Unexpected financial crisis can be hard. You might have planned your savings and salary, but one wrong bill or unexpected purchase can change it all. This is exactly where a personal loan can come handy. Also known as a salary loan, a personal loan is usually a small-period loan, which is offered by lenders and banks without any collateral security (in most cases). Here are some of the other things you need to know.
As mentioned, personal loans are typically not secured, which is why the amount offered by the lender is usually very small, and the terms and conditions are pretty simple. From paying medical, personal and unexpected bills to consolidating debts and bettering the credit score, the there are numerous reasons to take such a loan. Salary loans can be distinguished into two different categories – secured and unsecured. In some cases, a form of collateral is used for payment security, and this asset is used to repay the loan, in case the borrower is unable to pay the amount. Unsecured loans, on the other hand, don’t have any such condition, which is why the interest rates are typically higher, as the lender has to bear a higher risk. Such loans can be extended to Overseas Filipino Workers, as well, which is then called OFW loan. However, these loans are not always for short-term though.
Applying for personal loans
Depending on the country you live in, there might be a few requirements for personal loans. The borrower is usually expected to be of 21 years or older and should have a proof that establishes him/her as the citizen of the country. He/she should also have a proper billing address. Since this is the salary loan, the borrower should have a stable job that should meet the basic requirements as stated by the concerned lender. He also needs a Tax Identification Number (TIN), SSS/GSIS No and a postpaid number (either mobile or landline).
Other things you need to know
You can apply for a personal loan, even if you don’t have a credit card in the first place. However, those who have credit cards are likely to get quicker approvals. One can also choose to terminate the loan period in advance, as long as he pays the full amount with the interest, as per the terms and conditions.
With a personal loan, you can get up to four times of your current salary!