Short term loan Philippines, people often find themselves in situations where they need money to cover unexpected expenses. Let’s face it, there is only a tiny percentage of people that have a financial emergency cushion. Still, you have to cover these unexpected expenses, but where do you get money. People often use the services of lending providers offering short term loan online. Read the article about this topic and the potential risks of borrowing money short term loan.
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What Is A Short Term Loan In the Philippines?
A short-term loan is a loan type obtained by a person to support a temporary personal (or, in some cases, business) need. Short-term loans offer quick cash when a person’s cash flow needs a boost. Typically, short-term loans have shorter repayment periods when compared to traditional ones.
That’s why a short-term loan is called “short-term” since it often must be repaid within a shorter period. Usually, people ask for short-term loans for personal purposes. For example, an unexpected expense has occurred, and the person must cover it but doesn’t have enough money. Typically, these short-term loans are limited to PHP 30,000.
- As mentioned, this option may also be appealing to small businesses. However, a short-term loan for a business offers more cash. Compared to traditional lines of credit, short-term borrowings offer convenient solutions to help with sudden temporary financial problems.
- It’s worth mentioning that short-term loans are called “short” because they require rather quick repayments. Moreover, business short-term borrowings are repaid differently than personal ones. Typically, those who use such means have to repay on a daily or weekly basis.
- Before applying for a loan, it’s critical to consider a percentage rate. The rate directly affects how much an applicant will have to pay in the long run. Another vital thing to consider is potential fees and charges. Financial institutions often impose fees to ensure they get money on time from their clients.
- Moreover, if one is considering a short-term loan, they should understand that the interest fee may be very unappealing. Typically, short-term borrowings have rather high-interest rates. As a result, a person winds up paying more than they borrowed. So, if considering short term loan interest rates in the Philippines, ensure you won’t go too deep into debt.
How Do Short Term Loans Work?
Before you learn where to apply for a short term loan, let’s figure out how the mechanism works. Typically, a person borrowing money quickly gets approval and money on the deposit account. Moreover, borrowers have a myriad of options to choose from as there are hundreds of providers in the Philippines (and in the world overall).
Usually, a borrower must submit an ID and prove they are employed. The company or a provider reviews the application. In some cases, companies conduct minor credit score checks. Typically, companies approve applications even if an applicant’s credit score isn’t ideal – as long as they are employed.
When the application is approved, the borrower gets an agreement to sign. The agreement contains terms and conditions, so the borrower must pay attention. The agreement also contains the repayment schedule, which is important since it explains when and how much you should payback.
Typically, short-term borrowings offer less cash than traditional loans. Instead of getting around PHP 100,000, the person may expect up to PHP 30,000 or even less.
Short Term Personal Loan Philippines: Types Of Loans
Before we answer the “where can I borrow money short term loan?” question, let’s check short-term loan types.
Financial institutions recognize the following types of loans:
- Payday loans.
- Bank overdrafts.
- Car title loans.
Now let’s dive into the details.
Short Term Payday Loans
It’s one of the most popular short term loan products out there. Some of us tend to spend our salary before the next payday. Typically, it’s not a bad situation, but if an unexpected expense occurs, one may not be able to cover it. That’s when this short-term loan example comes in handy.
A payday loan provides cash for borrowers while they wait for their next paycheck. Typically, the only requirement (apart from the ID) is a pay stub or any other document that proves a person has a job in the Philippines.
These types of loans usually require a quick payback. Meaning, that as soon as a person gets their next paycheck, they have to return the loan. Borrowers should be careful since, in some cases, these loans come with enormous APRs and even fees for late payment.
Typically, most people recognize bank overdrafts as occurrences when they buy something, but there wasn’t enough money to cover the purchase. As a result, the bank covers this expense rather than declines the purchase.
The problem with a bank overdraft is its high-interest rate. It’s still considered a short-term loan since the person has to immediately cover the expense unless they want to also pay a hefty penalty. That’s why it’s critical to monitor funds in your bank account. Avoiding an overdraft could save you a significant amount of money.
Car Title Loans
It’s a different type of short-term lending. The idea is to let the borrower use the newly bought vehicle as collateral. The trick is that the car buyer becomes its owner and can use the car as collateral.
Typically, such loans pay out only a small part of the vehicle’s market value (up to half the vehicle’s worth). However, the interest fee may be rather high, while the repayment window is short.
Note: other options may include lines of credit extended by banks or financial institutions to cover short-term cash troubles.
Benefits And Drawbacks Of Short-Term Loans
This option has advantages and disadvantages. Let’s dive into the details and check if there are reasons to apply for short-term borrowings in the Philippines and what risks one may experience.
Advantages and Why Such Loans Can Be Good For You
Let’s start with the advantages of borrowing money short term loan.
- Relaxed Requirements – typically, borrowing money short-term means one doesn’t have to go through long and exhausting financial checkings. The only two requirements in the Philippines are having a job and providing a scan (if applying online) of any eligible Philippines ID.
- Quick Approvals – depending on the institution, the approval period may be from five minutes to hours. The longest one may have to wait is 24 hours. Some government-based institutions may require up to two days. Traditional lending platforms often conduct serious checks that lead to extending approval periods.
- Shorter Repayment Plans – some may consider it a disadvantage, but it’s a benefit. Instead of borrowing money and repaying it for months or even years, you may quickly clear off the debt from your books. Typically, amounts borrowed are much lower, so it’s easier to repay the debt.
- Reduced Paperwork – people using the services of lending companies are aware of how exhausting it could get to prove you are eligible. One must provide months of bank statements, a credit score, employment documents, collateral documentation, etc. However, most short-term lending providers require your Philippines ID and employment proof.
Disadvantages and the Risks You Should Be Aware
Unfortunately, borrowing money short term loan has some risks and disadvantages. It’s critical to be aware of these risks before using the services of lending companies.
- High-Interest Rates – even though lending companies don’t lend big amounts of money, they impose high-interest fees. If you can’t avoid borrowing money in the Philippines, try to find a lending company with low-interest rates.
- High-Cycle Risks – If a person is short on cash, they may require money. Then they require more money to cover the existing debt. You may quickly find yourself in a vicious circle – having to get into another debt just to get out of the previous one.
- Addiction Triggers – borrowing money short term loan is easy and convenient. It’s easy to form an addiction when money is available 24/7. The problem is that people get deeper into debt.
Short Term Loan Philippines: Best Services
If you were thinking what is the best short-term loan, the answer will depend on the service you plan to use. Below you will encounter a list of options to use in the Philippines. But before you check them out, let’s consider some important aspects and tips.
Short-term borrowings are convenient since they are fast and often limited to smaller amounts of money. Thus, it seems like a minor thing to borrow money. However, you must pay attention to details. Even when using reliable services, ensure to read the agreement. Do not blindly take a loan you won’t be able to cover.
Another tip is to always consider if the reason is important. For instance, if you need a computer or you want to repair an old one, it should be a viable reason, especially if you use the PC for work or study. It’s only natural to apply for a loan, especially if you know that soon you will get a salary or wage.
But it’s not a good idea to borrow money if the reason is minor. If a new iPhone release makes you want to buy it, but you don’t have money at the moment, it may be a bad idea to borrow money.
Consider your financial situation at all times. If you have several loan payments due, borrowing money may not be a good idea. First, consider alternative methods to cover other payments. Then find a reason why you are always in debt. Finding and eliminating the debt reason is the best way to finally plan your finances properly.
Now that you’ve learned about some useful tips check out reliable short-term loan services in the Philippines.
Short Term Loan With Cashalo
It’s a rather convenient fintech platform based in the Philippines. The best thing about Cashalo is that a user can download an app and immediately use all its features. The borrower has to link their card to the app to ask for a loan. If it’s approved, the money goes directly to the user’s deposit in the bank.
Short Term Loan With MoneyCat
The full name of the organization is MoneyCat Financing Inc. It’s another fintech company that offers convenient services to clients. It has an app that users can download. If the user doesn’t want to use an app, they may ask for a loan by using the official website. In some cases, MoneyCat doesn’t even perform a credit score check. So, if you were wondering how to get a short term loan online, MoneyCat could be the answer.
Short Term Loan With Finbro
If a person is wondering where to get a short term loan, they could consider Finbro. It’s an online lending platform. Typically, people in the Philippines use Finbro whenever they experience unexpected expenses. It’s a reliable financial institution without hidden fees. The company works 24/7, so anyone can cover their unexpected expenses anytime.
Short Term Loan With VAMO
How to borrow money short-term by using VAMO? It’s a rather simple procedure. If you are a new customer, you can get up to PHP 10,000 for the first time. If you have been using the services of VAMO, expect a loan of up to PHP 30,000.
Short Term Loan With CashXpress
Borrowing money at CashXpress is a great short-term loan example. CashXpress offers fast and convenient loans since the procedure takes just a few minutes.
The borrower needs an ID (any approved ID in the Philippines), and the loan should be approved. The CashXpress loan platform doesn’t perform serious credit score checks, but it offers small loans up to PHP 20,000. Moreover, clients can even prolong the loan if they tend to return full payments on time.
Short Term Loan With Digido
Digido offers reasonable short-term loan interest rates and doesn’t require collateral. Digido is a lending platform in the Philippines with convenient terms and conditions. It’s a leading platform preferred by people in the Philippines since it offers fast loans.
Short-Term Loan SSS
Social Security System in the Philippines may also offer short-term loans. Typically, SSS member-borrowers with past due short-term loans of six months as of the first day of the condonation period are considered eligible to apply for loans.
Short-Term Loan Pagibig
The Pag-IBIG Fund Multi-Purpose Loan (or, in other words, MPL) is a loan designed to help Philippines citizens who experience immediate financial needs. Philippines citizens can borrow up to 80% of their Pag-IBIG Regular Savings. Citizens have to fill out a short-term loan Pag-IBIG form and wait for about two days to get approval or denial.