CASH LOAN 101:
Because it pays to be informed!

September 24, 2020 | by HC Mutual

What is a cash loan? Is it different from a personal loan?

A cash loan, also commonly known as a personal loan, is an unsecured loan (meaning it does not require collateral such as a car or a house) that can be used for almost anything: from home renovation, emergency medical bills, or even capital to start a small business. Unlike secured loans, personal loans are backed only by your promise to repay the lender, which ranges from banks, peer-to-peer lenders such as a cooperative, and other financial institutions like HC Mutual.

What you need to know about personal or cash loans

When you take out a personal loan, the lender will charge interest as a fee for lending you money. Effectively, you will be repaying the amount you borrowed plus interest through monthly repayments over a set time period. Because personal loans are unsecured, interest rates often go as high as those for credit cards. (However, some lenders may offer lower rates under certain conditions, e.g. if you already have a savings account with that particular bank).

  • Advantages: they are easier to apply for than auto loans or a mortgage, and you get the cash upfront as a lump sum in a matter of days—handy if you need cash quickly
  • Disadvantages: spreads the cost of a purchase over several months or years

To know your eligibility as a borrower, lenders usually look at your income, credit score, and other standing debts. The amount you can borrow usually depends on your income and your existing account with the institution (if applicable). To get the best offers on personal loans, it’s best to have a history of on-time payments, a steady income, and a low income-to-debt ratio.

Common features of a personal loan

Interest rates may be fixed or determined by the lender based on your creditworthiness and length of loan

Paid back in fixed monthly payments typically over the course of 6, 12, 18, or 24 months

Some loans may feature increasing interest rates for longer payment terms

PREPARED FOR ANY OCCASION.

The HC Mutual KayaMo Cash Loan is a fast, multi-purpose loan you can avail without touching your hard-earned savings. 

  • Get preferential interest rates for personal loans up to P500,000*
  • Same day cash release via direct deposit
  • Applications 100% online for safety and convenience

*Depending on total amount of paid up subscriptions with HC Mutual

4 TIPS FOR GETTING A PERSONAL LOAN
1

Get pre-qualification from multiple lenders
You can do this to find out how much each lender is willing to loan you given your credentials, and their terms and conditions. (Doing this will not affect your credit score. Learn more about credit scores here.) Use these to compare your offers from multiple lenders to see what’s best for you.

2

Read the fine print
Did you know that indicated interest rates do not fully reflect the loan’s true cost? It is always best to have all the information before you make a decision, and lenders are required by law to give you these if you inquire:

  • Other charges to get the loan such as closing fees, origination fees, processing and document preparation fees
  • Charges related to loan servicing, such as late payment fees or NSF fees (overdraft or non-sufficient funds)
  • Benefits, such as payment holidays

CASH LOAN TIP: 
Some lenders charge prepayment penalties for overpaying or paying off the loan earlier (e.g. paying in full in 6 months for a 12-month loan).

3

Compare offers
When comparing loans, make sure you’re looking at similar offers with the same type of interest rate structure. Here are some things to consider:

CASH LOAN TIP: 
For some lenders, it actually costs you less to borrow more, meaning you pay less interest and get more of the loan value by getting a slightly bigger loan.

4

Save on personal loans
Personal loans are monthly liabilities. Know how much interest you’ll have to pay over the whole life of the loan, and how long it will take you to pay off given your monthly budget. Our advice: Only borrow if needed, planned and budgeted, borrow as little as possible, and repay as quickly as possible.

  • Make more frequent payments
  • Pay more than the minimum amount monthly
  • Set up automatic payments to avoid late fees and extra interest charges
  • Make bigger payments when you can
Conclusion

Personal loans may seem like a quick solution, but you still have to shop around and compare to find the right one that fits your need, your capacity, and your financial situation to make sure you maintain healthy and sustainable finances in the long term.

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