5 Awesome Rewards of Responsible Borrowers and How to be One
Borrowing money is part of our culture, however, it seems that avoiding repayments is also rampant. Know the rewards for being a responsible borrower.
5 Awesome Benefits of a Responsible Borrower
Higher re-loanable amount and easy re-loan process
Strong credit score
Easy access to housing and car loans
Zero Penalty Fees
Avoid legal actions from your lender
How to Be a Responsible Borrower
Get the right loanIf you search the type of loans in Google or if you go to banks and inquire, you will discover that there are various loans you can choose from. These loans vary in terms, loanable amounts, and interest rates, but you have to consider first the purpose of the loan. 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 easeIt is best to use a loan calculator. If you are borrowing from a reputable lender, most probably they have a loan calculator on their website. If you are getting a loan from an old-school company which you have to personally apply to since they have no website, 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. This way you will also have an idea on 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 termLenders have various repayment terms. Most of them have monthly terms and there are also others who offer loans in weekly and bi-weekly terms. Choose the one that can best meet your status. If you get your salary every week, you can get the weekly term, 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 truthHonesty is the best policy indeed in 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 that you are lying, then you will be automatically declined and your name will be written in an automatic default list. This means you will not be able to get a loan.
Never hide existing loansYour loans leave a record despite settling them long ago, and your existing loans are also recorded with CIC and CMAP. If you are asked if 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 contractMost borrowers do not bother reading the contract as long as their signature on it means they are getting cash. However, the contract bares terms and conditions that may save your money and credit report.
Meet the repaymentsMake sure that you repay your loans on time to keep a good credit report and top avoid late repayment fees. Each day that you do not pay, you will be penalized.
Keep a copy of your contract and repaymentsThere 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 balanceTo know when you will be able to 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 make your repayment 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?
- No, if there is no loan contract, but the lender can go to the barangay hall and demand a settlement there 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 included in the borrower’s credit history and will remain on the record for years, making it impossible to get a crucial loan in banks.