Applying for a loan can be a time-consuming process. However, in the Philippines, there are loans that are easy to apply for with simple requirements and fast loan approval processes. Before signing up for a loan, take into consideration the following.
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What Type of Loan You Require
Answering why you need to take a loan will help you determine the suitable type of loan and which lender to use. If you need a few thousand pesos, then apply for an online loan or payday loan. But if your need is to finance a small business, make a home renovation, or pay for a vacation abroad, better opt for a multi-purpose loan or a business loan.
Debt-to-Income Ratio
The debt-to-income ratio compares how much you owe each month to how much you earn. Simply put, how much can you pay in monthly installments? Lenders will consider the percentage of your gross monthly income that goes towards monthly debt payments.
Choose the Shortest Term
If possible, choose the shortest term when applying for a loan. You must factor in those longer-term loans imply more interest charges and in due course higher interest rates. A shorter-term loan may increase your chances of approval as loan providers prefer a shorter payback period because your financial position is less likely to change during the term period.
Apply for a Reasonable Loan Amount
Loan providers have minimum and maximum loan amounts, but your application will be determined by your income and credit history. Make sure you qualify before submitting your loan application.
Improve Your Credit Score
Credit history is one of the major factors loan providers consider whether to approve or reject your loan application. Improving your credit score will not happen overnight, but it is possible! So, pay off those past-due credit cards and any outstanding loans before you apply for a loan. Get your copy of the bank clearance letter and check credit reporting agencies to ascertain that your information is accurate and current. Check out here https://digido.ph/articles/teachers-loan for more information about Teacher’s Loan in the Philippines.
Sean Martin D. Plantado, head of customer service at Digido.ph, notes that the availability of credit in the Philippines leads to people borrowing money not only for critical situations but also for unnecessary things. This hurts financial discipline and the formation of a high credit rating.
Compare Fees and Shop Around
Examine the loan products of various loan providers to compare their rates and terms. Inquire from the loan officer about the loan process, requirements, repayment schedules, fees, and charges. This way, you can obtain all the necessary information and select the best loan product for you. Banks and other loan providers are always willing to help you they are in the loaning business.
Prepare Your Paperwork
Prepare all your income documents and other requirements to speed up the loan application process. All your documents must be up-to-date, and all information therein is true and correct.
Take Heed the Fees and Charges
Scrutinize the loan’s terms and conditions including the fees. See if the penalties are excessive in cases of late payments. You will find the loan provider who gives the cheapest loan by comparing the total cost of the loan, which includes fees and charges.
Don’t Apply for Too Many Loans at Once
This will notify loan providers that you are truly in financial distress, which may have a negative impact on your loan application. It also indicates that you have a poor credit history. It is better to know about your available loan options to find what is suitable for you.
Never Ever Skip a Payment
Missed payments mean late payment fees. It will hurt your credit score and your relationship with your loan provider. As a result, applying for a new loan will be more difficult in the future. Create an automatic debit arrangement on your savings account or set a reminder on your phone to avoid missing any payments.
Conclusion
A loan can undoubtedly assist you in getting out of a financial bind. However, it is a big responsibility. Try to increase your savings to cover any financial emergency. If this is not possible for the present, compare loan rates to find the best deal. Do your research, do not accept the first loan offered to you. There are many simple-to-apply-for-loans that are truly convenient, but you must make sure that you can afford the monthly payments. Opt for a loan that is suitable to your current financial situation and repayment plan, may it be a short-term or long-term loan.
Thanks for pointing out that missed payments could hurt your credit score, so you must not skip them. My husband and I are planning to apply for a cash loan next Friday so we can start the renovation of our kitchen before the month ends. We will surely keep your tips in mind to keep our credit history as clean from negative marks as possible.