April 9, 2008

Getting the Best Loans

Posted in debt, loaning at 2:47 pm by kimsan23

Loaning is something I would try as a last resort. As much as possible, I really want to be debt free. From experience, I have tried loaning and I was okay in paying and in case I’d ever need the money again, I would probably look to the best loaning agencies around.

My two cents on each loaning source:

1. FAMILY: I’m not too crazy about loaning from family members unless we’re really really close and I know I won’t get tied into something I might regret someday. Money is the root of most family wars, be careful when using this avenue. Whenever I get approached by a family member for a loan, if I do give it — I consider it gone.

2. FRIENDS: If you have REAL friends in high places – they would not mind too much unless they’re sensitive about money. Make sure everything is clear when you borrow from friends. Offer to sign an IOU form with them so that they feel secure about your intentions of paying. Get a lawyer to help you with papers. Believe me, your friends will feel better about things being in black and white.

3. LOAN SHARKS (“5-6” and the like): As much as possible, you don’t want to do this. Loans sharks ask for 5-6 – that means the interest is pegged at 20% of the total amount loaned. Many of these loan sharks are shady characters, they demand payment within a very small amount of time and some of them could very well harass you if you’re unable to pay. And by harassment, we’re not talking collection phone calls and credit statements, we’re talking unwelcome house visits and threats. However, they’re also the easiest to hide from — if you can afford to go and hide among some tribe in Africa.

4. BANKS: Bank rates vary depending on the type of loan. What you need to look at here are interest rates. Annual rates, monthly rates — make sure the interest rate is clear to you and that it was explained well by the person processing your loan. The good thing about bank loans is that they can approve high-amount loans, much higher than government agencies and credit card companies.

5. CREDIT CARDS: Many credit card companies now offer personal loans that could be carried into your card bill. This is dangerous. Most credit cards charge an interest rate of 1.5-2% per month. Whereas, if you loan from a government agency, you’d only be charged about 12% interest per year. When you add your card interest all together, it could add up to about 16-24% interest per year. However, you must admit that credit cards and banks are more efficient in keeping track of payment records. They’re normally up-to-date and updated in real time. Aside from that, credit cards also have very good customer service, most of them are 24/7. The approval time is also much faster than banks or government agencies.

6: GOVERNMENT: If you loan from a government agency, you’re sure to pay the lowest interest rates in the market and at the same time, you help the government too (well, that is, if you want to). If you have GSIS or SSS, I suggest you take out a small loan, not to spend it or use it but just to make sure you’re the one using your benefit. I’ve heard stories about people who try to take out an SS loan only to find out that someone else took out a loan in their name! Talk about cheating! To be practical about it though, government is on of the best choices when considering to take out small loans. The only catch is, the process is too slow for some people who prefer quick approvals. But money wise, this is the best choice.

I have tried taking out a loan from a credit card company at a discounted rate (they gave me that because of my good credit standing). That worked for me but only because I had no other debts. Think well before you borrow money from anyone! If your expenses can wait, wait.

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4 Comments »

  1. Good Blog. I will continue reading it in the future. Nice layout too.

    Aaron Wakling

  2. kimsan23 said,

    Thanks Aaron! đŸ™‚ Happy saving!

  3. frank said,

    Thank you!

  4. kimsan23 said,

    You’re welcome Frank!


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