According to the latest financial integration study conducted by the Central Bank, 41 percent of adults have outstanding or previous loans. There are many possible ways to borrow including emergency and personal loans in the Philippines. These solutions are helpful if you need money right away, specifically in lockdowns or natural disasters. However, before choosing the best one for your current needs, it is necessary to understand both the benefits and risks of any credit option. Some of these are discussed here.
An emergency loan is a personal loan, which can be borrowed to cover unexpected expenses. Filipinos who do not have enough money can fund the repair of their property after a flood, fire, or earthquake, quickly and easily. The Philippines has three main sources of emergency loans: private lenders, government organizations, and entrepreneurs.
Sean Martin D. Plantado, a finance specialist at Digido Finance Corp. said that the two most common types of emergency loans online in the Philippines are related to accidents and medical factors. People often take out emergency loans for many other needs, such as urgent purchases or service charges.
Emergency Loans from Private Lenders
Private lenders have the easiest application process, fastest approval, and disclosure of funds to three popular providers of emergency loans because they don’t usually require a bank account. Many requests for emergency loans can now be submitted online which can be given within 5 to 10 minutes. You can also get money through online “loans” on the same day.
This is why emergency credits appeal to people with little or no good credit history and the unemployed. Unemployed emergency loans in Filipino are ideal for ASAP cash but cannot be approved by banks because there is no evidence of income. Emergency lending is known to be expensive in the Philippines, as interest rates range from 1% to 1.5% per day, which is equivalent to an annual percentage rate of approximately 500% to 3,000%. Moreover, it is available for a very short duration, so you have very little time to pay.
Emergency Loans from Government Agencies
The SSS, GSIS, and Pag-IBIG Fund help those naturally suffering from disaster. Compared to private lenders, they offer longer repayment periods and cheaper interest rates. However, you must be an active member of these agencies and may be eligible for a loan with continuous contributions of a minimum of six months.
Emergency Loans from Employers
Some firms in the Philippines provide emergency loans to workers affected by the disaster. Others make these loans as part of benefits that their employees can use for emergency situations. Usually they do not charge interest and the payment is convenient and flexible because it is deducted from successive paychecks or 13th month pay. An emergency financing program may be offered in your workplace so check it out with the HR department.
If you need a larger amount, you can apply for a personal loan. Banks have strict obligations and processes for investigating the credit of borrowers. Credit processing will take three to seven days longer than other lenders. So if you need money right away, this may not be the option for you. However, it is a safe, legitimate, and economical option to borrow money with low interest rates and long replacement terms.
Salary loans are similar to emergency loans offered by private lenders because they offer quick and easy access to borrowers. But they also have higher interest rates than personal loans provided by banks. The cost of salary loans and the strict criteria for implementation are also somewhat higher. However, some lenders are able to lend up to Php 50,000 and require fewer proofs of income, such as payment receipts and bank statements.
Pawning or Pawn
All you have to do is to provide collateral like jewelry and electronics that are real and valuable if you need quick cash. No credit checks or income documentation required. Companies charge interest rates of up to 1% for a month. But you may not be able to return your valuables if you fail to pay on time.
Loans from Family and Friends
When you need money, it’s easy to ask your family and close friends. There is no documentation, collateral, interest, or due dates to worry about. If possible, you can just repay your debt. It is not surprising that some Filipinos have family, and friends in debt. However, you may lose confidence if you cannot pay.