Protect Yourself from Loan Sharks
Loans or ‘utang’ is part of the Filipino survival, yet however much we are in need, we have to make sure that we can still repay with ease and we protect ourselves from opportunist loan sharks.
According to the 2014 World Bank Data’s Global Index Database, 13.5% of Filipinos borrowed from private informal lender and 69.7% of Filipinos experienced borrowing money. Most Filipinos are not comfortable with getting loans as we all know the weight of its responsibility; however the needs to pay for education, medical bills, utility bills and basic necessities have to come first.
Before getting a loan, you must understand that there are two kinds of loans, the secured and the unsecured loan. With secured loan, you have to use certain assets such as your house and lot. For smaller scale, this means pawning your jewelry and gadgets. Secured loans usually are long term loans. As for the unsecured loans, these types of loans are more risky for the lending companies since they have no assets to collect in case the borrower is unable to pay, this is why these types of personal loans are usually short term and offered in smaller amount compared to secured loans.
Annual Percentage Rate (APR)
You must know if the calculator shows the interest rate or the annual percentage rate (APR).
Interest Rate is the base rate usually charged on top of the principal loans. Lenders get their revenues in interest rate, and it is the borrower’s responsibility to repay the loan with interest for the privilege of getting a loan. If you borrow Php1,000 at 4% and your total repayment sum comes to Php1,040. Short term unsecured loans usually use interest rate, however it is different from the annual percentage rate.
Annual Percentage Rate (APR) is an annual rate charged for borrowing a loan. The best way to compare loans when shopping for the right lender is to compare through APR. Some lenders include additional costs in APR such as the prepaid interest, closing fees and any other costs that may be associated with the transaction. Make sure that you ask your loan provider about the additional costs to avoid being surprised with hidden fees.
The Money Lender’s Loan Capacity
Loan calculators are set within the range of the lender’s loan capacity. You will be able to see the minimum and the maximum amount the lenders are willing to loan to their potential clients. usually, you will a bar where in you can calibrate the amount you are interested to borrow, the line sets the limit.
The Loan Period
For you to see the total amount of repayment, you must key in the length of time you want your loan to be. Loans can be as short as a week of as long as a couple of years and the interest rate are bound to change depending on how long you will need it. If you are going to choose a longer term, you may be able to spread out the repayment costs, however you may end up paying much more.
Stress-Free Payment Options
Money Lenders such as Cash Mart have created online loan calculators with repayment options such as weekly, bi-weekly, or monthly. You can easily see the flexibility of the loans and you can easily compare the amounts you have to pay whether you choose weekly, bi-weekly or monthly. This way you can have a well informed decision before you actually start the process.