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5 Awesome Rewards of Responsible Borrowers and How to be One

Rewards of Responsible Borrowers Updated on May 2023

Borrowing money is part of our culture. However, it seems that avoiding repayments is also rampant. Know the rewards for responsible borrowers.



5 Awesome Benefits of a Responsible Borrower

Responsible borrowers benefit a lot in their next financial plans. Here is why. 

  1. Higher re-loanable amount and easy re-loan process

There are lenders who reward their loyal clients with a higher re-loanable amount when they have repaid their loans before or on their due dates. Paying diligently increases the level of trust given by lenders. Also, if you make a re-loan, you do not have to resubmit all the required documents.

You may just be asked to update your uploaded payslip. If you have changed to make such an increased salary, you may also do so, making your loan process faster.

  1. Strong credit score

If you are a responsible borrower and you have been getting a loan from a registered lender or bank, your credit information together with your payment behavior will be reported to Credit Information Corporation (CIC) and Credit Management Association of the Philippines, Inc. (CMAP).

Your positive record can be seen by your future registered lenders, and this will make them know that you are creditworthy. However, if you have failed to settle your loan on time or worst, if you default, your credit report will be negative. Your future lender can access your credit history and will see how you dealt with your previous loan repayments.

  1. Easy access to housing and car loans

Since you have a good credit report, this increases your chance of getting housing or a car loan. These types of loans have high loanable amounts, and banks will not approve those with a negative credit report. There could be lenders who claim not to check the credit history. However, they charge higher interest rates.

  1. Zero Penalty Fees

If you settle your loan on time, you can avoid paying the late payment fee. There are no laws that standardize late payment fees. If you get a loan from a loan shark, you will be shocked by their skyrocketing late payment penalties. This is why a lot of us are baon sa utang.”

  1. Avoid legal actions from your lender.

Yes, unless there is an estafa case involved, no borrower will go to jail. However, lenders can still take legal action by going to court and filing a Small Claims Case. Also, your credit report will record any financial disputes under your name.

How to Be a Responsible Borrower

Do you want to know what it takes to become one of the responsible borrowers? Take note of these tips.

Get the right loan

If you search for the type of loans in Google or go to banks and inquire, you will discover various loans you can choose from. These loans vary in terms, loanable amounts, and interest rates, but you must first consider the loan’s purpose. This way, you will be able to get a loan that best fits your financial need.

Borrow only the amount you need and can pay with ease.

It is best to use a loan calculator. If you borrow from a reputable lender, they probably have a loan calculator on their website. If you get a loan from an old-school company, you must apply since they have no website personally, then ask them how they calculate the loan with the interest rate and how much you have to repay each term.

With a loan calculator, you will be able to know the total amount you have to repay and how much you need to repay each term. Also, you will have an idea of how much repayment you can handle without sacrificing your basic needs. Isn’t it pitiful not to eat three times a day just to repay a loan and avoid penalties?

Choose the best repayment term.

Lenders have various repayment terms. Most of them have monthly terms.  Also, others offer loans on weekly and bi-weekly terms. Choose the one that can best meet your status. You can get the weekly term if you get your salary every week. If you get your income twice a month, you may as well choose the bi-weekly term.

Do not lie. Lenders are good with finding the truth.

Honesty is the best policy indeed in the lending business. Lending is an industry that revolves around trust and money. Lenders will only give a loan to those they deem creditworthy, so if the lender discovers you lied, you will be automatically declined. Your name will be written in an automatic default list. This means you will not be able to get a loan.

Never hide existing loans.

Your loans leave a record despite settling them long ago. In addition, your existing loans have a record with CIC and CMAP. If asked whether you have an existing loan, better tell the truth and still have the chance to get approved than lie and get automatically declined.

Read and Understand the loan contract.

Most borrowers do not bother reading the contract as long as their signature means they are getting cash. However, the contract bares terms and conditions that may save your money and credit report.

Meet the repayments

Ensure you repay your loans on time to keep a good credit report and avoid late repayment fees. Each day that you do not pay, you will be penalized.

Keep a copy of your contract and repayments.

There are times when your repayments take time before it gets registered to the lender’s system. Keep your receipts to prove that you already settled your loan. If you think your credit report has some error, you can also make it accurate by showing your repayment receipts.

Keep track of your balance.

To know when you can settle your loan, keep track of how much you still have to repay. Also, you can make it as a motivation.

What to do if you can’t repay your outstanding debt?

Talk to your lender and ask for an amicable agreement. Lenders will remind you of your due. If you can’t repay on time, do not ignore the lender’s calls. If your lender is a registered lender with a reputable image, it just most likely wants to get your due. Talk to your lender and ask for other options. You will be surprised how helpful they will be.

Will you end up in jail if you don’t pay your loan?

There are two possible answers. 

  • No, if there is no loan contract, the lender can go to the barangay hall and demand a settlement in front of the officials.
  • Yes, depending on the signed contract. You can get jailed if the case involves estafa or bounced checks.

Lenders can absolutely file a case against the borrower under the A.M. No. 08-8-7-SC Revised Rules of Procedure for Small Claims Cases for loans not higher than Php200,000. This case will be in the borrower’s credit history and will remain on the record for years, making it impossible to get a crucial loan in banks.

Getting a loan includes responsibilities. If you handle it with diligence, you can reap the rewards for your future financial gains.