Personal Loans Ultimate Guide

Ultimate Guide to Personal Loans

What Is A Personal Loan?

The growing popularity of personal loans makes it so prevalent that it typically doesn’t need an introduction, to begin with. However, for those who are yet to enjoy the benefits of taking advantage of the convenience of a personal loan, it’s not that hard to understand at all.

In fact, lending institutions do their best so that anyone who wishes to borrow from them will understand what they’re getting into.

Sure, it’s a simple form of borrowing, but that doesn’t mean borrowers are not obliged to understand the very concept of personal loan and their responsibilities in terms of payment.

Simple means of borrowing

Simply put, a personal loan is a type of loan that a person can make usually even without a collateral. Typically, all they’d really need is a good credit score. Or none at all – depending on how the financial institution deems their reputation.

It goes without saying that borrowers who appear to know what they’re doing and are not downtrodden are likely to have bigger chances of getting their loan applications approved. But then again, considering that personal loans are so simple and accessible, it’s usually not a big problem applying for one.

A Personal Responsibility

A personal loan owes itself to the personal responsibility of the borrower when it comes to repayment. From a lender’s perspective, it’s a riskier loan to offer relative to other forms of loans.

However, lending institutions are well aware that people need an accessible form of loan for their specific needs. Not everyone borrows money to expand a business, after all.  

How Personal loans work? 

Needless to say that personal loans don’t work the same way as other loans do. However, in its simplicity lies its own set of rules that borrowers should at least be aware of. In some cases, the process for private lenders for personal loan philippines may vary. But nothing that a simple face to face application and inquiry won’t cover.

Choosing A Type Of Personal Loan 

While a personal loan in itself is already a simple form of borrowing, it also has several classifications that can either complicate decision-making or make it more convenient. Convenience stems from the fact that borrowers are presented with the best option possible for their needs.

How These Different Personal Loans Work

  • Secured Loans. Generally, secured loans will require some form of collateral. This is where the term ‘security’ comes from. It’s security for the lenders. However, it’s easy to see where they’re coming from. They, too, need peace of mind, after all. Fortunately, secured personal loans don’t compel borrowers from using the money for whatever purpose they wish.


  • Unsecured Loans. Unlike secured loans, unsecured loans don’t require a collateral for the application to be approved. However, as great as that may sound, the trade-off is that it has a bigger interest rate. But just like secured personal loans, this personal loan too will not stipulate how the borrower is supposed to use the money.


  • Car Loan. The name of this type of loan makes it clear what it is used for. A positive side of this loan is the generally lower interest rate imposed by lenders. The gist of this loan is that the vehicle bought by the borrower is essentially used as a collateral which will be used in the event that they default the payment.


  • Personal Credit Line. A personal line of credit is an interesting form of personal loan. Basically, it’s a credit line that allows the borrower to take certain amounts whenever they need to. But without exceeding the credit limit. The credit limit is refreshed whenever the borrower repays the lent amount.

How to qualify for personal loan in Philippines?

In the Philippines, filing for loans can be a tricky matter especially for people who feel overwhelmed by piles of paperwork that they have to see to. However, personal loans are relatively simpler compared to high-ticket and complex models of business loans.

Personal Assessment

With so many personal loan lenders in philippines, it can get tricky trying to meet all requirements. Qualification for a personal loan can be frustrating when borrowing from different lenders time and again. But then again, there’s no need to keep jumping to the next ship when one lender already has good offers anyway.

The good news is that there are a few guidelines that can help borrowers in, at the very least, making sure that they have a chance at loan approval.

  • Be of legal age.
  • Minimum income requirements.
  • Confidence in repayment.
  • A stable job.
  • Existing savings accounts.
  • Good credit rating.

Getting Ready 

In order to increase the chances of getting a loan approved, a borrower should start improving their financial standing long before the date of application. This may sound counterintuitive, but if lenders have no clue about the borrower’s history, the chances of loan approval become smaller.

At the very least, a borrower should maintain a savings account in a bank. These days, that’s not really such a tall order. There are plenty of local banks with minimal to no maintaining balance required. Though it does help to have some cash in there somehow. Lenders can infer that the borrower can spare a small amount – increasing the likelihood of their repayment.

Steps to getting Personal Loan

It all starts by listing down options for a personal loan with low interest rate in the philippines. Comparison of differences between interest rates, terms, and lender reputation helps considerably in making sure that the chances of loan approval are optimal.

Keen Eye For Details

It’s highly advised to not rush when choosing between different loan offers from different lending companies. Read the fine print. Compare interest rates. Be aware of the penalties. It’s well worth the research.

Eligibility For The Loan

Before applying for a personal loan, borrowers should first assess themselves whether they’re eligible for the said loan or not. Usually, lenders will have information for qualifications available on their websites. If not, it’s probably just a phone call away.

Loan Application

The next step in getting a personal loan is to visit the lending institution or try Lonify personal loan search and present the necessary documents. Loan applications usually don’t take that long – but it can stretch a bit during peak hours of operation. Submit the application at an earlier time, if possible.

Awaiting Approval

After a short interview and the submission of required documents comes the waiting game. The uneasy feeling of restlessness is understandable at this stage – especially for those who will be using the money for critical expenses like medicine or school fees.

Prior to choosing the type of loan and the lending company, it’s a good idea to check if the lending company is known for instant approvals. This can take a lot of anxiety off from the borrower.

How to pick the best personal loan?

It can be troublesome to pick the best personal loan – especially when the borrower has the pre-existing notion that there’s just one form of personal loan. Fortunately, this choice becomes easier when they have a specific purpose in mind.

Choosing Between Secured and Unsecured Personal Loans

There are many instances where borrowers are stuck in deciding between these two types of personal loan. Secured personal loans, for the most part, require borrowers to have a collateral that is of equal value or more to the amount they’re borrowing. Unsecured personal loans are easier to get. But has the downside of a bigger interest rate.

Choose a secured personal loan if a collateral can be presented to the lending company. Otherwise, go for an unsecured personal loan but be extra wary of prompt payments.

It’s fairly common for personal loan fast approval in the Philippines but borrowers should also be responsible enough to reciprocate such convenience by honoring payment schedules.

When To Pick A Car Loan? 

Nobody really needs to have an extensive list of reasons why they’d opt for a car loan for their personal loan. If their personal loan is to be spent on a vehicle, this is the most appropriate option to go for.

How About A Credit Line?

Choosing a personal credit line for a loan is pretty common. But it’s relatively hard to get approved for an account simply because of its stricter guidelines. After all, this is a recurring form of borrowing so it makes perfect sense for financial institutions to impose extra safety measures to secure their business

A personal credit line is ideal for people who need to have a better way to manage their finances such as consolidation of bill payments. The convenience of paying for said bills and then just paying the lender the total amount in one go is a huge load off anyone’s back.

When to use personal loan?

With personal loans easy to come by, it’s really not that surprising that more and more people are opting for one. The sad part is that a lot of them don’t really need a personal loan, to begin with. The idea of having a huge lump of cash does sound enticing, which is why some people find the darndest reasons to borrow money.

Personal Discretion

Personal loans are, at its core, personal. How the borrower spends the money is up to their discretion. With the exceptions, of course, of specific loans like car loans.

However, one must remember that personal loans are double-edged swords. Used wisely, it can elevate a person’s financial status. Otherwise, it’ll just bury them in deeper debt, not really bringing anything beneficial to the table.

The occurrence of personal loans online is getting more popular, check monily personal loan lender deals for starters. At the very least, online loans help borrowers in terms of getting educated about their personal loans. This helps them decide if whatever they’d need the money on is worth the interest rate.

Leverage and Investment

For the most part, the best way to determine whether a personal loan makes sense for the individual is to see if it does, in fact, help them improve their lives. Luxuries can fit the bill, for sure. But only in special cases.

A notable reason for applying for a personal loan is buying equipment for freelance work. Or perhaps using the money as initial overhead for a startup business. These are just general examples. Ideally, the borrower should have a sound mind and objective look on the matter before submitting a personal loan application.

When is better to avoid such loan? 

Personal loans are growing ever more popular. Consequently, it’s getting easier and easier to file for an application and bigger chances of getting approved. The downside is that people see this as an opportunity to have the instant gratification of having a huge sum of money at their disposal.

This is a dangerous mindset. Unfortunately, it is innate. Who doesn’t want to have a huge amount of money just waiting to be spent, right?

This is, unfortunately, a test of character. Those who can control themselves and look at their loans objectively will have better control of their finances. Those who don’t end up in direr financial situations.

Fortunately, financial institutions have safety mechanisms so that people who can’t manage their finances won’t be in deeper trouble. And that’s basically them assessing a borrower’s capability of repayment.

Think Twice

Here are some specific scenarios where borrowing money isn’t such a good idea.

  • Indulgent shopping.
  • Replacing last year’s phone with a new model (with exceptions).
  • Repairing bad credit.
  • Huge family vacation.
  • Exorbitant wedding.

Of course, there are exceptions to the rule. Like with phone replacement being an actual necessity if the new phone model has significant advantages that can be used to make work easier.

As mentioned, it’s ultimately personal discretion. But it’s best to be aware that personal discretion may suffer a huge blow once the thought of getting one’s hand in a lot of cash sets in.

Is there a risks of using personal loan? 

After so many good things said and done about personal loans, some might think that it’s too good to be true. In some cases, it actually is. Unsecured loans, for example, can be a huge problem especially if the lender has high interest rates in case you missed the repayment date.

The Local Lending Scene

In the Philippines, personal loans have considerable risks for both the lender and the borrower. It’s not a perfect world, that’s for sure. With this in mind, both borrowers and lenders should be aware that there are people who are ready to run off with money whenever they can.

Some go even as far as moving to a new residence just to avoid small-time lending companies. On the other hand, borrowers should also be wary of lending institutions that exploit their disinterest to read the fine print. Always read the fine print.

Risks Borrowers Should Be Aware Of

Borrowing money should never be taken lightly. One of the most notable risks of borrowing without second-thinking is getting buried in a huge pile of debt. What some people end up doing in this situation is borrow even more money. This is, of course, typically a bad idea because they’re just doing the same thing that put them there in the first place.

Another notable risk of borrowing money in the form of a personal loan is, well, underhanded means of invoicing. That is, loan sharks getting aggressive and resorting to harassment. This risk is usually more prevalent in unsecured loans. They resort to other means of getting their money since there’s no collateral, to begin with.

Of course, that’s a gross generalization. There are lenders who provide unsecured loans that will prefer resorting to legal means of getting their money back instead of going for despicable means.

It does help, however, that borrowers are aware of such risks before putting their names on the line.

Personal loan benefits

The convenience of personal loans is well-loved all over the globe. People find themselves in the most precarious financial situations that they will always find a use for personal loans. Today you can apply for a personal loans online as well get approval online which makes things even simpler.


Without a doubt, the biggest benefit of a personal loan lies in its convenience. Compared to other types of loans, such as ones offered by established banks, personal loans don’t need a lot of paperwork to get assessed and approved.

Not everyone has the time to spend lengthy and repeated visits to the bank just to follow-up on the status of their loan application. Not to mention that the majority of people who want to borrow money aren’t keen on reading every single line of the loan terms and conditions.

Sure, it’s irresponsible to skip through the terms and conditions. But let’s face it, only those who can afford some time to relax at a posh coffee shop will bother reading it. If at all.


Unlike regular loans, personal loans don’t have to be strict in stipulating where the money will be spent. It is what it is – personal.

Loans from huge financial institutions such as home loans and car loans have limited use. Obviously, they’ll be used for whatever the type of loan is named after. A personal loan can be used for various purposes which covers a huge ground. It can be used as an emergency fund in the event that one member of the household loses their job, for example.

With this flexibility, however, one has to be aware that it entails a huge responsibility. Even bigger, in fact, than the sense of responsibility imposed by home loans. It’s a true test of character.

Alternatives to personal loan

Before rushing off to the nearest lending institution that offers personal loans – one should be aware that it’s probably not the only choice they have.

There are other ways to borrow money that just might be more appropriate for their current needs.

Small Business Loans

Although personal loans can be used to start small businesses, one might just be better off opting for small business loans offered by a local bank. List of banks in philippines giving a personal loan.

While a personal loan may indeed be easier to come by, a local bank will probably approve such a loan if the borrower has a good credit line.

Obviously, this isn’t a good choice for people who have iffy credit histories. It’ll take considerably more time before a bank will approve their loans. It just might be outright rejected in some cases.

A Credit Union Loan

With like-minded individuals, loans can be approved just as fast as an application for a personal loan at a lending company.

There are plenty of advantages presented by a credit union loan. One being relatively lower interest rates. In some cases, lending companies may offer lower rates – but on the average, credit unions offer lower rates to their members. For obvious reasons.

Peer-to-Peer Lending

There’s a certain charm to peer-to-peer lending that makes it a good source of loans. For some, it’s probably the sense of pride of having a loan approved by multiple investors. In addition to its flexibility, of course.

The downside with this flexible form of lending is that it takes longer for loans to get approved. Definitely not a good option when the cash borrowed is to be used for emergency spending.

One is better off knowing where to get a personal loan in their locality or perhaps checking offers online.


In this fast pace world as we all know money plays a significant role, we like it or not, and in the moments the big banks say no to your application consider checking some fastest alternatives available in this digital age as non – bank organization online loans. Feel free to use Lonify online loan calculator to find the top lender for your quick money needs.