The Right & Wrong Ways To Use A Personal Loan
If you are like many other Filipinos, you probably have a credit card or two, so the thought of applying for a personal loan may not have crossed your mind. Before you pay for your next major expense on a credit card, you can also consider getting a personal loan.
A personal loan holds many advantages such as:
- Lower interest rates: Personal loans traditionally have lower interest rates than credit cards, making them a great option to help you consolidate your debt.
- Flexibility: There are endless possibilities of how you could use your personal loan, keep in mind that you could get discounts on products by using cash.
- Fixed rate and term: Most personal loans have a fixed interest rate for the entire term of the loan, so your monthly installment remains the same.
- Easy online application: Most financial institutions provide you with an opportunity to apply for a personal loan online, making it easier than ever to get financing.
When Should I Consider A Personal Loan?
Here are the top five scenarios where using a personal loan makes a lot of sense.
- Consolidate Debt
One of the top reasons many Filipinos use a personal loan is to consolidate debt. A personal loan can help you reduce your revolving credit card debt at a lower interest rate. Consolidating your debt can also help reduce the stress associated with managing multiple credit accounts, and help you become debt-free faster!
- Pay for Your Wedding
Consider using a personal loan to finance your wedding-related costs before you charge these expenses on your credit card. Depending on the interest rate on your credit card, you could save a ton of money with a personal loan.
- Finance Home Remodeling
Another scenario where a personal loan would be appropriate is to help you finance a home remodeling project. Before you start charging home remodeling related expenses on a high-rate credit card, consider applying for a personal loan first. A personal loan is perfect for an individual who does not have a lot of equity built up in his or her home.
- Pay for Health-related Expenses and Emergencies
If you are going to be facing an expensive medical procedure, consider taking out a personal loan to help you finance it. Before you empty out your bank account or max out your credit card on a hospital visit, see if a personal loan could help you save money.
- Take a Vacation
A personal loan could help make your dream vacation a reality. Paying for vacation-related expenses such as airfare or hotel accommodations with a personal loan could help you save a ton of money in credit card interest, and make your vacation more affordable with fixed monthly payments.
When Shouldn’t I Get a Personal Loan?
Here are some instances where getting a personal loan may not be the best option.
- Take a Lavish Vacation
We just stated that a personal loan can be a great option to help make your dream vacation a reality, but be reasonable and don’t go overboard. Taking out a personal loan for a vacation that you know you cannot afford to pay for on a monthly basis will result in additional debt and stress.
Avoid taking out a personal loan to fund a shopping trip. If you can’t afford to pay for the items now, you probably don’t need them.
- Can’t Afford Monthly Payments
If you have multiple financial obligations that would hinder you from making monthly payments on your personal loan, you should not apply for one. You will need to make all your monthly payments on time to avoid hurting your credit score.
This may seem like a no-brainer, but don’t take out a personal loan to go gambling. This could form a bad habit, and could easily lead you down a path of high-debt.
Where Should I Consider Applying For a Personal Loan?
There are many options when it comes to personal loans. One great option is getting a no collateral personal loan. With it, you can enjoy flexible payment terms of 12, 18, 24, or 36 months, making your installments very affordable. You can get a monthly interest rate of as low as 1.49% for a 12-month tenor if you have a credit card. You can get your financing in as little as five banking days if you opt to pick up your loan proceeds at the head office.
Before you apply for a personal loan, make sure you can make the monthly payments to avoid falling deeper into debt. It’s essential to always be responsible with the debt you take on.
Find the best Personal Loan in Philippines at http://www.imoney.ph/personal-loan
Do you have any personal experience or valuable knowledge about personal loans? Share it in the comment box below.
Image credits: .nashfs.com.au, moneysavingexpert.com
Continuation of: Planning to Buy a Condo? (Part 1)
The developer made an arrangement with a bank. That bank told me that if I apply my loan until January 2016, the bank will waive the Loan Application Fees that was around P40k to P50k. That was a big reduction on my supposed expenses and the bank still gave me 6% for 5-year fixing, a bit less compared to what other banks offered (another bank offered to me 6.5% with same terms). So this made me took the loan as I have thought the unit will be turned over really very soon.
My loan started in February 2016 but the turnover of my unit was only in June 2016, four (4) months difference, that was a four-month-worth of opportunity loss. I have already started paying my amortization since February 2016 but my unit is still not being rented, that means all I have is money coming out and no money coming in. Aside from my unit is still not earning rents yet, I also started to pay the monthly association fee since the turnover.
By the time that you have already paying for amortizations, it is better that your unit is already being rented. The rent will help you cover the amortization payments and other related expenses.
- Association Fee: P2,732.80 (P112 per sqm with 12% VAT; monthly)
- Membership Fee: P5,600 (one-time)
- Meralco Transfer of Service Name: P3,500 (one-time)
- Water Installation and Service: P7,500 (one-time)
- Water Deposit: P1,000 (one-time)
- Pest Control: P2,400 (annual)
Property and Loan Summary
- Location: Salcedo Village, Makati
- Year bought: 2011 (pre-sell)
- Total Contract Price: P2,623,950
- Current price (September 2016): P3.7M to P3.8M (bare unit)
- Size: 24.4 sqm
- Floor: 28th floor
- Loan Application Fees: Waived
- Loan Interest: 6.0% (5-year fixing)
- Loan Started: February 2016
- Actual Turnover: June 2016
Hayyy oo mga bes, condo living is really costly…
- I missed to take note of the floor plan. I could have seen the problem about the column earlier since I already visited the unit twice and had the copy of the floor plan months ago before the turnover. I cannot blame my representatives during the punch listing/turnover, I should have informed and reminded them if only I could have been more cautious.
- I also didn’t study the electrical lay-out in the unit when I visited it. Every unit owner should take note of this so they could plan the furnishings with the architect or the contractor earlier and would not need to revise the plan later on.
- I could have more particular in other details like what will be the color of the tiles in the toilet, how that space below the kitchen sink will look like, where will be the “actual” structural columns be located because I relied only on what I’ve seen on the render and on the floor plan.
- And I was very careless in signing the Contract to Sell (CTS). The first time I signed, there was no contract price indicated but all else were there. Then for some reasons the developer asked me to sign new one. So I’ve checked my name, my new residential address, the property details and they have included the contract price—all correct. But what I didn’t realized on the second CTS was that I have signed a new copy with blank information about the construction schedule/completion—so beware. If the CTS didn’t mention about the schedule of completion, I can’t say whether the project was delayed or not. I just based my expectation of the completion on what I’ve seen in related websites that I have mentioned in Disappointments > Delivery (first bullet).
Tips for beginners
- Research – Understand the ins and outs of owning and investing in condominiums. Here’s some reminders from HLURB. Know what are the applicable laws and taxes. Please read the Condominium Act (RA 4726) and PD 957. In real estate investing, “location” is extremely important. Read Colliers Researches and Forecasts. There’s no other better way to start your journey in investing than to study first. It is always better to understand first what you are getting into, that applies to all investment decisions you’ll make in the future. Just be ready and start by studying everything first, the fun and adventure will follow. I have put more helpful links for beginners at the end of this article.
- Learn as much as you can and learn from the best – Investing in real estate can be so elementary for others but do not take this decision lightly. Do not just rely on what you hear from random people or just believe on what you’ve read on random blogs if you really want to invest in real estate. Ask from those who are actually investing in properties, from those who are doing this for long time and really earn from it, and from those who are real experts or very knowledgeable in this field. Don’t buy a property just because someone said you can make passive income.
- Keep yourself updated – What you already know today might not be as much as what you really need to know later on. We all know that smartphones need to get updated once in a while and I would say the “smart real estate investors” need it too.
- Make sure you are financially ready – Do not fall in “low down payment promotions” easily. There are a lot of expenses involved in buying a condo and not just the price of the property. So my friend, it will be an advantage if you are good in Math. You would not want to sell your property because you cannot pay it anymore.
- Buy from someone you trust – Don’t easily buy from random agent or broker. Ask friend or relatives to refer you someone they’ve worked with before. The advantage is that your friend or relative have already set some standards and you know at least they trust the agent or broker. This is important as they are the ones who will serve as your middlemen to the developer. If somehow you are not comfortable with your agent or broker, do not buy from him or her. Remember, this involves your hard-earned money.
Investing in condominiums might not really be for everyone. It has different sets of advantages and disadvantages from buying a house and lot. There are still a lot more things you should know if you want to invest in a condo or in real estate in general. But indeed, my decision to own one has absolutely given me more knowledge about investing in properties.
Other helpful resources for beginners:
How to Buy Properties in the Philippines: A Guide for OFWs & Filipinos Abroad
15 Things You Need to Know about the Condominium Act
Top 15 Tips for First-Time Home Buyers
What to ask your agent before buying property
The Simplified Anatomy Of A Condo Contract To Sell
A Buyer’s Guide on Philippine Laws on Real Property Ownership