Financial emergencies come at the most unexpected times, and often, we think we are left with no choice but to grab what’s available. They say beggars can’t be choosy. But in terms of finding the right lender, consumers should check whether their chosen one will be of help or would worsen their financial condition.

When it comes to taking out a personal loan or a payday loan, choosing the most reliable lender is essential. Here are five signs you should take into consideration before applying for a short-term loan:

1. The lender has a good reputation

Customer satisfaction reflects good lender reputation. Some moneylenders are accused of shaming their borrowers in many ways to the point of sending collection messages to their relatives and friends. Some even reach the end of revealing loan balances and an exact number of days and months of delayed payments. 

short-term lending


In some situations, the borrower’s friends and those on his contact lists receive a text from the lending company asking them for payment. In worse scenarios, the lenders are also accused of wrongly using the borrower’s information by disclosing unpaid balances to their friends.

A good money lending company professionally handles customer issues and loans. Their representatives do not resort to harsh means of getting paid and adhere to the cruel methods of obtaining loan payments.

2. The lender explains the terms and conditions

The lender should thoroughly discuss the terms and conditions of a quick cash loan or any loan. The borrower should understand the interest rate and repayment terms during the application process. Most borrowers fail to read and the terms and conditions before signing the loan agreement, eventually leading them to sign off with provisions they are not amenable with.

short-term lending


The most important aspect of the loan which you should understand is the type of interest imposed on it. There is a big difference between a variable rate loan and a fixed-rate loan. There are times when the loan cost will rise unexpectedly because you, as a borrower, agreed to the variable-rate one.

3. The lender explains charges

Section 4 of Republic Act 3765 stipulates that a creditor should furnish every borrower with a clear statement of applicable rates and charges. 

Borrowers should be aware of:

* The total borrowed amount

* The total amount to be credited

* The difference between the amount borrowed and the amount received by the borrower

* Itemized charges entailed with the transaction

* Finance charges in pesos and centavos

* The interest charges and annual rate to be paid

4. The loan application process is quick and easy

The primary purpose of borrowing money is to address financial emergencies. Borrowers are willing to pay the high-interest debt for as long as it can fill in the need immediately. Lenders that take time to release your money from the date of agreement may not be the refuge you are searching for. Worse, the interest charges are already implemented at the time of loan approval and not when your loan reaches your pockets.

short-term lending

5. The lender does not force you to borrow more than what you need

Most predatory lenders or loan sharks persuade you to borrow more than you need. Higher loan amounts mean more earnings for the lender, especially when interest rates are excessive. Remember that borrowing more than what you need to pay at the moment will pose higher risks for you to get out of debt. The goal is for you to pay off the loan as soon as you can.

Is the lender legit?

Online loan applications are a trend nowadays. The ease of use prompted a lot of borrowers to apply through apps and browsers and get instant cash. The urgency of the situation can sometimes prevent you from checking whether the lender is legitimate or not.

Before borrowing, make sure that the creditor is registered with a Certificate of Authority to operate issued by the Securities and Exchange Commission (SEC).

Although lenders mainly operate online, a physical location is a must before securing a license to operate. A branch, a satellite office, or a head office makes it easy for you to visit in cases of inquiries and disputes. A moneylender without a brick-and-mortar address may not have secured its proper permits from the SEC. Based on the provisions of the Lending Company Regulation Act of 2007, the lender should have approved the physical location. Do note that the company should submit NBI clearances of the manager, cashier, and administrative officers of those who will be manning the branch.

Bear in mind:

Borrowing money is a risky option, especially if you land in the hands of a lousy lending institution. Before sending the application or clicking the apply button, it would be wise to plan your loan. Think of the best loan amount and payment option you can handle. Then, shop around for short-term lending companies. A lot of borrowers no longer spend time comparing their options. Some would immediately download the app, register, and reveal their personal information. In other cases, you are also allowing the app to access the data on your mobile phones and other devices.

Comparing with GoBear can help you understand each company’s loan features. Comparing will ensure that you understood all aspects of the loan and that borrowing truly helped you get out of financial misery.