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10 Myths You Should Forget About Getting a Personal Loan

Last Updated 24.05.2024

Personal loans in the Philippines have become a popular financial tool for many individuals. Whether it’s for emergency expenses, debt consolidation, or even just to fund a dream vacation, personal loans provide a convenient way to access cash quickly. However, with their increasing popularity comes a fair share of myths and misconceptions surrounding them. In this article, we’ll delve into 10 common myths about personal loans in the Philippines and debunk them once and for all.

Myth 1: Personal loans are only for emergencies.

One of the most common myths about personal loans in the Philippines is that they are only for emergencies. While it is true that personal loans can be used to cover unexpected expenses, such as medical bills or car repairs, they can also be used for a wide range of other purposes.

For example, personal loans can be used to fund a home renovation project, pay for a wedding or vacation, or even start a small business. The flexibility of personal loans makes them a great option for anyone who needs to borrow money for any reason.

Myth 2: Personal loans are only for people with good credit.

Another common myth about personal loans in the Philippines is that they are only for people with good credit. While it is true that having a good credit score can make it easier to qualify for a personal loan, there are options available for people with less-than-perfect credit as well.

Many lenders in the Philippines offer personal loans to people with a range of credit scores. Some lenders may require a higher interest rate or a co-signer for those with lower credit scores, but it is still possible to get a personal loan even if your credit score isn’t perfect.

Myth 3: Personal loans have very high interest rates.

Finally, many people believe that personal loans have very high interest rates. While it is true that personal loans may have higher interest rates than some other types of loans, such as home equity loans or car loans, the interest rates on personal loans in the Philippines are generally competitive with other types of unsecured loans.

The interest rate on a personal loan will depend on a variety of factors, including the borrower’s credit score, the loan amount, and the loan term. However, with a little bit of research, it is possible to find a personal loan with a reasonable interest rate.

Myth 4: Personal loans are difficult to obtain.

One of the most common myths about personal loans is that they are hard to get. This is not true. In fact, personal loans are one of the easiest types of loans to obtain. Most banks and financial institutions offer personal loans, and the application process is relatively simple. You just need to provide some basic information about yourself, your income, and your employment status. If you have a good credit score, you may even be able to get a personal loan without submitting any collateral.

To make the process even easier, some banks and financial institutions offer online loan applications. This means you can apply for a personal loan from the comfort of your own home and get a response within a few hours.

Myth 5: Personal loans require collateral.

Another myth about personal loans is that they require collateral. While it is true that some personal loans do require collateral, not all of them do. In fact, there are many unsecured personal loans available in the Philippines. Unsecured personal loans are loans that do not require collateral, which means you do not have to put up any of your assets as security for the loan.

Unsecured personal loans are great for people who do not have any assets to offer as collateral or for those who do not want to risk losing their assets if they are unable to repay the loan. These types of loans usually have higher interest rates than secured loans, but they are still a viable option for people who need extra cash.

Myth 6: Personal loans are only for salaried employees.

The third myth about personal loans is that they are only available to salaried employees. This is not true. Personal loans are available to both salaried and self-employed individuals. In fact, some banks and financial institutions offer personal loans specifically designed for self-employed individuals.

The only difference between personal loans for salaried and self-employed individuals is the documentation required. Salaried employees need to provide proof of employment and a copy of their payslip, while self-employed individuals need to provide proof of income, such as their income tax return.

Myth 7: Personal loans have hidden fees.

One of the most common myths about personal loans is that they come with hidden fees. This misconception has led many Filipinos to believe that they will end up paying more than they borrowed. However, this is not true.

In the Philippines, lenders are required by law to disclose all fees associated with a personal loan, including the interest rate, processing fee, and other charges. Before you sign a loan agreement, make sure to read the terms and conditions carefully and ask your lender to explain any fees that you don’t understand. By doing so, you can avoid any surprises and ensure that you are fully aware of the costs of your loan.

Myth 8: Personal loans take a long time to process.

Another common myth about personal loans is that they take a long time to process. Many Filipinos believe that applying for a personal loan involves a tedious and time-consuming process that can take weeks or even months. However, this is not the case.

Thanks to advances in technology, many lenders in the Philippines now offer online application and quick approval processes. You can easily apply for a personal loan online and receive a decision within minutes. Once your loan is approved, the funds can be disbursed to your bank account within 24 hours or less.

It’s important to note that the processing time for personal loans may vary depending on the lender and the amount of money you’re borrowing. However, in general, personal loans are much faster and more convenient than other types of loans, such as home loans or car loans.

Myth 9: Personal loans can only be used for specific purposes.

This is one of the most widespread myths about personal loans. Many people believe that personal loans can only be used for specific purposes, such as paying for a wedding, buying a car, or renovating a house. However, this couldn’t be further from the truth.

Personal loans are unsecured loans, which means that you don’t have to put up any collateral to secure the loan. This gives you the freedom to use the funds for almost any purpose, whether it’s to pay for medical bills, consolidate debt, or even take a vacation. As long as you can afford to repay the loan, you can use the funds for whatever you need.

Myth 10: Personal loans are a last resort.

Some people believe that personal loans should only be considered as a last resort when all other options have been exhausted. While it’s true that taking out a loan should never be your first option, it’s also important to remember that personal loans can be a smart financial decision in certain situations.

For example, if you have high-interest credit card debt, taking out a personal loan with a lower interest rate could help you save money in the long run. Additionally, if you have an unexpected expense, like a medical emergency or car repair, a personal loan can help you cover the cost without having to dip into your savings.

Final Thoughts

Personal loans are a great way to get the extra funds you need for various purposes. However, it’s important to do your research and understand the facts before applying for one. By debunking these common myths, we hope that you feel more confident about considering a personal loan as a financial option.

If you’re interested in applying for a personal loan in the Philippines, there are many reputable lenders that offer competitive rates and flexible repayment terms. Just remember to only borrow what you can afford to repay and to compare rates from multiple lenders before making a decision.

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