We get it, applying for a loan can be a daunting process especially when you’re not sure about what you’re getting into. Because not many people are familiar with the process of securing a loan, there’s quite a number of assumptions being passed around that are actually incorrect. Here are the four most common loan myths and why you should not believe them.
Myth #1: All online loans are scams
Given the many horrible things some people experienced when applying for a loan online, it’s understandable to have doubts when it comes to choosing where to apply for a loan. The most important thing to remember is that legitimate banks or lending companies DO NOT ask you to pay for any fees before they process your application. It is considered a red flag when someone approaches you to encourage you to apply for a loan and asks for a fee up front.
Make it a habit to check accreditation from government mandated institutions like the Bangko Sentral ng Pilipinas (BSP) or the Philippine Deposit Insurance Corporation (PDIC) who govern banks like CIMB Bank to make sure you are working with a trustworthy banking institution.
Myth #2: Getting a loan may bury you in debt
It’s a common belief among Filipinos that getting a loan will sink you into debt. This could not be any more wrong. Getting a loan does not equate to a huge debt especially if you’re being responsible with your loan payments.
In fact, getting a loan can even give you financial leverage in two different aspects. Firstly, you get access to funds that you need the most at the moment. Secondly, it triggers you to have an existing credit history. If you make sure that you're a responsible loan borrower, it will be easy for you to get a good credit score. Thus, giving you more chances to get access to new credit in the future.
Myth #3: Applying for a loan is a complicated process that requires too much paperwork
Securing a loan does not have to be as complicated as everyone thinks it is. With proper research, you can easily understand how the application process works. Usually, lenders need to verify first your identity. Then, they perform credit and background checks to see how much risk they need to take if they lend you capital. This process could be as short as one day and up to 7-10 days depending on the bank or credit company.
To make sure that your application runs smoothly, be ready with the proper documents that may be asked of you. Banks and private lending companies usually require a proof of identification and a proof of income. Your proof of identification can be a valid government issued ID, which you may already have or you can avail of at your local government office.
If you’re currently employed, you may request a proof of income from your company’s Human Resources department which may come in the form of your payslip, Certificate of Employment, or BIR forms 2316 (W2) or 1700. If you’re self-employed, you must prepare some proof of how you’re going to finance your loan. It can be a DTI or SEC registration of your business, Mayor’s Permit, and BIR form 1707 or a bank statement from the business owner from the last six months.
These requirements, of course, may vary from one institution to another so it’s best to do your research first on what documents you need to prepare when applying for a loan with a specific bank or lending company.
Myth #4: Loan fees can rack up
While getting a loan does not come cost-free, it does not mean that you can get buried in fees. Some common fees like disbursement fees and early settlement fees may be avoided when you apply for a loan in institutions like CIMB Bank.
The only way you can get charged with more fees than usual is when you don’t keep up with your loan payments. That’s why you have to make sure that you’re always on top of your monthly loan dues to avoid unnecessary charges.
With CIMB Bank’s Personal Loan, you are sure that you’re working with the Most Awarded Digital Bank in the Philippines. You can enjoy ZERO disbursement fees when you opt to have your loan deposited to your CIMB Bank account. Absolutely no early settlement fees. Apply for a Personal Loan with just 1 ID and 1 Payslip.
PLUS you can get up to 30% interest rebates on your Personal Loan just by paying your dues consistently and on time. Through the Loan Loyalty program, you can enjoy yearly increasing interest rebates starting with 10% for the first year and up to 30% by the fifth year. All you need to do is pay your monthly loan payments completely and on time! If you’re a CIMB deposit account holder, just apply and get approved for a Personal Loan on or before August 31, 2020 to become eligible. Make a move towards your financial goals!
Learn how you can apply for a Personal Loan using the CIMB Bank PH App: