Major life decisions such as starting your own business, making a downpayment for a condo unit or car, or purchasing tools to help you get started on a new career path often require you to pull from major financial resources. However, not everyone has funds to spare for such cases on top of their day-to-day expenses. One way to obtain additional funding for large expenses is by applying for a loan, which can be a big help in getting you closer to your goal.
Once you’ve decided on applying for a loan, however, the next step is to determine which lender to borrow from or what kind of lending program you want to join. Traditional banks used to be the most common option when looking for a lender, although online loans from digital banks have also been gaining more popularity over the years as these platforms offer a better and faster user experience and may even offer better terms and rates.
What kind of lender will suit your needs? To help you decide, here are some things you may want to consider as you choose a lender for large amounts of money:
1) Interest Rates
When you take out a loan, you won’t just pay what you owe; there’s also the additional interest rate according to the terms of the loan. If you’re planning to loan a large amount, then it’s all the more important to choose a lender with lower interest rates so that you won’t have to pay as much on top of your borrowed money.
Always compare interest rates as you’re shopping around for a lender. Even a small difference in interest rates could mean thousands of pesos saved when repayment time comes. Be aware as well about whether the lender offers fixed rates, meaning that the rate is constant for the entire loan period, or variable rates, meaning it may fluctuate based on market conditions.
2) Ease of Application Process
Some lenders may require various documentation for the loan application process, especially if you’ll be borrowing a large amount. Others may also ask for collateral, such as any property or personal assets. Such requirements can be a tall hurdle that not all loan applicants may be able to cross. This is where online lending platforms often shine, as they promise an easy application process that can be approved in an instant.
For instance, if you’re already a Maya user, then you can gain access to various lending options such as Maya Personal Loan and Maya Easy Credit by simply having an upgraded Maya account and meeting the age and residency requirements. Though approval for both programs is still subject to credit evaluation, unlike with traditional banks that can take weeks, Maya will be able to process your loan’s approval and issue instant feedback. You'll also be able to gain access to the funding you need much faster via your Maya Wallet. Once they’re there, you can immediately withdraw your funds via card or use them to make cashless payments via QR code.
3) Loan Terms and Repayment Period
As you’re choosing a lender, it’s also a must to review their terms and conditions, as these influence your monthly payments and total interest paid. For instance, a longer-term loan may seem attractive at first glance since your monthly payments will be lower, but this setup also results in paying more interest over time.
Meanwhile, shorter-term loans may have you paying less interest in total, but you’ll need to ensure you have the means to make those higher monthly payments. Carefully examine the loan terms offered by various lenders and you’ll be able to find one with a repayment plan that works best for your financial situation.
Maya Personal Loan offers the best of both worlds with loan terms as short as 6 months and as long as 24 months, with a 48-month payment term option coming soon. You’ll be free to choose the loan terms that best suit your needs.
4) Fees and Additional Costs
In addition to interest rates, some lenders may charge additional fees such as application processing fees and service fees once they transfer the funds to you. Thus, it’s important to look for a lender that’s transparent with their fees.
Make sure you carefully review all associated costs to avoid unpleasant surprises once you receive your funds. If in doubt, don’t hesitate to ask the lender for clarification and if you should expect any additional costs once you start your repayment period.
5) Timeframe of Funds Disbursement
If you’re planning to use your loan money for something time-sensitive—for example, a big purchase during a sale period so that you can get the item at a lower price—then finding a lender who can release funds quickly is a must.
While banks may take several banking days to release your funds, some online lenders could transfer your loaned amount to your e-wallet or other preferred account within seconds. You’ll be able to receive your funds as soon as your application is approved and have it in an account that is most convenient for you to access. Once you’re approved for a Maya Personal Loan, for example, your loan will be instantly disbursed to your Maya Wallet, ready for use immediately.
6) Reputation and Reviews of the Lender
With so many available lenders out there, it can be difficult to discern which ones are credible and which aren’t. Moreover, different lenders can have different terms, with some being more borrower-friendly than others.
To be assured that the lender you’ll be transacting with is trustworthy, check reviews first from other people who have borrowed from them before. This will clue you in on what kind of reputation the lender has and ensure they don’t have any red flags, such as a history of hidden fees or poor customer service. Choose a provider like Maya Bank that’s regulated by the Bangko Sentral ng Pilipinas (BSP), insured by the Philippine Deposit Insurance Corporation (PDIC), and is counted among one of the world’s best banks of 2024.
The right lender for a loan amount can be extremely beneficial, as they can help you obtain more favorable loan terms, save on fees, and get a repayment schedule that suits your financial means. If you’re planning to apply for a loan anytime soon, make sure you use the pointers in this article as a guide so that you can benefit from the most hassle-free loan management experience.
