Wazzup Pilipinas!
There are many reasons to get a bank loan in the Philippines, whether it’s for personal or business purposes. The problem is that sometimes, you might be borrowing at the wrong time. When you take out a loan at inopportune moments, you might end up buried in debts. In short, before getting any loans Philippines-based banks are offering, you should get the timing right. This way, you can create more opportunities and ensure that you’re getting the most value out of the money you borrow.
That being said, here are five best times when you should definitely consider getting a bank loan in the Philippines:
When You Want to Consolidate Your Debts
If you have multiple active loans (with different due dates, no less), it’s a good idea to get a personal loan and consolidate your debts. Doing so will not only be more convenient but can also help you save more money in the long run. For one, consolidating your debts means you only have one due date to worry about. Thus, you’re less likely to miss a payment deadline and in turn eliminate the need to pay overdue fees.
When you take out a loan for debt consolidation, you also end up with lower interest rates. This is especially beneficial if one or more of your active loans have higher interest rates. In addition, consolidating your debts can make it easier for you to budget your money. You’ll be able to choose more flexible payment terms, which can further make money management more convenient.
When You Have Emergency Expenses
First, let’s set things straight: the best way to deal with emergency expenses is to still have an emergency fund. This fund should ideally be worth 3 to 6 months of your income so that you don’t have to stretch your budget too tight. That said, there are times when your emergency fund still isn’t enough to cover your sudden expenses. In this case, getting a personal loan is a viable solution.
Obviously, you have to qualify what truly constitutes an emergency. Don’t take a loan for the purpose of buying new gadgets or traveling to your dream destination; these are expenses that you can save up for. Instead, evaluate the consequences of a situation. If the price of not shelling out money is too steep, then it’s probably a good idea to consider a personal loan.
When You Want to Make More Money
Investing in things like online courses or certifications is a worthwhile cause, especially if it opens more opportunities for you to advance your career. Obviously, you have to do your research and make sure that such opportunities will work out in the end. Otherwise, you’ll be stuck with a debt that you can’t pay.
You may also want to consider money to invest in stocks or properties to accelerate wealth building. Again, however, you have to do your research. Remember that the more money you invest, the more money you can also make. On the other hand, borrowing money to make an investment is a high-risk strategy. You may end up making a lot of money or losing a lot of it. Make sure that you understand these risks before deciding on getting a loan.
When You Want More Capital for Your Business
If you’re running a small business, you’re going to need money to sustain your daily operations. This money is called the working capital and not having enough of it to go around might cost you significant losses. As such, you may want to take out a bank loan that’s specifically for micro-entrepreneurs or small businesses. Different banks have different requirements, but most will need your business to be registered with the proper authorities.
With more working capital, you’ll have a little more peace of mind and you can then focus on growing your business. You might even soon be borrowing more money for the next reason that will be discussed below.
When You Want to Expand Your Business
If your business is already doing well and you want to expand your operations, you might want to consider taking out a loan. You can then use the money to acquire new property, invest in new equipment, or develop new products. Do note that there are different kinds of business loans, such as secured and unsecured loans (non-collateral and collateral). Depending on your business’s needs, as well as your capacity to pay, there are certain advantages of one over the other. Study them thoroughly before you make a decision.
What you have to remember is that not all loans are bad. Indeed, you’ll find that even the richest people and most successful businessmen still borrow money from banks. The key is to be strategic. Don’t just take out a loan on a whim, but rather have a solid plan for the money you will borrow.
Ross is known as the Pambansang Blogger ng Pilipinas - An Information and Communication Technology (ICT) Professional by profession and a Social Media Evangelist by heart.
