Are you thinking about applying for the loan? There are some things you should know...

5 Things You Need to Know Before Applying for a Loan

1. Determine what kind of loan you need

Not all loans are the same. Loans are usually classified according to their use and the length of time in which a person loaning can pay for the loan. In the Philippines, there are educational loans, housing loans, calamity loans, emergency loans, salary loans, personal loans, etc. From the terms themselves, it's not hard to guess which loan applies to what use, but it's still imperative that anyone in need of a loan reads into the nitty gritty of these loans.

2. Know the length of the loan you are getting

Short term loans are often taken out because of an urgent need like an emergency or a quick transaction. Long term loans involve a larger amount of money and is usually used for bigger purchases such as a car or a house. Basically, the more money you loan, the longer your loan term will be. 

Short term loans might be easier to obtain than long term loans.

3. Make sure you have the requirements for getting a loan

Since not all loans are the same, it is important to look into the various requirements banks or otherwise will ask of you. Here are some of the most common requirements that might be asked from you when you're applying for a loan:

  • At least 21 years old
  • Employed
  • Payslip copies of at least 3 months
  • Latest BIR income tax returns
  • Government-issued ID with photo
  • Financial statements
  • DTI Business Permit or SEC Registration (for businesses)

4. You can apply for a personal loan without a bank account

Most people are apprehensive about taking out online loans, especially when you don't have bank accounts or credit cards. Thankfully, a handful of banks don't require you to be their member to take out a loan. When you apply for a personal loan at a bank, they'll usually ask you to open an account anyway so that you could have a channel in which to pay for your loan.

5. Compared to credit cards, personal loans have lower interest rates

Assuming that you're taking out the most common loan, which is the personal loan, you'd be surprised to hear that they offer lower interest rates compared to credit cards. Credit cards might be shiny and appealing, but they might end up costing much more in the long-term. While credit card companies charge a 3.5% interest rate per month, you can find loans with rates as low as 2% or even less.

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