What is a Personal loan?
A personal loan is one of the easiest ways of obtaining funds, which you can avail for yourself in times of emergencies, or for other personal reasons. You can avail of personal loans from banks or from credit / lending companies. Those who are employed, self-employed individuals or any other individuals who have a stable source of income are qualified to apply for such a loan.
Features
Interest Rate
Interest rates vary upon the type of loan that you will apply for: a secured loan (mainly comes with collateral) and an unsecured loan (approval basis is the borrower’s credit standing or capacity to pay). Mostly, a Secured Loan provides lower interest rates and a favorable loanable amount as compared to Unsecured Loans because of the higher risk of the borrower defaulting without any means of recovering the loan amount back from the borrower.
Terms
The repayment period of the loan, expressed in monthly installments, is typically paid back within a year to up to 5 years depending on the preference of the borrower and approval of the bank.
What is Debt Consolidation?
It is a type of loan that mainly differs from a simple loan – it means a collection of multiple loans that are converted into one new loan, mainly to help people who are paying a lot more on interest from different financing institutions and consolidate them into a single one and pay much lesser interest.
Personal Loans Debt Consolidation in the Philippines
Here are a few of the banks and other financial institutions that offer Debt Consolidation in the Philippines:
Citibank
- Loan Amount: up to Php2,000,000
- Loan Term: up to 5 years
- Minimum Income Required for Borrowers: Php250,000 per annum
- Age: 21 to 65 years old
Vidalia Lending Corp.
- Loan Amount: Php20,000 to Php100,000
- Loan Term: 2 months to 12 months
- Interest Rate: 6% per month, 5% processing fee, 80.6% maximum annual percentage
- Minimum Annual Income Requirement: Php15,000 for employed, Php30,000 for self-employed
Advantages of Debt Consolidation
- The convenience to pay only one creditor. Having multiple loans from different financing companies means different installment payments at different due dates and different interest rates.
- Pay lower interest rate.
- Borrowers who opt for debt consolidation get loan terms that are more favorable and longer than the original loan.
Disadvantages of Debt Consolidation
- Borrowers will have to pay an additional fee which some people call an exit fee or early termination fees.
- With an unsecured type of Debt Consolidation, it is difficult to obtain a higher loanable amount. Additionally, the borrower might end up getting approved of a higher interest rate.
Conclusion
Every loan agreement has its pros and cons and borrowers must be very cautious and wise to choose the debt consolidation product that will help them pay less on interest and have a longer repayment term. Ideally, the person getting a personal loan debt consolidation should be left with lesser financial stress than before.