Online Loan VS Credit Card in The Philippines

Online loan vs credit card – enough popular question in the Philippines and not only. In this article, you will find more information about it. Read, please further and choose the service you´d like.

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Online Loan VS Credit Card in The Philippines

Sometimes, severe issues of vital necessity for taking money can appear. If you need cash lending instantly, you will do your best to find the most suitable financial establishment quickly. Depending on the aim of getting money, the process may contain several peculiarities, which should be known to the borrower. They include documents’ preparation, counting the monthly income to understand the solvency, and, for sure, choosing the suitable type of financing. Filipinos use them, and the most popular are applying with online or banking services. What does each of them include, and which aspects should be considered while choosing the type of financial lending? 

Online Loan VS Credit Card Philippines
Online Loan VS Credit Card Philippines

For What Do People Need Fast Money? 

The goal of acquiring quick finances is individual. The citizens apply for a loan to make investments or for other individual purposes. The type of the loan determines the number of available finances to borrow, the interest rate, and the time given to return the cash. For sure, the borrower’s payment abilities, and general financial condition, are also considered.  

The credits are provided by two different procedures: guaranteed and unguaranteed. The first one requires a deposit to take a loan (it is provided for a significant amount of money, such as financing the real estate, car loans, etc.). The unguaranteed loan is expected for small amounts and doesn’t need to leave a pledge.

All in all, the most common reasons to get money are the following: 

  • Individual lendings. People take them to make individual payments, which are usually considered life-essential, such as medicine, bills, study, etc. this loan doesn’t require a pledge. Hence, the establishments provide less money to the borrowers. 
  • Disaster insurance loans. Filipinos, who fall under a regular danger because of their residence, can ask for a calamity money lending. In this case, money is usually given for no more than 3-3,5 years with a 5% interest rate per year. 
  • Real estate lendings. It is one of the most significant loan types given to finance buying a new house, a flat, or land to build it up. The pledge is required because the establishment sets the big repayment time (up to 30 years). The yearly interest rate is smaller than the other types, but regular repayment is obligatory.
  • Gadget loans. If a person can’t afford to buy any device at once, he can ask for it. It is an unsecured loan and doesn’t consider enormous cash sums. The most common repayment time for it is one year (usually depends on the establishment and the type of gadget). 
  • Loans for entrepreneurs. The businessman, who wants to invest in his company, can take this financing. If the company is big and the interest rate is lower, the shares can be provided as a pledge. Small companies have more considerable financial value and have different procedures for applying. 
  • Car lendings. The financial organizations provide up to 85% of the price for a new car and 75% for a used one. This loan type is usually a secured procedure with a repayment time of 3 years. 
  • Building investment loans. It is taken to invest in schools, hospitals, shopping centers. The social projects are also financed with this loan type – big companies take lending to support. 

Overall, some of the listed loans are provided only with a face-to-face procedure and require confirmation of various agreements, which takes a lot of time. But when money is necessary at present, people use online loans and credit cards, which is the fastest method to apply for financial lending in the Philippines.

Online Credits and Its Peculiarities 

Different organizations provide quick financing with an online procedure. It is a quick method, which requires using a company’s app or a website to borrow the necessary sum. However, if you are aged less than 21, or older than 65, most organizations may reject your request. The monthly income confirmation for personal lending is optional (the organizations usually ask for no less than 10,000 PHP monthly), but the confirmation of payment ability should be provided.

The information required for online loans is the following: 

  • The ID documents, such as passport, SSN, or driver’s license. 
  • The confirmation of having a regular monthly income. 
  • The mailing address and the phone.
  • The citizenship (optional for the Filipino and obligatory for the foreigners).

After uploading the documents and filling up the specific forms, the organization contacts the borrower and asks several questions. If everything is OK, the money will appear on a debit card in 24 hours or even be taken after a cashout at the specific financing centers. 

Benefits Of Online Lendings

The objective advantages of this loan type make many citizens use it for individual purposes.

The benefits are the following: 

  • Quick money. If an unexpected situation happens, and you apply for it, the money will be received in 24 hours. Therefore, you can instantly use it to make required payments and have time with a margin to repay. 
  • Comfortable procedure. The process of uploading the necessary documents and filling up the writing forms takes no more than half an hour. Many companies try to make the most convenient to the customers to save their time. 
  • Accessibility. You can apply for a loan anytime because financial organizations provide a non-significant amount. 
  • Few documents. The companies usually ask for the obligatory documents to identify the person and verify his payment abilities. 
  • Low interest rate. Due to the small cash amount, the percentage bid is also lower than other banking credits. It is usually no more than 25%. 

The loan companies try to make their services maximum comfortable for the customers and make lendings to everybody who corresponds to the inquiries 

Where to Take an Online Loan in The Philippines? 

The companies, used by the citizens, are the following: 

  • Digido: it provides a maximum of 25,000 PHP for 1 month of repayment. 
  • Cashalo Philippines: you can take 10,000 PHP for 30 days. 
  • MoneyCat: it gives up to 20,000 PHP for 3-6 months with an 11.9% monthly rate.
  • Cashxpress: the company provides up to 20,000 PHP online for a maximum of 36 months of repayment. 
  • Kayamo: maximum 1,000,000 PHP with a 2.5% interest rate can be borrowed for 180 days. 

Each organization has its specific rules and conditions for money lendings, which should be followed by the borrowers.

How is The Card Used? 

Credit cards are provided to bank clients in the Philippines after several conditions are followed or a customer reaches a specific status. If you have provided your data while opening an account, it won’t be obligatory to do it while taking a credit card. 

The credit card allows you to take the necessary money at any time. It is done with the help of a bank’s mobile app. The loan amount for the cards usually depends on the salary per month, indicated during the verification. Taking money with its help is generally faster than an online process but is specific to each bank. 

The most popular banks, which provide comfortable conditions for credit card applications are Tonik Bank and the following:

  • UnionBank. Allows to cover up to 400,000 PHP of the account balance with 53 days of credit. 
  • BDO. The bank will enable you to convert your card’s limit and install payment options for up to 36 months. 
  • American Express. The primary fee for the card is $0 for the first year but is $95 for the further ones. 

Many banks provide their loan services similarly to other organizations. They primarily include uploading the identifying documents, filling the writing forms, and answering the specific questions. 

Comparison of Credit Cards and Online Loans in the Philippines

  1. The income confirmation is obligatory for the banks but optional for online loans. The ID and employment status should be provided in both cases. 
  2. The rate for approval is no more than 50% for the cards and no more than 80% for online loans
  3. Taking the card at a bank establishment is required, while the application of website loans doesn’t make you leave home. 
  4. Different financing fees are available at credit card applications, while online loans don’t have extra expenses. 
  5. There is a grace period for bank credit cards. 

Summary

Overall, applying for a loan may become vital for each Filipino. Credit cards and taking lending online are popular methods of taking finances fast. Regardless of the aim, all the rules should be carefully learned before getting financing. The repayment should also be made in time to avoid problems with the financial organizations.

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Linda Carters/ author of the article

Financial Journalist on Advance Loans Philippines with 8 years experience in a Fintech niche.

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