We all have some cash emergencies we just can’t avoid. Maybe your car broke down, or you need to pay medical expenses, or you only have a couple of days of groceries left. In that case, an advanced salary loan might come as a useful solution until your paycheck arrives.
Filipinos are famous for their money spending habits, and their salary just slips through their fingers. Therefore, many of them resort to salary advance loans which solve their temporary financial troubles. Now, let’s see that these types of loans have to offer what are their terms and conditions.
To pay utilities – we are all aware that utilities have fluctuation tendencies. The electricity bill might suddenly increase, or you may miss a couple of payments and end up swatting flies at night, instead of sleeping comfy with an electric fan. Therefore, people apply for salary loans to avoid these uncomfortable situations.
Car repairs – you shouldn’t take an advance salary loan to finance your car payments. However, when unexpected breakdowns emerge, such as engine failure, discharged battery, or flat tire, then the salary loan can come as a suitable solution. Let’s not forget about your registration renewal.
Pay a debt – while salary loan isn’t an ideal alternative to fix your debt issues, sometimes we don’t have another choice. As you probably know, if you don’t pay your debts on time, they can double up and leave you in a big financial mess.
Avoid borrowing money from friends and families – a lot of Pilipinos value their pride and feel embarrassed when they need to ask for money. However, with advanced salary loans, you can avoid uncomfortable situations and fix your money problems.
Time-sensitive purchase – you might find we a well-paid individual, and yet an item you have been eyeing for months just went on sale. This way, you can actually save money by taking a salary advance loan.
To apply for a salary loan, you must be a 21-year-old Filipino citizen and currently employed. All applicants should provide a Government-issued ID, the latest salary slip, as well as billing proof.
The application process mostly depends on the lender. However, nowadays, the majority of people choose online lenders due to convenience. Make sure to find a reputable lender, and you will only need a couple of minutes to submit an application form, along with the necessary paperwork. In most cases, the loans are approved within 10 minutes.
On the other hand, if you choose a government institution, then this process might take some time, as the terms and conditions are much stricter.
Well, if you are lucky enough to find a lender who offers 0% interest, then your loan will be deducted from a salary. But, most of the lenders charge interest rates, and they can be surprisingly high. Often interest can reach 10% of your initial loan, along with the other expenses, such as processing fees.
Are you ready to make a substantial financial commitment this year? Do you know what it takes to purchase a new house? This is probably the most significant investment in your entire life, so every step should be planned.
The vast majority of people don’t have money to pay for a property upfront, so they take different types of loans to finance their purchase. However, the price of the home, monthly income, and other factors can determine how affordable your loan will be.
Now, let’s see what the requirements for home buyers are and what terms and conditions you must meet before applying for a home loan.
The person’s financial capability, as well as stability, are always the top qualification the majority of banks and lending institutions require. But, before you start, make sure to have all the paperwork ready.
· Application form
· Government and employment issued IDs
· If married, your spouse must fill out the form
· If single, co-borrower must fill out the separate application form
· You must be at least 21-year-old, but not older than 65
· Full-time job
· Employed in the same company for at least two years
· For self-employed citizens, your business must be operating for at least two years
· Employment certificate
· The latest Income Tax Return
· The proof of remittance for the past six months
· Audited financial statement
· DTI registration
· Income Tax return for the past two years
· The list of at least three major clients with their phone numbers
· Bank statement for the last six months
Principal – the amount you wish to borrow on any home loan. If you choose the fixed interest rate, then you can reduce the initial amount.
Down payment – the upfront payment the borrower pays, and it’s usually 30% of the initial loan amount.
Tenure – the life of the loan, for instance, if your mortgage has a tenure of 15 years, then it will take you 15 years to fully pay for your house. Alternatively, you can choose a 20-year tenure as well.
Interest rate – this is the amount the lender charges for a loan. The interest rate is often calculated annually. For example, if you take a 10-year home loan, then your interest rate will be around 5.5%. Additionally, you can choose between fixed and variable interest rates.
The fixed interest rate is more secure than the variable one. Basically, you pay the same amount until your loan expires.
On the other hand, the variable interest rate tends to change over time, so it’s quite challenging to pay your installments ahead.
If you want to lower down the interest, then you should deposit bigger down payment. Also, make sure to find a reputable lender who will offer you decent terms and conditions. In this case, you will avoid numerous issues along the way and ensure the roof over your head.
Salary loans might come as a great solution when you need some emergency cash. Even though they are quite easy to get, eventually, salary loans can be more expensive than traditional loans.
However, when you compare lenders, it is crucial to understand how fees and interest rate work and what they pay for. Keep in mind that not all lenders charge the same fees; therefore, you should try to calculate fees before you apply for a loan.
We are going to show you the best ways to discover fees related to your loan, and even save some money along the way.
Online calculators are probably the most popular way to check your loan fees. They are quite easy to use, you just insert loan amount and tenure. However, they aren’t 100% reliable and offer you an approximate estimate.
When using online calculators, don’t go for random tools. You should visit your lender’s online page and use their calculation tool because it will provide you the most accurate estimate. If this tool fails to disclose the interest rate and additional fees, then skip this lender and look for another one.
Visiting the lender’s branch might not always be applicable, especially if the lending institution doesn’t have a physical store. Unfortunately, nowadays, a lot of people resort to online lenders, so there isn’t an exact way to thoroughly verify the terms and conditions of the loan unless you submit an application.
However, you can try sending them an email and ask them to provide you information regarding interest rates and additional fees.
On the other hand, government banks and lending institutions have offices that you can visit and get detailed information. But, keep in mind that these types of loans impose stricter regulations, as well as the requirements.
In most cases, lenders charge about the Php2,000 processing fee, and this is a common practice for the majority of salary loans. Additionally, you may have to pay documentary stamp tax, which is Php1 for every Php200, but this is only of the loans above Php250,000.
Some people will be submitted to credit life insurance, but not everyone. Based on your application, the bank will determine whether you need credit life insurance or not. Not every lender imposes the same terms and conditions; therefore, make sure to check with them before you actually apply for a loan.
As we mentioned before, you can apply for a salary loan using some of the popular online lenders or go to a government institution. In both cases, to be approved, you must be at least 21-year-old, but not older than 65. Complete the application form and provide copies of two valid IDs.
Additionally, submit the lasts payslip and utility billing statement.
It usually takes a couple of hours for your loan to be approved. However, this process might be a bit slower with government banks.
Employees and self-employed citizens in the Philippines are eligible to receive an SSS salary loan. This can be a beneficial way to fix your financial issues and finally get rid of debt, at least in some way.
However, before you apply for this type of loan, you should understand the essential requirement, as well as terms and conditions. Usually, people are concerned about the interest rate because it determines how affordable your loan is.
Therefore, in this article, we are going to explain a couple of things and help you go through this process as smoothly as possible.
If you wish to apply for an SSS loan, then you must make at least 36 monthly contributions for a one-month loan, and 72 monthly dues for a two-month loan. In both cases, six-monthly contributions must be made in the last six months.
Make sure with your employer that all the contributions are up to date, to avoid unnecessary delays. You need to be at least 21-year-old, but not older than 65. Additionally, you must have a clear record and free of any fraudulent activities committed against SSS.
First of all, you should fill out the application form and submit the application with the Government and employee issued IDs.
Alternatively, you can apply through the SSS online page. The final loan amount will depend on how many monthly dues you’ve made since opening the account.
However, in most cases, you will be able to get two-month salary loan, which can be payable in 24 monthly installments. The loan will be deducted through your pay. Depending on your case, you might have to provide additional paperwork.
The interest rate usually depends on the lender. But, in most cases, the borrower will be charged an interest rate of 10% on an annual level. In this case, we are talking about fixed interest rates, which you continue to pay until you fully pay off your loan. On top of that, you will be charged with a 1% loan processing fee.
If you miss any payments or you are late with your monthly installments, then you will be charged with a 1% penalty. You can also renew your SSS loan, but you have to pay at 50% of the initial loan. However, in this case, you won’t have to pay additional fees, only the interest rate.
On the other hand, there are lenders who offer variable interest rates, which might be lower than a fixed one. But, in this case, you are risking a lot.
For example, the interest can increase in the following months and leaves you in bigger debt than you initially hoped to repay.
For that reason, make sure to review everything carefully before you make a final decision. After all, you fail to make the right choice; then, you may have to pay a much larger interest until your loan is repaid.
When taking a salary loan, there are specific commitments you must fulfill before you get approved. Another issue to worry about is the interest rate and additional fees that aren’t always displayed and often tend to be misleading.
For that reason, people are always skeptical when considering these types of loans, but sometimes you don’t have another choice.
A salary loan is money that a bank or other lending institution borrows to employed people who use it to manage financial emergencies.
The interest rate usually determines how affordable your salary loan is. Even though the majority of lenders charge up to 10% annually, some lending institutions might provide you with lower interest rates. Usually, government branches and banks have lower rates, but they impose striker rules.
Additionally, you may choose between fixed and variable rates. With fixed rates, you pay the same amount until your loan expires. Even though they are safer, fixed loans tend to have a higher interest rate than variable ones. After all, in some way, you are paying for that security.
When it comes to variable interest rates, they can change in a matter of days. But, initially, they are lower than fixed ones. One of the biggest disadvantages of a variable interest rate is that you can never plan your monthly expenses. For example, one month, your monthly installment will be lower, while the next one it might be higher. In that case, variable interest rates are highly unpredictable.
So, before you make a final decision, make sure to consider all the factors above, and see whether you can afford the fluctuations in the interest rates.
Every salary loan involves a certain fee and additional charges you will have to pay throughout the life of your loan. Depending on the lender, they might be higher or lower. But, let’s review the standard fees applicable to salary loans.
Disbursement Fee – you will have to pay approximately Php1,800 for each disbursement.
DTS or documentary stamp tax – for every Php200 for the amount, you will be charged with Php1,50. However, this is subjected to changes and depends on different laws and regions.
Closure Handling Fee – you will be charged with 4% upfront.
Returned Check Fee – if any check is returned and bounces back, the borrower will be charged with Php1,500. Usually, the check bounces back due to insufficient funds on borrowers account.
Attorney’s Fees & Other Judicial Expenses – in case of late payment, or if you breach the terms and conditions of the loan, then the lending institution might sue you. In that case, you will have to pay attorney’s, litigation, and judicial fees.
As you can see above, it’s relatively easy to get a salary loan, but it might be a bit challenging to repay it on time, especially with all the fees and interest rates. But, if you are a financially responsible person, you shouldn’t have any issues.