Taking out a personal loan is a common occurrence in the Philippines and there are various reasons for this. The fact that a personal loan is not restricted in its use has to be its greatest advantage. Usually, Filipinos take out loans to meet different obligations or to better care for their families. It could be money for a work opportunity or simply to provide better necessities for their loved ones. With that being said, here are the common reasons Filipinos approach licensed moneylenders for personal loans:

1. Medical bills – It is definitely worrying when you or your loved ones fall sick. A trip to the doctor can call for cash when you least expect it. Even though all Filipinos are entitled to healthcare coverage under the Philippine Health Insurance Corporation (PhilHealth), there are instances where the medical insurance is not enough. Or, it may not be able to cover the required procedure.

In cases as such, personal loans come in handy. One can use the cash to pay for surgeries, x-rays, consultations, anesthesia or even hospital stay. It can also be used for cosmetic surgeries which is usually not covered by the insurance company. Personal loans are designed to help every need of the borrowers so that they can get the best healthcare treatment for their family or for themselves.

2. School fees – The Philippines economy has been improving in recent years with a positive growth outlook. More and more Filipinos are enrolling in schools in order to obtain more skills for better jobs and income. While the economy has gotten better, the cost of school fees is still a problem for many. Personal loans can be used to pay for school fees and school expenses and can be really helpful if one is hoping to invest in education for a better future.

3. Consolidating debts – Most people who find themselves up to their necks in debt, especially credit card debts can use a personal loan to consolidate and pay off the debt. Too many debts make it very confusing so by combining them into one, debt repayment becomes easier and clearer. Also, paying off the various multiple lenders is not only tedious and messy, but also expensive based on the different interest rates charged. You may get confused as to which bank or lender you are supposed to pay off.

Instead of writing a myriad of checks, you will only write one with debt consolidation plans. Because a personal loan has an end date, consolidating your debt means that you will have a date for when you will finally be debt-free.

4. Moving costs – When it comes to moving houses, one can expect to fork out a huge sum for the entire process. The costs can include buying boxes, packaging materials, renting a truck, or even hiring a moving company. None of these come cheap and the mover will be expected to pay for them out of pocket. If he or she has already spent all of his or her money on a downpayment for the house and closing costs, or perhaps they have paid the deposit and rent for the home they are moving to, then chances are that they will need a personal loan to help out.

5. A dream vacation – A trip to Hawaii, to the United States, Spain, Greece, Thailand, Australia sounds very fun and enjoyable. Most people save up for their yearly vacations, but if one is looking to go on a luxurious break or needs extra money to pay for a honeymoon, or bring the entire family out for a good break, they can take out a loan to enjoy the same vacation. The costs for such vacations are very high, but if one wants to see the world, he or she might as well see it in style and comfort. Consider a vacation loan to celebrate an anniversary, graduation, or simply a family trip to bond with your loved ones.

6. Emergencies – Sometimes, things get tough and there are emergencies that require money. In such situations, the last problem anyone wants is to have no money for the costs. If a person does not have enough savings, taking a personal loan can definitely help when faced with emergencies. Personal loans are good in a way that it is not restrictive, so one can use the money for any purpose or reason.

Usually, when one applies for a loan from banks, they will be required to fill in valid loan reasons before approving the loan. Personal loans from licensed moneylenders like Cash Papa provide greater flexibility for Filipinos in times of need. Nonetheless, always shop around in order to find the best loan terms.

7. Starting a side hustle – Sometimes having only one source of income is not enough. Coupled with bills to pay, hobbies or dreams, people can choose to start a side business or take on a side job. This gives them the opportunity to do something that they like and to earn more income.

If one has decided to start a side job and realized that they do not have enough capital to begin, they can take out a personal loan to start the business they have always wanted. Some Filipinos choose to start their own food business, retail business, printing business, hairstyling business and many more. Endless opportunities await. After starting the business, they can then pay off the loan bit by bit until they are done, while at the same time building their business.

8. Home improvement – Tens of thousands of people have been displaced because of the heavy floods in the Philippines over the years. It is common for Filipinos to experience floods and it usually gets much worse during the monsoon season. Due to the natural weather, houses are hard to maintain. They have to be prepared for such weathers and houses often need to be fixed when it gets hit by heavy rain or floods. Natural disasters are unexpected and sometimes, there may not be enough funds for repairs. In cases as such, personal loans come in handy and can be used for urgent home repairs.

9. Paying for a wedding – The wedding day is probably the most important day in a person’s life. Wonderful and nicely planned weddings require huge funding and planning. The expenses include buying or renting the wedding dress and tuxedo, reserving a venue, getting a caterer, buying the flowers and decorations, getting a photographer, DJ, crew and so much more. These expenses can go quite high and, in some cases, the couple may not have enough money for the best wedding. The couple can opt to take out personal loans to help meet these costs. Getting a wedding loan does not sound exactly exciting but a wedding is definitely the most important event in a person’s life. Most loans offer flexible repayments and the clients can repay the loans at their own pace.

10. Funerals – Funeral and death is a topic that is usually avoided. However, when it happens, money will be needed for the funeral expenses and other necessities. If one does not have enough funds, the time of mourning can be made worse by the lack of money. One of the best ways to deal with this is to take out a personal loan that can then be used to pay for the funeral costs. Whichever form of burial should the family choose, there will be costs involved and this additional stress of financial worry should be removed.

11. To boost one’s credit score – Someone with no credit, or one with bad credit, can consider taking out a personal loan in order to create a good credit history. If he or she has bad credit, taking out a personal loan and paying it off can help improve his or her credit score. The way one’s credit score is computed calls for length of credit, and also different types of credit. If all of one’s credit is in the form of credit cards, a personal loan can help strengthen their credit by offering a different kind of loan.

12. Buying a car – Personal loans are not only good for purchasing cars, but Filipinos can also use this fund to purchase a motorbike, a boat or any other travel vehicles. These purchases are sometimes necessary because of the large land area and long travelling hours. Buying these cars and motorbikes are costly and an individual may not be able to pay the full amount upfront. For certain car dealers, they will allow buyers to take out a credit note with them but the car has to be used as a collateral. This form of loan might also be more expensive as compared to other moneylenders and banks. When one is purchasing an expensive item, they should always do their research and look around for the best deal.

13. Buying a home – Even though one is expected to take out a mortgage to purchase a home, sometimes there are additional costs that call for some additional money. Some people take out a personal loan to put down as a down-payment for a mortgage, while others take one to cover other upfront costs associated with purchasing a home.

Secured loans have lower interest rates and requires collateral from borrowers. This is because secured loans offer less risk for the moneylenders. Assets such as cars, houses, land and valuables can be used as collateral for the loan. In the event where the borrower is unable to repay the loan, the moneylenders can sell the assets to get back their money.

Unsecured loans on the other hand, do no require collateral and assets. This causes the loan interest rates to be higher due to the higher risks involved for the moneylenders. Licensed moneylenders often refer to the individual’s credit score before approving the loan. If the person has a good credit score, the lender will most likely lend the money. Similarly, if the person has poor credit score and many late repayments, the lender may not work with him or her. Nonetheless, credit scores can be improved with discipline and punctual repayments. Cash Papa offers unsecured personal loans, salary loans, car loans and OFW loans for everyone.

1. Select the right lender – In the Philippines, one can take out a personal loan with a bank, a licensed moneylender or a credit union. In order to figure out which lender is the best choice, the applicant should carry out a comprehensive comparison of various factors.

Different lenders will have different interest rates, loan terms, and even eligibility requirements. For example, it might be tougher to get a personal loan from banks or that it may take a longer time because of the many checks and approvals required. It might be easier to get a loan with other licensed moneylenders as they are more lenient and usually reply faster. However, a loan rejection with one moneylender does not necessarily mean that other lenders will reject as well. As such, shopping around to find the best lender is the best way to go.

2. Variable or fixed interest rate – This is a consideration that one must look at. A fixed rate means that you will have the same monthly payment for the entire duration of the loan tenure. This gives stability to the budget because you know exactly how much you will be paying from month to month. You will know how much money to set aside each month for the loan repayment.

A variable rate usually starts off lower than what one gets with a fixed rate. Unfortunately, it tends to fluctuate, which means that one will not know how much is due until he or she gets their repayment statement. The different interest rates work for different people. Some clients prefer to have more flexibility while some prefer stability. Evaluate your monthly expenses and spending to pick the option that works the best for you.

3. Get the most suitable loan package – This will really be dictated by the need for which one is borrowing the money. If he or she is are looking to carry out some home improvements, they could take out a personal loan or a renovation loan. Usually, these loans are specially crafted for certain needs and purposes. A renovation loan will give the best rates for borrowers planning to renovate their homes. An OFW loan will be best for Filipinos who need money for work overseas. Always carry out a comparison of the pros and cons of the loans to figure out which moneylender and packages gives the best deal.

4. Accuracy of your credit report and score – Since personal loans are largely unsecured (meaning no collateral is needed), one’s credit score makes a big difference to the interest rates applied for the loan. Unfortunately, it takes a while for one’s credit report to be updated, so calling and making sure that it is accurate is very important. Borrowers should ensure that they make timely repayments in order to maintain or improve their credit score.

5. Consider the loan term – Usually, the first thought that comes to people’s mind is to get the shortest loan term. However, it actually depends on the situation. The loan tenure affects the amount you pay every month and also affects the overall interest paid.

A longer loan term translates to smaller monthly payments, but the overall interest paid is higher. A shorter loan term translates to higher monthly payments, but lower overall interest paid. You should choose the loan term based on how much you can set aside each month for the loan.

6. Pay keen attention to charges and costs – The loan terms should be reviewed with a fine-toothed comb. Consider every clause that will somehow affect total costs and monthly payments. The following should be thought through very seriously:

• Penalties and charges – Be aware of the charges imposed. They will usually include an application fee. Penalties will likely include late fees and even early repayment fees.
• Monthly payments – The borrower must ensure that he or she can afford these. Even though it is better to have a shorter loan term, the most important thing is to make sure that one can afford the monthly payments so that he or she does not fall behind. It will not be wise to apply for a plan that offers monthly repayments that are too high, putting a strain on their wallets and end up incurring late fees.
• Total costs – Calculate the total cost of the loan based on differing loan tenures then settle on the one that is best.

7. Consider collateral – Even though one can get an unsecured personal loan, a secured one offers better interest rates. The reason for this is that the asset put up as collateral reduces the lender’s risk. In addition, when someone has poor credit but has collateral, it boosts their chances of getting the loan approved and they will most likely get a lower interest rate than what they would otherwise be offered. The downside is that should the borrower default on their loan payments, the collateral can be sold off to pay for the amount pending.

8. The fine print – Never sign the loan agreement without first reading though the fine print. Yes, it can be a lot of words but reading the fine print means that the borrower will not be getting any rude shocks in the future. The fine print will give you details of penalties, rules and regulations, prepayment fees and the like.

9. Don’t overly apply for loans – Most moneylenders require that one puts in an online application after which he or she will be contacted. Making too many applications to different lenders reflects on one’s credit report negatively. By having a multitude of applications reflecting on one’s credit record, the borrower is perceived as being desperate or undergoing difficult financial times, which makes them a credit risk. This in turn makes it difficult to get approved for a loan. 3 or so applications are just about enough.

10. Work with automatic withdrawals – This works well when one has a regular income that comes in at a certain time every month. Should there be a delay in payment, this can pose a challenge because bounced payments are not ideal. As such, it is important to ensure that the money is always available on time. Trust and punctuality go hand in hand. One of the things to note is that most moneylenders will work the automatic withdrawal into the contract, so if for whatever reason it is not preferable, the borrower may need to opt out. Sometimes, moneylenders may charge extra for cheque repayments which should be factored into the overall cost of the loan.

There are several other things to think about when going out to take a personal loan. One should make sure that they know what the eligibility requirements are, and also what supporting documents are needed by the lender. With this information, they will be able to prepare the documents ahead of time so that the process can be expedited. With all the information in place, the lender can quickly approve the loan and once the loan contract is signed, the money can be transferred to the borrowers account. A personal loan is the solution to a variety of financial needs. They are readily available today provided one meets the lender’s requirements.

At Cash Papa, we respect your privacy and appreciate your trust in us. While providing high standard services, Cash Papa keeps all of your personal information secured. We will not divulge any of your information to other business or organisations. Do not worry as your information will be safe with us. If you have any questions, please feel free to drop us an email. Our team of professionals is always ready to assist you.

Cash Papa is living up to our name by offering quick 3-minute loan applications and fast cash disbursements. This means that you can get the money in your account within 24 hours. Compared to banks and other moneylenders that may have numerous application forms and approvals that may take days or even weeks, Cash Papa is much faster and much more convenient. Also, we constantly upgrade our systems and financial consultants in order to provide the best services for our clients.