Ways To Use A Personal Loan

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.
  • Shopping
    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.
  • Gambling
    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

Housing Loan: Application Fees

Disclaimer: The sole purpose of publishing this here in this website is to show how housing loan application fees differ from five (5) banks that I and my friends currently have for the reference of this website’s readers. This is not to show which bank gives the best package. Rates and fees differ according to several factors. Rates and applicable fees revises from time to time. Please do your own diligence.

1. Philippine National Bank (PNB)

Loan Information:
Loan Started: February 2013
Loan amount: P1,047,516.70
Term of loan: 15 years
Rate: 6.75% (5-yr fixed interest)
MRI: P6,785 / year

Fees and charges:
Mortgage Registration Fee: P26,640
Processing Fee: P 3,000
Mortgage Redemption Insurance (MRI): P6,785
Fire Insurance: P5,067.27 (1st year premium only)
Notarial Fees: P3,100
Grand Total: P44,592.27

2. Bank of the Philippine Islands (BPI)

Loan Information:
Loan Started: February 2013
Loan amount: P1,404,000
Term of loan: 10 years
Rate: 8.00% (5-yr fixed interest)
[2015 update: BPI allowed my friend upon his request to bring the rate down to 7.5% even he is still in the fixing period.]

MRI: P2,021.76 / year (10-yr coverage is payable in 7 years only)

Fees and charges:
Registration & Annotation Fee: P16,329
Processing/Handling Fee: P 11,500
Notarial Fees: P1,000

Grand Total: P28,829.00

3. Rizal Commercial Banking Corporation (RCBC)

Loan Information:
Loan Started: August 2013
Loan amount: P2,163,638
Term of loan: 12 years
Rate: 6.88% (5-yr fixed interest)
MRI: P25,963.68 / year

Fees and charges:
Legal Research Fund: P 2,316 
Notarial Fee: P600
Real Estate Mortgage Fees: P10,956 
Doc Stamps Real Estate Mortgage: P4,347.28
Doc Stamps-Promissory Note: P10,818.19
Others: P2,000 (facilitation fees)
Fire insurance: P5,194.95 (1st year premium only)

Grand Total: P36,232.42

4. Robinsons Bank

Loan Information:
Loan started: August 2013
Loan amount: P1,000,000
Term of loan: 5 years
Rate: 6.88%
MRI: P5,000 / year

Real Estate Mortgage
Entry fee: P90
Legal Research Fund: P 57.36
Registration Fee: P5,646
Documentary Stamps: P2,010
Notarial Fee: P250
Computer Fee: P2,000 (P400 x 5 years)
Special Power of Attorney: P200
CTC of TCT: P900 (P300 per title)
Others: P3,000
Sub-total: P14,153.36

Fees and charges:
Documentary Stamp on Promissory Note (PN): P5,000
Notarial Fee on PN: P250
Notarial Fee on Loan Agreement: P250
Mortgage Redemption Insurance (MRI): P5,000
Fire Insurance: P 2,537.23 (1st year premium only)
Appraisal: P3,500
Processing Fee: P3,500
Sub-total: P20,037.23

Grand Total: P34,190.59

5. Banco De Oro (BDO)

Loan Information:
Loan Started: October 2014
Loan amount: P1,499,653.65
Term of loan: 15 years
Rate: 6.50% (5-yr fixed interest)
MRI: P7,223.35 / year (diminishing)

Fees and charges:
Documentary Stamps: P10,509
Handling Fee: P 5,000
Notarial Fees: P1,300
Registration Fee: P19,946
MRI: P7,223.35
Fire insurance: P2,861 (1st year premium only)

Grand Total: P46,839.35

Personal comments:
– BPI’s MRI premium was the cheapest
– Look at the MRI premium of RCBC, so expensive!
– BDO’s interest was the least for 5-yr fixing

Feel free also to share us what you know about housing loans by commenting below.

Applying for a housing loan soon? Here are some helpful resources:
Amortization Scheduler – Amortization Scheduler from Calculator Soup
Mortgage Calculator – Moneychimp Mortgage Calculator

Read also: Planning to buy a condo? Part 1 and Part 2