I had the great misfortune of applying for personal loans before helpful websites like this one launched in the Philippines. Being young and naïve then, I had to stumble throughout the experience because of the misconceptions I had about these loans. And because I don’t want you to go through the same mishaps I encountered (I’m a Good Samaritan like that), I hope you learn from my balat-sa-pwet experiences.
I wish I knew…
…that personal loans are better for borrowing money than credit cards or loan sharks.
My dilemma regarding the personal loan began way before I got one. I was borrowing money from my credit card through cash advance. And there was this one time I borrowed money from the neighborhood loaner (you know, the one on the motorcycle). My first problem with the personal loan is that I found about it too late when I’m drowning in credit card debt and getting regular visits from the motorcycle guy that I now hide from. The low-interest rate (around 1.5% per month, compared with 4% for the credit card/5% for a four-month loan from the motorcycle guy) got me interested.
…that borrowing money to pay off my previous debts is not as silly as it sounds.
Given the low-interest rates on personal loans, getting a new debt to pay for an old debt actually sounds like a good idea. Now I can slow down the bleeding of my wallet. But I admit that applying for the loan is not as easy as borrowing from your credit card.
…about the proper way to apply for the loan.
My troubles continued during the application process. Afraid that I might end up not being accepted for my personal loans application from one bank, I prepared at least two backup applications in other banks. I’m a boy scout that way. Until all three banks rejected me. Then it hit me. Of course, banks talk to each other, especially when it comes to them lending money. It’s like the time when my douchebag friend tried to court two girls at the same time, only to receive two slaps in the end.
So I pursued only one personal loan application since, in the bank nearest my home. Which is not exactly my best option.
…that being upfront about your reasons is good for you.
I was too shy to admit that I’m getting personal loans to pay off other loans. I actually thought that it would make me look bad to these people because they might think, “Once a bad debtor, always a bad debtor.” But later on, a friend who works in a bank told me that I should have admitted my loan purpose in the first place. He said that debt consolidation, aside from being a good reason for getting personal loans, also shows that you’re handling your finances intelligently.
…that lower interest rates aren’t automatically better.
I read the flyer the bank provided me with its personal loans. The flyer claimed that the bank’s offering has a lower interest rate than online loans brand X and competing bank loan Y. Only much later, when I searched about the other loans, did I find out that those loans indeed have higher interest rates, but with lower miscellaneous fees and penalties. In fact, the competing bank’s loan ended up being a better option than the loan I’m stuck with.
…that a longer payment option, while lighter on the wallet, actually loses me more money.
Here’s where I could have used a good loan calculator. Because the calculator I accessed before only pointed me to the monthly payment I need for settling the loan. A better calculator would have let me know how much I was paying in interest (significantly more via the 24-month option than the 12-month option).
…that I can negotiate better terms for my loan.
My sister, upon hearing my story about getting a personal loan, asked me if I was able to negotiate a better deal. She then went on with her yabang story about how she convinced the bank to lower her interest rate by touting her good credit card payment record and her on-time salary loan payment.
…about the bad implications of my previous debt on my application.
But of course, since my credit card bills showed my bad record in paying obligations, I probably wouldn’t have been in a good position to negotiate.
…that I can pay off personal loans in advance.
It’s not like in a home loan where I have an additional fee for advance payments. At least one personal loan product actually offers rebates for advance and excess payments. This would have been a proper use for my Christmas bonus last month.
…about a good personal loan comparison website.
Given that we can find almost anything obscure on the Internet these days, I was astonished at how I didn’t even think about looking up the best loans online, whether through the banks’ websites or a third-party comparison website. And you know what’s more ironic?
That I now write for one of the better comparison websites: GoBear. I really wish I was aware of this website before because after using this platform, I easily found at least five personal loans that are better than what I have now.
GoBear Personal Loan Guides:
Under the GoBear Philippines literacy campaign are resources, which we hope you will find helpful for your smarter financial decisions:
Make smarter personal loan decisions with the help of GoBear Philippines on gobear.com/ph. Check out our online guide on some of the best personal loans and other financial tips.