Personal loan application in the Philippines is popular all year round, and for good reason: it serves a number of purposes. Among them are education, home renovation, travel, medical emergencies, and starting a business.
Although a credit card may seem like a long-term tool, a loan is a more convenient way to finance your current expenditures at a payment term that fits nicely in your income and living expenses.
Although there are numerous personal loan lenders in the country that approve applications in as fast as 24 hours, it is your duty as a smart consumer to be wary of the risks before signing into an agreement.
Acquiring a loan in haste may end up being a burden to borrowers because of additional fees that they don’t realize beforehand.
Here are some loan application traps that you should watch out for to avoid serious financial repercussions.
1. Increased interest rates
Some banks have the call to raise personal loan interest, so it’s crucial that you check the terms and conditions. Pay your monthly dues on time to steer clear of penalties and late payment fees.
2. Multiple disbursement fees
Customers pay a certain percentage every time cash is handed. As such, multiple cash-outs result in frequent payment of disbursement fee. Ensure a one-time disbursement with your issuing bank to avoid paying bigger amounts in the long run.
3. Pre-compute interest
You might think you are doing yourself a favor when you pay early to give yourself peace of mind. Contrary to that belief, you can be charged pre-payment penalties. Ask if the interest rate is “pre-computed.” Pay your loan on the agreed rate and terms even if you have a ready cash to pay a bigger amount.
4. Bounced checks
Banks charge a fee for bounced checks. Before submitting, see to it that the check is free from tampering and erasures. More important, make sure you have enough balance in your bank account.
5. Loan modification fee
There are banks and financing firms that charge fees in case you need to modify some information in your account. This is payment for the additional work load and interruption of loan processing.
Be realistic of the amount you borrow
Applying for a personal loan requires an objective assessment. A big amount paid over a longer period may reduce the amount of monthly payments . But the interest paid in the end can be much higher than the interest on an amount you borrow for a shorter term.
Use easily available tools
Make use of technology. Save time by comparing loan rates online using a personal loan calculator.