Asteria Lending Inc. Unit 305 3/F 6762 National Life Insurance Bldg. San Lorenzo, Ayala Ave. Makati City
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For most people, borrowing is just a part of life. Something to be considered when making the monthly budget and sorting out the finances. There are a number of mistakes you can make when considering a personal loan, though. Here’s our list of the most common ones and some advice on how to avoid them.
When you’re looking for a loan, it’s easy to fall into the trap of choosing the first provider you come to. This is often the case if you need cash quickly or have your heart set on getting an approval as quickly as possible. This isn’t a good plan as you can often miss out on better interest rates and terms by doing this. Make sure you shop around.
Probably the number one cause of problems to do with loans and finance. Failure to check your statements on a regular basis will inevitably lead to serious issues. You can miss default charges, outstanding amounts and any other activity that’s critical to managing your repayments in an effective way. Set a reminder to do this at least once a month.
When your loan providers ask you for repayments, you must make them on time. All legitimate companies will give you plenty of notice and will never change the terms unexpectedly, however, ignoring a request for payment can mean that your interest rate goes up, or incur a penalty fee. Direct debits or bank transfers can help you avoid this kind of problem.
This is unavoidable sometimes, however, controlling your spending is essential to manage your money properly. If you are already in significant debt, never make any more large, unnecessary purchases. You don’t need to live without spending anything, but you continuing to live beyond your means will inevitably cause your debt problems to get much worse. Borrowing without a means of repayment is never a good idea, and even if it means getting a second job or selling some unwanted items, there are always ways of finding extra cash if you need to.
It may seem like a kind thing to do but using your loan to pay for other people’s debts can be very risky. If you trust that you will get the money back without a problem, this won’t be an issue, however, life can be extremely unpredictable. Lending people money that isn’t yours isn’t usually a good idea because you have no legal recourse in terms of getting the money back if you need to. Always see a loan amount as something extra to your everyday finances. It isn’t there to be used like a regular income and doing so will create serious problems for you.
This is common sense to most people, however, those with gambling problems can find themselves in serious financial trouble very quickly. Even professional gamblers would advise against using a personal loan as a means of financing their pass time. There’s always a small chance that you’ll win your money back or even make a profit, but the risk of losing everything you put up as a stake is always a very real option. There are services that can help you with gambling addiction or other related problems if you feel this is an issue for you.
Spending your loan too quickly on frivolous things or impulsive purchases you aren’t really thinking about is very easy to do. Especially if you’ve been used to living on a small budget for a long time. Resist the temptation to waste your personal loan if you can. In the Philippines, generally speaking, the cost of living is much cheaper than elsewhere, however, it’s still very easy to fritter away a large of chunk of change and have absolutely nothing of value to show for it.
Interest is usually calculated and added on to each of your monthly repayments, so you don’t usually need to consider this in any great detail, however, you do need to think about it when budgeting and accounting for the amount of money you will be paying back. This is particularly important with things like salary loans in the Philippines, as not paying enough can mean that you are only just covering the cost of the interest, rather than actually paying anything off in real terms. This is how so many people end up in financial difficulties, as they don’t fully understand the terms and conditions they are signing up to before agreeing to a legally binding contract.
This isn’t an issue for people who pay their debts on time but for those who frequently miss payments or who are disorganised when it comes to managing their cash flow, it can be something that causes debt to increase. Penalty charges are usually activated automatically when you miss an agreed payment deadline. They can also apply when you pay things off early. In some cases, penalty charges can be quite substantial, so always try to put some money aside to cover the cost if you can.
We have mentioned this several times in our blogs but it’s something that can’t be stated enough. No matter what your circumstances are, turning to illegal lenders is never a good idea and will generally lead you in to serious financial and legal trouble. Always check that the organisation you are borrowing from is reputable and legally registered in the Philippines. Report any questionable behaviour to the authorities and don’t be afraid to ask questions about terms and conditions that seem to be unfair or unethical.