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Table of Contents
Consumer Loan in Marikina City, Philippines
A consumer loan is a money that a bank or other lending institution lends to the borrower for personal needs: for example, to buy household appliances or to pay for repairs. It is usually only a small loan and is usually given for a year and a half or two years. Interest is charged for the use of the money.
To get a loan, the bank and the individual conclude a loan agreement. It prescribes the conditions for granting the money: the amount, interest, monthly payment schedule, repayment period, and the borrower’s responsibility for nonfulfillment of obligations.
Types of consumer loans in Marikina
Banks analyze consumers and develop credit products based on their needs. Sometimes they even create offers for specific customers. For example, they keep track of the expenses and income of clients who keep their salaries in accounts in that credit institution and immediately calculate the amount and terms of the loan based on income.
Consumer loans in Marikina differ in purpose, type of security, and form.
By purpose
There are two types of credit, target, and non-target.
Targeted loans are given to buy specific goods or pay for a specific service. For example, to pay for education or buy a laptop.
If the amount is small, the consumer credit is processed in a simplified manner directly in the store or office – the procedure takes no more than half an hour. But money in hand is rarely given: as a rule, it is immediately sent to the account of the seller or contractor.
Non-purpose loans are given for any purpose, and the money is transferred to a credit card or given in cash. The bank risks are higher here, that is why the conditions are less loyal than under the special purpose loan: the interest rate is higher and the amount is less.
By type of collateral
If the loan amount is large, the bank may require collateral. For example, to ask for a property pledge. If the borrower fails to pay the debt, the property will go to the bank.
Another way of securing obligations is a surety. The guarantor guarantees the bank that the borrower will pay the debt. Otherwise, the amount will have to be paid by the guarantor himself.
By form
Classic loans are given in cash or transferred to a personal account. The amount of the loan is stipulated in advance and an agreement is signed, where all the conditions are spelled out. If the money is transferred to the account of the borrower, it can be withdrawn without interest.
It is also possible to have a credit card: it is an ordinary debit card, but the money on it belongs to the bank. When you pay for things with a credit card, you are borrowing money. It is not profitable to withdraw money from a credit card: the bank charges interest on the transaction.
The card has a credit limit, which is the maximum amount you can borrow. Its size depends on the solvency and credit history of the borrower. Usually, there is an interest-free period on the card: if during this time the borrower has fully repaid the debt, he will not have to pay interest to the bank. The minimum monthly payment is about 3-10% of the loan amount.
Pros and cons of consumer credit in the Philippines
A consumer loan has advantages over other types of loans:
- You can apply to different organizations and choose the most favorable terms.
- Requirements for borrowers on consumer loans are more lenient than on other types of loans.
- As a rule, it is possible to repay the debt ahead of schedule without penalties.
But there are some disadvantages:
- Small amounts.
- High interest rates: the average rate on unsecured loans is above 20%.
- Short terms: loans of up to one year are more common.
With all the minuses and pluses, a consumer loan is a good solution when you need money here and now: it is easier to apply for than other types of credit, and you can repay early.
How to apply for consumer credit in the Philippines
It takes four steps: choose a bank, apply, collect the documents, and wait for a decision. If the application is positive, you can sign the contract.
Step 1
Choose a bank. Avoid companies that ask for money in advance for processing a loan: it should not be like that. It is better to choose major banks: their range of credit products is wider, and the conditions are often more favorable than in small credit institutions.
Banks publish all the information on the requirements and required documents on their websites. There you can also calculate the rate and term of the credit with a special calculator.
Step 2
Submit an application. This can be done in the bank branch or online. As a rule, in a form on a site to specify the passport data, contacts, average monthly income, amount, and term of credit. The bank will check your credit history and decide whether to grant or refuse the loan.
The bank sets its own requirements for the borrower, but there are general rules for granting a loan. To become a borrower can only adult capable person at the age of 18 years. But in fact, more often applications are approved for borrowers between the ages of 21 and 60.
Step 3
Collect Documents. The minimum package of documents is a passport and application for credit. Additionally, the bank may request:
A statement of account transactions. This document also confirms the solvency of the borrower. It can be obtained from the bank.
A copy of your employment history. Loans are more often approved for borrowers with more than six months of work experience.
Step 4
Wait for the decision and sign the contract. Consumer credit is usually given for a small amount, so the verification is quick, sometimes in a few minutes. If the bank approves the loan, you need to sign the contract.
It is not obligatory to take out insurance when receiving credit – this is an additional voluntary service.
How to pay a consumer loan in Marikina
The borrower and the lender conclude an agreement, where the rights and obligations of the parties are prescribed in detail, as well as the terms of the loan, including its repayment.
How to Pay
A loan payment consists of two parts – the debt and the interest on it. Depending on the composition, there are two types of payments:
Annuity
This is the most popular way of accruing payments: each month the borrower repays the debt in equal amounts. The size of the payment remains the same, but its composition changes: first, the borrower pays interest, and the amount of the debt is practically not reduced. Gradually the correlation evens out. The overpayment on such a loan is higher.
Differential
This method allows the borrower to make large payments, but each month the amount decreases. Here it is the other way around: the main part of the payment is the debt. This is paid in equal installments during the whole period of the credit, and the rest is followed by the interest. Your overpayments will be smaller.
When to pay
When you sign a contract, you make a schedule of payments. It prescribes the number of payments, their composition – the ratio of the principal and interest – and the date when the last payment should be made.
You can make a schedule yourself: through a calculator on the bank’s website or manually, when all the conditions of the loan are known.
