Maricor Bunal
It’s easy to get caught up in a tight financial situation. In times of dire financial need, we might not be able to make informed and well-thought decisions that we’ll just grab the first solution we see.
However, one has to bear in mind that getting a loan is tricky, considering the interest rate that may compound when payments are delayed. Plus if you’re required to put up collateral upon application, you’ll risk losing your assets if you fail to pay on or before the payment schedule.
With this in mind, it helps to pick up some financial hacks to choose which type of personal loan to get.
Where’s the dividing line between secured and unsecured loan?
Here in the Philippines, there are basically two mainstream types of personal loan banks and private lenders offer – secured and unsecured loan.
To get a secured loan, borrowers need to put up collateral, which can be a car, house or a piece of land, upon application. Although a secured loan usually comes with higher loanable amount, be reminded that the asset you’ve placed as collateral might be at risk if you miss payments.
Meanwhile, an unsecured loan can be had without putting up a valuable asset. This type’s loanable amount is usually lower compared with secured loans. All you need to do is meet the provider’s eligibility criteria and requirements.
When to choose one over the other?
Opt for a secured loan if:
- You’re really sure you won’t miss any payment because, in the first place, you’re not in dire need and you have a stable income. Instead, it’s more like a way to pool immediate money to fund a major purchase or venture such as a business, a new house or a luxury car.
- You’re planning to invest the loan proceeds on something that will enable it to generate income higher than the interest rate.
- You want an extremely easy application process. Banks and private lenders usually approve secured loans faster than unsecured loan because they’re given a guarantee – the collateral.
If these situations above don’t apply to you, then an unsecured loan is probably your best choice.
Unsecured loans are best if:
- You’re in need of immediate cash for emergency needs such as utility bills, school fees and medical costs.
- You like more flexibility with your options (e.g., loan maturity, payment methods).
- You’re willing to go down the more challenging way of getting approved for your creditworthiness and other requirements.
- You don’t want to risk any of your assets.
Need more tips and insights? Contact Loansolutions PH agents to help you out, whether in terms of lending options or general loan insights.
Know Your Choices at Loansolutions.ph
Loansolutions PH is the country’s largest network of lenders, who can help the public explore different financing options before deciding to get a specific credit deal. Borrowers will just have to fill up company’s 3-Step Online Application to get a loan, whether a secured or an unsecured type, in the most convenient way.
