Column: Loose Change by Ben Kritz The interest rate does drop for later loans that have a short repayment term of 7-10 days – one lender, ...
Column: Loose Change
by Ben Kritz
The interest rate does drop for later loans that have a short repayment term of 7-10 days – one lender, Loan Ranger, offers a P10,000, 5-day loan to eligible customers at just 3.25 percent interest – but if a longer repayment term is needed, the interest rate increases sharply; the rates for a P10,000 loan for 30 days average about 27.4 percent, with the highest interest charged (by Robocash, which has some of the easiest eligibility requirements) being over 65 percent.
Because the online cash loan business is still relatively new, there have been a number of complaints about companies’ customer service and aggressive collection practices, although to be fair, a majority of customer reviews do seem to be positive. Some companies are difficult to reach in case of questions or concerns, and there have been a number of issues where customers have not received their money despite being approved, or have not had their payments properly credited.
And of course, making late payments or not repaying the loan in full can have disastrous consequences. The lenders all impose penalty fees on top of the loan and interest due, and thanks to the improving credit reporting system in the Philippines, a bad record will not only make a borrower ineligible to borrow from the same lender, it will make it difficult to get approved for loans from other lenders. On the other hand, managing a few small loans properly can help a borrower build up a good credit record, which will be helpful in the future when he or she has the opportunity to borrow for more substantial purposes, such as buying a house, a car, or major appliances.
Still, the high interest rates make online cash loans difficult to recommend, and when I am asked for advice about it, I usually suggest they’re best avoided unless one really has a critical need for cash and no other options. The most important thing to remember to avoid running into trouble is not to borrow from an online cash lender in the first place, unless you are certain you will have the entire repayment amount from a reliable source – salary, pension payments, or remittances – at least two to three days before the loan’s due date. Keep careful records of all your transactions with the lender as well; save any paper receipts, emails, or text messages, just in case a dispute arises later.
Ben Kritz holds a Master’s degree in Economics and is a former auto industry executive, and writes the thrice-weekly Rough Trade column on business and the economy for The Manila Times. You are welcome to send him your questions and comments at benkritz@outlook.com, or follow him on Facebook and Twitter.
The interest rate does drop for later loans that have a short repayment term of 7-10 days – one lender, Loan Ranger, offers a P10,000, 5-day loan to eligible customers at just 3.25 percent interest – but if a longer repayment term is needed, the interest rate increases sharply; the rates for a P10,000 loan for 30 days average about 27.4 percent, with the highest interest charged (by Robocash, which has some of the easiest eligibility requirements) being over 65 percent.
Because the online cash loan business is still relatively new, there have been a number of complaints about companies’ customer service and aggressive collection practices, although to be fair, a majority of customer reviews do seem to be positive. Some companies are difficult to reach in case of questions or concerns, and there have been a number of issues where customers have not received their money despite being approved, or have not had their payments properly credited.
And of course, making late payments or not repaying the loan in full can have disastrous consequences. The lenders all impose penalty fees on top of the loan and interest due, and thanks to the improving credit reporting system in the Philippines, a bad record will not only make a borrower ineligible to borrow from the same lender, it will make it difficult to get approved for loans from other lenders. On the other hand, managing a few small loans properly can help a borrower build up a good credit record, which will be helpful in the future when he or she has the opportunity to borrow for more substantial purposes, such as buying a house, a car, or major appliances.
Still, the high interest rates make online cash loans difficult to recommend, and when I am asked for advice about it, I usually suggest they’re best avoided unless one really has a critical need for cash and no other options. The most important thing to remember to avoid running into trouble is not to borrow from an online cash lender in the first place, unless you are certain you will have the entire repayment amount from a reliable source – salary, pension payments, or remittances – at least two to three days before the loan’s due date. Keep careful records of all your transactions with the lender as well; save any paper receipts, emails, or text messages, just in case a dispute arises later.
Ben Kritz holds a Master’s degree in Economics and is a former auto industry executive, and writes the thrice-weekly Rough Trade column on business and the economy for The Manila Times. You are welcome to send him your questions and comments at benkritz@outlook.com, or follow him on Facebook and Twitter.
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