turn, reduces the risk of default and can provide a more comfortable rate. The borrower has the right to refuse the recommended insurance. About how the refusal will affect the terms of the loan, it is worth finding out before the deal is concluded.
- Taking insurance seriously can bring many more pros than cons. It is important to study all the options that are allowed under the credit proposal and choose the most appropriate. This way, the borrower can get not only great benefits but also an additional tool for financial protection.
With or Without Guarantors
The terms of some advance loans Philippines provide for a guarantor. Involving another person in the contract, the bank protects itself from the risk of default, and the client increases the chances of approval.
Taking out a loan involving guarantors without their consent is not a good idea. It can lead not only to the loss of a good relationship with loved ones but also to legal problems.
An additional list of factors to consider before you apply:
- Contingency loan relief options: restructuring, deferment, minimum fees, etc.;
- penalties for late payments;
- restrictions aimed at the right to dispose of the acquired property;
- availability of government programs that can multiply the benefits of the bank’s offer;
- type of payments annuity or differential;
- Analyze one’s credit standing at the time of application.
How to Choose a Loan in the Philippines?
Calculate how much and for how long you need. But keep in mind that you will have to pay back not only this money but there will also be interest and possible additional payments.
If payments on all advance loans Philippines and credits take about half of your annual income, there is a risk of not being able to repay the debt. It is optimal when payments do not exceed 30% of your monthly income. And with that, you already have a financial safety cushion. Take into account major upcoming expenses, both one-time and recurring, such as tuition for your children or an annual check-up or car insurance. Or a planned reduction in income, such as if you’re going on maternity leave.
Find Out How Much You Will Have to Pay
Make sure you know the total cost of the advance loans Philippines. This includes not only the cost of the loan and the interest rate but also other costs involved in the contract, such as mandatory insurance and credit card fees.
The bank should indicate the total cost of credit in the upper right corner on the first page of the contract.
Check whether your contract includes any additional paid services you don’t need, such as a credit card, SMS-informing, voluntary life, and health insurance, remote banking, or notary services. Find out if these items are mandatory or you can opt-out of them.
Please note that the cost of the advance loans Philippines should not include services for which you have not given your consent, and those that the bank provides in its own interest: a review of the application, preparation of documents for the contract, maintenance of the loan account.