Borrowing money can be very useful for funding numerous goals such as a mini vacation or expanding your business. Therefore, every type of business as well as an individual who has financial difficulties may find some relief in loans. However, not everyone can be served by a single loan product.
With all of the different types of loans in the Philippines, which do you think suits your needs best? In this article, we’ll talk about the different types of loans in the Philippines and how they work. But first, let’s have a recap of its benefits.
Loans and Benefits of getting a Loan in the Philippines
If you manage your money well, getting a loan can be massively advantageous. There are so many productive things you can do when taking out a loan. It can even help you achieve your dreams like starting a business, buying a home or a repossessed car, or any other kind of grand purchase you might want.
Furthermore, loans can help you with unexpected major emergencies, financing a wedding, home improvements, tax payments, business expansion, or even adopting a child. Now the question is, which loan is best for what purpose?
Different Types of Loans in the Philippines
Below are the most common types of personal loans in the Philippines. Be aware though that your loan purpose may affect the amount, rate, and repayment terms of your loan. If possible, putting up collateral to secure a loan is recommended to reduce your interest rate.
Home Improvement Loans- Thinking of a kitchen renovation or perhaps a revamp for your garage? Homeowners can apply for home improvement loans whether it’s for minor repairs or major updates and remodeling of the house.
Emergency Loans- Emergency loans are personal loans used to cover unexpected expenditures. You can use this to pay for emergencies like urgent repairs, medical bills, or funeral costs. Here’s a tip: For emergency matters, you likely can’t wait weeks for your loan to be disbursed, so look for reputable lenders that offer quick loan disbursements.
Educational Loans- used to fund post-secondary education or higher education-related expenses. These are also intended to cover the cost of tuition, books, school supplies, and living expenses while the borrower is in the process of pursuing his studies.
Medical Loans- used for the sole purpose of paying for medical services. Examples of this are financing medical treatments such as major medical costs, surgeries, IVF treatments, and emergency procedures.
The different types of loans in the Philippines mentioned above are the most commonly applied for. But know that there are other uses of Personal Loans such as the purchase of home appliances, wedding costs, travel expenses, car servicing, debt consolidation and the like. Moreover, personal loans can help you improve your credit score and trustworthiness when you apply for another loan in the future.
Business Loans help companies and SMEs use funds to cover the costs that come with operating and growing a business. These include everything from working capital, purchasing of equipment to massive purchases like real estate.
One type of business loan that a lot of business owners find useful is the working capital loan.
Working capital loans were created to provide funding for short-term capital expenditures such as, rent, employees’ salaries, debt service payments, or even finance activities such as sales and marketing or research and development.
Depending on the type of financing, you can find unsecured options that do not require any collateral backed by your business assets or the item you’re purchasing. Interest rates can be fixed or variable, with repayment conditions lasting for an estimated six months to 25 years.
How Loans can Help Individuals and Businesses
Whether your reasons are for funding a dream vacation, building your business credit, opening a second location or increasing your cash flow, there are many reasons for considering a personal loan or business loan in the Philippines.
Overall, a business loan can massively help cover your business needs, especially when you can’t get investors on board to fund marketing. On the other hand, a personal loan aids relief for individuals who need funding for emergencies or voluntary expenses.
Remember that different types of loans in the Philippines suit different borrowers. It’s imperative to familiarize yourself with these types of loans and their finer details, including repayment terms, APRs and requirements.
Now that you know the benefits of a business loan, do some research and compare all your options. Most Filipinos opt for lending institutions like RFC as they have helped a lot of individuals and businesses for the past 50 years. Also, before you move forward with a loan, read and agree to the fine print, then come up with a plan for how you’ll repay it.
If you’re ready to apply for a loan, you may fill out a short application form by RFC through this link.