What is a Personal Cash Loan?

It is a type of loan provided for health, education, household, and/or for any
other personal usage. This kind of loan is either unsecured or secured (with
collateral) and repayment is normally by adjusted sum payments
(installments) over a fixed duration, depending on the borrower’s capacity to
pay back from his/her personal income. Personal loans in the Philippines are
usually provided with no collateral requirement.

What is a Collateral?

It is a particular asset (house, land, car, building, and several more) pawned
as secondary assurance by a borrower. The principal security is usually the
anticipated money of the debtor such as his/her salary, business earnings,
etc. Even though personal loan in the Philippines require no collateral most
of the time, lenders may demand assurance in the event that the primary
security is not considered to be fairly reliable or adequate enough to redeem
the loan in case of a failure. When collateral is required, it must be
documented legally so the lender would have the right to these assets when
the time comes. Lenders would then have the legal power to seize and sell a
collateral if the borrower cannot pay the loan back as agreed.

Different Forms of Cash Loans in the Philippines and How it Works

Yes, you read it right, there are different forms, methods, and terms of
borrowing cash in the country. Listed below are a few (if not all) of the
options you can choose from:
 Five-Six Loan. This lending operation started from Indians that came
to the Philippines who are often referred to as “Bumbay” (the term’s origins
are still debatable up to these days) and is one of the most utilized lending
systems up to this day because no collateral is required to apply for the loan.
A verbal agreement is sufficient to get this instant cash loan and the rate of
interest is often 20% hence the term 5-6 (if you borrow 5, it would be
returned as 6). The lender collects payments on small increments on a daily
basis for a period of time until the entire amount and interest are fully paid
off.
 Private Lenders. All these are private individuals who grant money
with interest just like the “Bumbays” but with a difference in terms and
interest. Collateral may be required by some depending on the amount of
money borrowed and the duration of when it will be paid. Written or printed
agreements with signature are also usually demanded for legal
purposes.This form of financing system is not often utilized if you need a fast
 cash loan in the Philippines because of the amount of time it takes and files
it requires. It often needs about a week to get processed and the
documentary requirements are not that easy to provide either.
 Online Private Lenders. Online loaning system is still fairly new in
the country but is becoming more and more popular because of its
convenience and security. Online lenders could be a private individual or a
company willing to provide short-term loans at the quickest process possible
and with fewer requirements compared to banks. Most online loans in the
Philippines get within-the-day (24 hours) approval which is a great thing.

Things to Consider Before Securing a Cash Loan

Now that you know your options, it is very important to assess yourself first
before going through a loan agreement. Bear in mind that receiving a loan
however small or large the sum is, must not be regarded lightly. I have listed
some of the things that you need to ask yourself before taking that leap:
 Do you really need to apply for a loan? Think about it thoroughly
and decide. Is it a need? Is it a want? Either way, your credit score, name,
and financial standing will be on the line and you are the one who’s going to
pay it all off no matter the situation so make sure that the loan is going to be
well worth it.
 Do you know the exact amount of money you need/will be
needing? As things don’t always happen the way they expect them to, it’s
ideal to borrow just the significant amount needed. Getting too much or too
less than this amount may not be economically healthy for you.
 What is your financial capacity to make the payment? Where are
you going to get the money to pay the loan? Would it be from your salary?
Or your business perhaps? Out of your allowance? If the
money/salary/income you’re expecting wouldn’t arrive on time, would you
have other sources? Remember, paying on time is critical and could save you
a few bucks as some agencies/lenders charge late fees.
 What is the amount of time you need to pay it all off? Would you
be able to pay it in a month, or two perhaps? Would it take more than six
months? How about one year? Your predicted duration is very important
because your loan’s interest rate can only get higher the longer it takes you
to pay it off.

Conclusion

After identifying and analyzing your financial needs and standing, it would be
useful to do some research about the company/lender you are going to apply
to for a loan. The company or lender’s reputation is your security. Also, take
note of all of your readily available documents so you’d know if you would
need to process a certain paper while applying for it. Lastly, keep in mind
that loans are there to help you – borrowing the right amount of money from
the right company can get you through difficult times.

SOURCE: https://www.acom.com.ph/cash-loans-manila-philippines/

Online Loans in the Philippines:

What Filipinos Need to Know

What is an Online Loan?

An online loan is a non-traditional type of loan from a private lender that
operates over the internet. It’s becoming popular among borrowers who
need quick cash but lack the credentials to qualify for bank loans.

Unlike government offices and banks, most online lenders don’t perform
credit checks to determine a borrower’s capacity to repay a loan. Most
online lenders require only a valid ID, while some may also ask for proof
of income.

The entire loan application process is done online—from filling out an

online form on the lender’s website or mobile app to receiving approval.
Loan proceeds are released and repayments are made through the online
lender’s partner banks and remittance centers.

The specific procedure and requirements, however, may vary from one
lender to another.

Pros and Cons of Online Loans

You may have heard from family and friends about their positive
experience with online loans. Or you’ve read news about bad practices of
certain online lenders.

Online loans have their pros and cons. It’s important to know them, so
you can decide if you should get one.
 Online Loan Advantages

 24/7 online application

 Minimal eligibility and document requirements
 Convenient loan application through a computer or smartphone—no
need to apply personally in-branch and wait in lines
 Easy and quick approval, especially for unemployed people and
borrowers with bad credit or no credit history
 No bank account required for withdrawing funds (applies to some
online lenders)

Online Loan Disadvantages

 Higher interest rates than banks

 Short loan amortization terms
 Risk of losing money to scammers
 Risk of harassment by online lenders that resort to debt-shaming

Read more:

 Loans for People with Bad Credit: What Borrowers Must Know
 No Bank Account Loans: How to Get One in the Philippines
 Borrowing from a Private Lender? Consider the Pros and Cons First

Legit Online Loans in the Philippines

Online lending companies in the Philippines are regulated by the
Securities and Exchange Commission (SEC). Just as there are legitimate
online lenders, some companies are illegally operating in the country.

Minimize the risks associated with online loans by making sure you deal
only with an online lender that’s duly licensed by the SEC.

We’ve compiled a list of top online loans that are legit, meaning their
providers are registered with the SEC either as financing companies or
lending companies.

ACOM Quick Cash Loans

SOURCE: https://ph.news.yahoo.com/online-loans-philippines-filipinos-know-020022682.html
Borrowing from a Private Lender?
Consider the Pros and Cons First

1. Few Requirements and Restrictions

Compared to banks, private money lenders require fewer financial

documents and are more relaxed in their conditions for loan approval. When
you apply for a personal loan with a private lending company in the
Philippines, you’ll be asked to submit only a valid ID or two, proof of billing,
and proof of income such as latest payslips or income tax return.

2. No Credit History Check

A borrower’s credit history and credit score are a big deal with banks. That
isn’t the case with private lenders. They don’t base their loan decisions on a
borrower’s credit standing. Instead, they evaluate the ability to repay a loan
through the submitted income documents.
Because of this, personal loans from private lenders appeal to borrowers with
a poor credit score or no credit history, as well as those with an unstable
income.

3. Fast Approval

Private lenders won’t make you wait for weeks and months to approve your
personal loan. Online lenders decide in as fast as 24 hours from the time of
application. While some lenders take two to three days to process a loan, it’s
still a quicker turnaround time than banks. Traditional banks take much
longer to approve a loan because they spend time conducting data
verifications, credit investigations, and background checks.
Private lending companies also release funds within the day of application or
approval, or the next day at the latest.
Disadvantages of Private Lenders

1. High Interest Rates

Private loans are known for their high monthly interest rates starting at 4%
to 7.5% or higher, making the cost of borrowing expensive. Personal loans
from banks in the Philippines have much lower monthly interest rates of
1.20% to 1.94%.
Why do private money lenders charge higher interest rates than banks?
Private lenders have a higher cost of acquiring funds, and they’re lending to
borrowers with high credit risk.
Private lenders get the funds they loan to borrowers either from private
investors who are earning profits from their investments or from banks that
lend money at higher rates. This increases a private lender’s cost of funds
that they have to repay to investors or banks. They pass on that high cost to
borrowers through high interest rates.
Also, such lenders carry a high risk of lending money to borrowers with a bad
credit score or no credit history. It’s less likely that such kind of borrowers
will repay their loans compared to those with a good credit score. Private
lenders compensate for this high credit risk by charging high interest rates.

2. Short Repayment Period

Most private lending companies in the Philippines expect borrowers to repay

their personal loans within a very short period, ranging from two to 18
months. The longest repayment term for a private loan is 24 months.
Combined with a high monthly interest, a short loan term can lead to a high
monthly mortgage. If you’re on a tight budget, repaying a private loan
monthly can be very difficult.
In contrast, banks offer longer repayment terms (six to 48 months) on
personal loans in the Philippines. The Citi Personal Loan has the longest term
of up to 60 months.

3. Risk of Losing Collateral

Some private lenders ask borrowers to declare a collateral on their loans

such as a house, lot, or car to raise their chance of getting approved for a
personal loan. You may have secured a loan easily with a collateral, but once
you fail to pay back your loan, the lending company may take away your
valuable asset.

4. Risk of Getting Scammed

More than 2,500 private lending companies in the Philippines are registered
with the Securities and Exchange Commission (SEC), which means they’re
legally operating in the Philippines.
On the other hand, fake private lenders rip off borrowers through online
lending scams. Promoting their loans on Facebook, Twitter, and other social
networking sites, scammers pose as legit private lending companies. They
trick people into providing their personal information (which makes them
susceptible to identity theft) and paying a processing fee before releasing
the loan proceeds.
But after the victims have deposited the payment for the processing fee,
they’re blocked from the social media accounts of fake lending companies.
Eventually, these scammers close all negative comments from their accounts
or even deactivate them.

Final Thoughts

After weighing all the pros and cons, will you still borrow from private
lenders? If you need a short-term loan to fund an emergency and you lack
the documents required by banks, a private loan may be a viable option. Just
be sure to deal with a legitimate private lender.
However, a personal loan from the bank is a smarter option if you’re looking
for a loan with a low interest rate and a long repayment term, and you have
a good credit history. Check out the best deals on personal loans in the
Philippines with the help of an online comparison site like MoneyMax.ph.

SOURCE: https://www.moneymax.ph/personal-loan/articles/private-lenders-philippines/

History of Money Lending

Bartering
Bartering has been a method of trading between groups of people or even
nations before money became a common form of payment acceptable to
both trading parties. This is still used in many less developed economies,
especially in their tribal areas. It is also used by nations that have economic
sanctions against them, e.g. Iran gives oil to China in exchange for them
building a dam or a power station.

Money
Most human new developments can be traced to a source, point in time or
an era in one or two locations in a specific civilisation. However, the
‘creation’ and ‘appearance’ of money and its use can be traced to many
periods and locations during the recent human history, 3 to 5000 years. It is
worth noting that ‘money’ could take any form, e.g. whale teeth, metallic
objects, ivory or live animals.

Early ‘Banking’ and Money Lending

The need for ‘banking’ and money lending is associated with more recent
use of money, e.g. silver, gold or it was created as soon as money appeared
in a civilisation. In Roman times ‘banking’ was carried out by private
individuals who would also conduct nearly all money lending. They had
regular borrowers who would be given what could be termed as ‘harvest day
loans’, which would have been similar to today’s ‘payday loans’ for farmers
at much lower interest rates (APRs). Many of these individuals who loaned
money disappeared in the last days of the Empire, but were replaced by the
very rich who capitalised on their dominant position and became extremely
rich.

In 325 AD religious leaders decreed any form of ‘lending’ with interest above
1% per month as usury, although usury was regarded as any lending. This
resulted in a misuse of the word and confusion about what was regarded as
usury and what was acceptable money lending.

Most money lenders by the dark ages (11 th and 12th centuries) and middle
ages (15th and 16th centuries) were Jewish, as Christians were forbidden from
lending money with any interest. The reason Jewish people had become
‘experts’ at this practice was primarily due to Christian religious leader’s
decree on money lending and the fact that Jews were permitted to lend
money with interest to non-Jews, but not to Jews. Most traders in the middle
ages in Venice would have had access to ‘banking’ and money lending from
the Jewish lenders who were kept in special locations of the city. This
practice continued until it made many such practitioners very rich.

Pawnbrokers
This is one of the oldest ‘money lending’ practices, which started in the
ancient Greek and Roman times. It is a form of ‘secured’ lending with the
individual placing one or more items as collateral for the borrowed money.
There’s a ‘charge’, ‘fee’ or ‘interest’ payable for an agreed period (e.g. 30
days) before the item(s) can be retrieved from the pawnbroker.

These can also be regarded as a type of a secured ‘payday loan’ of the past,
which continue today in most cities of western countries. The interest or fees
charged by pawnbrokers tend to be much lower than unsecured payday
ones, as the collateral significantly reduces the risk to the ‘lender’.

Modern Lenders
These are the mainstream banks, credit card companies and specialist
mortgage lenders. The money markets are developed enough to allow these
organisations to have a tight hold on the mainstream lending. Ironically, they
also provide wholesale finance in the money markets for the much smaller
payday lenders, which can be found at www.gimmedosh.com.

SOURCE: https://gettingmoneywise.com/2013/01/history-of-money-lending-2.html