When you’ve got a financing problem, a lending company will be helpful, but before getting a private loan from these companies, you should know the things you will get into first.
Besides, it would help if you weighed the advantages and disadvantages of borrowing money from private money companies to make the best decision.
This post on lending company will provide all you need to learn. Keep reading!
Lending companies – the new financial situation!
Table of Contents
- 1 What Are Lending Companies?
- 2 Advantages Of Borrowing Money From Lending Companies
- 3 Disadvantages Of Borrowing Money From Lending Companies
- 4 Lending Companies In The Philippines
- 5 Final Thoughts
What Are Lending Companies?
They are these individual investors or non-banking companies in the Philippines providing short-term loans for personals:
- Car buyers
- Owners of small businesses
Those Filipinos who can’t meet the requirements of bank loans come to these lending company to support their emergency financing difficulties.
Advantages Of Borrowing Money From Lending Companies
Should you seek a lending company?
1. Fewer Requirements and Restrictions
The loan conditions of Philippine lending company are more flexible and relaxed because they do not require many financial documents.
When you use a personal loan service, you just need to submit:
- Billing proof
- One or two valid ID
- Income proof
2. No Credit History Check
Credit score and the borrowers’ credit history are major things with banks yet not with private money lenders, whose loan decisions don’t depend on borrowers’ credit. These private companies will rely on loan repayment ability instead of income proofs.
Therefore, personal loan services provided attract those borrowers having:
- No credit history (a low credit score)
- The unstable income
3. Fast Approval
Private lenders won’t let you wait too long, such as many months or weeks, to get approval for the personal loan. Online service will give the decision as quickly as possible (about 24 hours after receiving the application).
Fast approval when choose a lending company
Although it takes 2-3 days to settle on a loan, this turnaround time still lasts more quickly than other banks’ one. Traditional banks normally take a lot of time to decide on the loan because of the works below:
- Credit investigations
- Data verifications
- Background checks
Companies providing private borrowing services also release money within the day of applying for an application to get approval or on the following day at the latest.
Disadvantages Of Borrowing Money From Lending Companies
1. High Lending Interest Rates
Here is the table of Interest Rate comparisons between banks and private companies.
|Loans||Monthly Interest Rate|
|From Private Companies||4%-7.5% or higher|
|From Philippines banks||1.20%-1.94%|
So, why is the loan interest rate of private money companies higher than the banks? Because they spend more money acquiring funds and their customers have large credit risks.
Lending companies receive the funds lending to borrowers from two main sources:
- Private investors earning profits’ investments
- Banks at higher lending rates.
The cost of funds that the companies repay to banks or investors increases, and they transfer this high-interest rate to their borrowers.
Such lenders accept a high risk when allowing borrowed money to customers with no credit history or a bad credit score. The repayment ability of such borrowers is low compared to borrowers with high credit, which is why lending company have to charge high-interest rates.
2. Short Repayment Period
Most such Philippine companies expect customers to repay their loans in a short period, often 2-18 months, and the longest-term loan is 24 months.
A loan term in a short time can cause a high amount of money on a monthly mortgage. If your budget is tight, it won’t be easy to finish personal loan repayment monthly.
Banks’ repayment terms of personal loans are longer, from 6-48 months. The personal loan term of Citi bank is the longest, 60 months.
You need to pay back the money quickly for the lending company!
3. Risk of Losing Collateral
To easily get the approval for personal money, several companies require borrowers to register the collateral asset (house, car, etc.) to secure your loan. Still, if you fail to repay, such companies can take away your mortgaged asset.
4. Risk of Getting Scammed
About 2,500 Philippine private money lending company permit the SEC to prove that they are a legal business.
On the contrary, fake companies scam borrowers by offering promotional loans on many social networks like Twitter or Facebook.
Scammers trick people into providing personal information causing an identity theft situation and can spend money before getting the loan.
Once these victims deposited their payment, scammers would block them from all social media of these fake companies and delete these negative comments entirely.
Lending Companies In The Philippines
|Lending Companies||Loan amount||Interest rate:||Loan terms|
|Cashwagon Instant Cash Loan||PHP 8,000 to PHP 40,000||12% per month-144% per year||3-6 months|
|First Circle||Up to PHP 2.5 million (business loan)||1.44%-5.29% per month||up to 6 months|
|Quickloanprovider.com||Up to PHP 100,000 (personal loan)||2.5% per month||6-12 months|
|AEON Credit Service (Philippines) Inc.||Up to PHP 50,000 (personal loan)||2% per month||6-12 months|
|Global Dominion Financing Corporation||Up to PHP 5,000,000 (business loan)||From 1.5% per month||6-12 months|
Finally, after getting all the necessary information on the lending company, will you choose to borrow money from them?
Remember to always consider the cons and pros before making a decision. If you are looking for urgent and short-term money borrowing but lacking the documents forced by banks, surely these financial companies will be a viable solution.
Thank you for reading!