Personal Loan

A growing fraction of individuals are now getting a personal loan on either through an online lending company or instant personal online loan for their procurements. They are also turning their properties into equated monthly installments (EMIs).

Personal loans benefit families face any shortfall they encounter in purchasing a property like a house or a car, in children’s education expenses, or even in circumstances of medical emergencies.

What is a
Personal Loan?

It is an unsecured loan or credit used by an individual from a bank or a non-banking financial company (NBFC) to suffice their particular demands. Personal loans have remarkable key differentiation from turning credit, like credit cards or lists of loans.

With this loan, the debtor gets a fixed value of money and returns it in monthly repayments, termed installments, for a decided period. Repayment duration varies. Depending on your loan, your credit term could reach from a year to seven years, though that will differ by the terms and conditions applied by the lender.

How does it work?

Personal loans can either be safe or unsecured. For a safe and secured loan, the debtor needs to put properties like a car or house as collateral, like a savings account or bank statement.

If you agree with any of the terms, the lender usually has the power to take your collateral or deposit as repayment for the loan you applied. When collateral or any certificates do not support a loan, it is considered as an unsecured loan.

Alternatively, lenders examine factors like your financial records and account to decide if you do qualify for the loan. Because they are not ensured, unsecured personal loans usually appear with a higher interest percentage than you get for a secured one.

What to know before you apply?

Before deciding to apply for a personal loan, you need to consider why you need it and assess other alternatives. If you do not badly need it for an emergency, then that’s not an option. Make sure that you can manage to figure the monthly repayments into your resources.

Common loan terms

Before you take responsibility for applying for a loan, you should note of these terms to avoid confusion.

Principal Amount

This refers to the amount or the exact value of money you apply for. For instance, you are applying a loan amounting to Php 100,000.00; that amount is your principal amount. The lender will charge interest by computing the principal amount you borrowed. Every time you pay, the principal amount you borrowed decreases.


This refers to the added amount you are paying to your borrowed principal amount. It is considered as the charge the lender added as they allowed you to use their money in the meantime. You will pay the amount in addition to the portion that towards the reduced principal amount. It is in percentage rate.

APR (Annual Percentage Rate)

This term refers to the additional charge to the interest. The lender usually adds this charge fees for granting the loan. It covers the interest rate and any lender charges to present you with a better understanding of the actual value of your loan. Correlating APRs is an excellent idea to compare the affordability and expense of several personal loans.


The number of months you must note to pay the loan is named the term. When a lender allows your loan request, they will inform and discuss with you the interest rate and term or tenure they are offering.

Monthly Installment

Each month throughout the term, you will owe a regular monthly payment to the moneylender. This installment will incorporate the money toward settling down the principal of the amount you borrow, as well as a part of the entire interest you will owe beyond the course of the loan.

Unsecured Personal Loan

Most of the personal loans are unsecured, implying you don’t have to set up collateral to the lender. The actual property you are purchasing serves as collateral to them. It is typically only supported by the excellent credit status of the borrower. But, some lenders prefer secured personal loans, which will need collateral, and could give more favorable charges than an unsecured one.

Things to Consider Before Applying for a Loan

Credit Score and Records

An excellent credit score and credit records convince lenders that you meet your loan responsibilities on time. The better your reputation, the higher your odds of obtaining a loan at the usual advantageous terms.

The most favorable conditions can save you thousands covering the length of tenure of your loan. Before considering applying for a personal loan, know your credit score, and review your credit statements to verify for mistakes that could pull down your account.

If your credit is not in great state, do not apply for a loan because you will end up in a risky situation. Exert more effort in improving credit score before applying for a personal loan.

Monthly income

Your monthly bills concern your ability to spend off a personal loan. You will require to have proof of income for your loan application. If you are an employee, you need to pay stubs, W-2 forms, or payroll from your company.

If self-employed applicants, you will need tax returns for the prior two-plus years and maybe statements and receipts. Remember to consider all of your earnings and sources, not just your primary source of income.

Monthly Installment Commitments

Your income is just one part of the equalization; it is similarly important to know your monthly installment responsibilities. A loan application will possibly demand you to arrange particular conditions — typically, your rent if there is any or lease payment and perhaps existing regularly debt repayments.

Assets and Obligations

Your potential lender may study at is your net value minus your debts. Assets are the stuff that you have that is meriting something, like your property records and resources, and obligations are the monetary responsibilities you have, mortgage.

Work Information

Potential lenders will surely ask for your current employer’s contact details and perhaps a previous employer’s information. Your current and former employers may be reached as references or to prove income and employment terms.

Types of loans offered in the Philippines

The Philippines have many lenders that offer various types of personal loans to likely borrowers who need fast cash to support an important value. These loans provide different demands and financial capacities.

Never get the confusion of applying for a personal loan online without examining and learning the various options accessible for customers. Below are some of the types of loans offered in the country.

Cash loans

These personal loans are issued in cash, which numerous borrowers in the country favor because these loans can be utilized for whatever appropriate purpose they need for immediate approval.

Normally, cash loans are considered with no collateral, thus inflicted with an extremely higher interest rate and a quick and limited payment term. The loans that are under these varieties of loans are personal loans, cash loans, accident cash loans, wage loans or payday loans, and state loans for small companies in the Philippines.

Consumer Loans

There refers to loans that are for acquiring or purchasing consumer needs. Often are installments based on individual or business loans. Although seldom times, these kinds of loans can be exploited, it rarely happens.

To stop mishandlings, secured credit and lending companies will only issue goods for this sort of loan cash. Most lenders that get these types of loans are market companies looking to grow or start a venture.

Types of Loan Provider in the Philippines

Introduction to the loan has never done simpler than today. From requirements to credit terms, collaterals, and more, here are the distinctions among traditional banks and alternative lending companies as well as their pros and cons.

Traditional Bank

Traditional banks are recognized for their rigorous requirements and qualifications. Traditional bank loan requirements comprise almost perfect personal credit records and possible collateral agreement for up to 100% of the total loan value, a solid marketing plan, different financial reports, and cash-flow forecasts.

Traditional banks certainly offer much cheaper rates and more favorable repayment duration than alternative moneylenders.

Therefore, if you believe that you have a high chance of qualifying for a bank loan — and understanding yourself and your inadequacies, you will be capable of waiting for the approval means. Then most assuredly, traditional banks are worth gradually weighing.

  • The broader and more extensive breadth of alternatives
  • Cheaper interest rates
  • Minor risk as the company is gradually improved
  • More necessary upfront requirements and qualifications
  • Slower processing speed
  • Needs good personal credit
Private Lenders

Taking a personal loan from an alternative moneylender is an excellent choice for those individuals who are not capable of meeting the least demands that banks and other credit organizations require.

Since the primary action to your application can be managed virtually, the application means it can be quicker. Most important, private lenders operate to be more sympathetic when it appears to the applicant’s credit records. Some of the common lenders in this section is the online loan applications.

Online loan applications are very famous today.  Makati Loan is an online loan application that allows borrowers to get what they need in just as quickly once the requirement is completed.

Requirements needed are only a few compared to traditional banks. Additionally, you will no longer need to commute in submitting the requirements because it can be done virtually.

Facts about online loan applications

Advantages of Borrowing Online

Online lenders can inform you extra or short immediately as to whether the loan is approved or not, how much you can obtain, and what your repayments will seem like. Most regular banks are varied: you can apparently fill an application online, but it requires you to take a while to get an approval.

In this type of loan, no more collateral and the additional requirement is needed. It has at least two or more requirements then boom! The application is approved. Online lending websites and applications are beneficial in the insight that they allow you to compare many loans offers all at one on the internet.

This is essential and performs it more comfortable to compare and get the most favorable interest rates and terms feasible. Again, keep in mind that online lending can be a proper option if you do not fit for a bank loan and demand money instantly.

Disadvantages of Online Loans

One difficulty that you may need to understand when it appears to online loans is interest charges. Online business loans are associated with having higher interest charges, mainly when linked to traditional loans.

Apart from the high-interest fees and costs that you have to return as you demand the online. You also need to pay an extra charge if you are overdue in your payment. Most overdue repayment charges that are imposed by online lenders are pretty high that they can move up to double or triple the principal that you have borrowed.

In various loan services, there might be specific terms and conditions that put you in high-risk circumstances. This is usually intentionally hidden or presented unclear because they do not aspire to you to understand it.

Although helpful, there are situations that you demand to get into consideration before obtaining an online loan application. It would help if you always weighed the pros and cons before settling on anything.


Personal loans are usually smooth and quick to apply for, and having a mass sum of cash can assist you out in various approaches as well as reaching your dreams. By decreasing the expenses of your lifestyle and adhering to a repayment method, you will be capable of paying back your loan while creating a huge responsibility that you’ve always desired to fulfill.

A loan can be utilized for anything. When you think of applying out a personal loan to repay off credit cards or to deliver the perfect event, you are using money that needs to be repaid-with interest on high value. So think wisely!