Are you looking to buy a new home, renovate a portion of your old house, or start a new company? However, for some reason, you are short on cash and are desperately searching on Google for how to get a loan in the Philippines. Well, your financial objectives are well within reach now. Thanks to the Securities and Exchange Commission’s recent cap on interest rates imposed on lending organizations, you can now get a loan at relatively lower rates.

Borrowing money is a considerable risk that may ruin your finances if you don’t handle your loans properly. However, it is always better to consider the option of a loan from a well-established company like Home Credit to meet your monetary demands instead of going for a personal loan from a random lender, which can be much costlier.

The company began its operations as a money-lending service provider in 2013 when personal loans became a popular payment option as a big-ticket product. The company also provides lending facilities for home appliances and electronics. The organization has since expanded its activities to include personal loans to employees, entrepreneurs, self-employed professionals, and retirees.

What is a Home Credit personal loan?

Home Credit’s most popular financial instrument is the personal loan. It follows a pay-later model that lets borrowers pay monthly payments for big-ticket products like computers, telephones, gadgets, musical instruments, furniture, and household appliances. The company also allows non-credit cardholders to apply for a personal loan.

The loan facilitates people looking to borrow a small amount of money. Those with no credit history, especially people working in unorganized sectors, can apply for it with minimal documentation. Home Credit also offers quick personal loans for any financial need. You can use the loan proceeds for different purposes, such as starting your businesses, renovating your home, upgrading your appliances, or paying for your kids’ tuition.

What are the major types of Home Credit loans?

The company only offers one type of personal loan which is evaluated on the basis of the applicant's credit history with the company. This loan is given out as an unsecured loan to the borrower, which means they do not have to provide any collateral against it.

Most of the personal loans offered in the Philippines are unsecured or non-collateral. Through the company's personal loan service, you can borrow a minimum sum of ₱2,500, while the maximum amount depends on the borrower's credit history and the offer they receive from the company. The loan tenure can range from 1 to 60 months depending on your loan offer.

An appraiser from the financial institution determines the value of the collateral and the amount of money that may be borrowed. This form of loan is commonly utilized in the Philippines to pay medical costs, finance business initiatives, and renovate homes, among others.

How to apply?

Applying for a personal loan is simple. There are three methods through which you can apply for a personal loan; you can select whichever is more convenient for you.

Home Credit app or website.

• Log in to your account using the Home Credit app (download the app from the Google Play Store or App Gallery if you don’t already have it on your phone).
• Click the Personal loan banner once you’re on the home page.
• Choose your preferred loan amount and loan tenure. Continue after analyzing the information.
• You’ll be sent the application for a personal loan. Prepare your personal information and two acceptable identification cards (postal ID, NBI clearance).
• Make sure that all of the information is accurate. Tap Submit when you’re finished.
• You’ll be able to monitor the progress of your application after one to two minutes of submitting it. If your application has been approved, the Sign the contract button will appear on your screen.
• To sign your personal loan contract, tap the corresponding button. After you’ve signed the contract, the company will send you a text message with instructions on how to retrieve the loan.

Tele application

You can also apply for a Home Credit personal loan via phone. Just call any of the following hotlines:

• Telesales Hotline - (02) 7753 5714
• Smart, PLDT, Sun, TNT - 1800 10 234 3000
• Globe - 1800 8 905 0303

Follow the instructions of the telesales agent to finish your application. For contract signing, take the following steps:

• Wait for the text message informing you of the application’s status. If your application is approved, the text message will have a link to direct you to the contract.
• To access your contract’s log-in page, click the link. Then, enter the loan account number from the SMS message. You’ll also have to fill in the text message’s recipient’s phone number.
• After entering the information required, click Log in. You’ll be sent to the personal loan contract after that. Read everything carefully, including the terms and conditions.
• After reading the contract, tap the Check button in the terms and conditions before proceeding.
• You’ll be sent to a new page that asks for a one-time password. Check your phone and enter the password you have received. Then tap the Submit button.
• You’ve signed the loan. The methods for claiming your loan profits are outlined on the next page.

Partner stores

Applicants can also apply for an in-store personal loan. The steps are as follows:

• Choose any of the available partner stores.
• Approach a store employee and ask about the personal loan you are interested to take.
• They will brief you about all the terms and conditions; after that, fill out their application. Remember to carry two acceptable government-issued identification cards.
• Submit your application to the salesperson.
• With that, you have successfully submitted your application. Now, wait for the update, which will be sent to your registered mobile number.

What are the main requirements for getting a personal loan?

Multiple documents are required to apply for a loan. It’s critical to be aware of them ahead of time so that you don’t run into any issues afterward. The documents you’ll need are listed below.

General requirements

• At least one government-issued ID
• Marriage contract (if applicable)

For locally employed

• Latest copy of the employment certificate indicating salary, position, and length of employment
• Latest payslips

For overseas Filipino workers

• Latest employment contract of employment
• Latest working visa
• Latest payslips or remittance slips
• Special power of attorney (bank format)
• Consularized copy may be required if issued abroad

For self-employed/self-employed professionals

• ITR for the last three years
• Audited financial statements for the past three years
• Business registration documents (DTI, Mayor’s permit, etc.)
• PRC ID (for professionals)

How to repay?

You can repay your personal loan in multiple ways.

Auto-debit arrangements (ADA)

If you want to automate the loan repayment process, ADA is the best option. You can create an auto-debit mandate from banking partners like BDO, BPI, Metrobank, RCBC, Security Bank, PNB, and Union Bank.

Steps to repay using ADA via Home Credit Appication

1. Open the application and click on Pay.
2. Select Auto-debit arrangement and click Set-up now.
3. Go to the Debit-card section and click on Add card.
4. Read the terms and conditions and click on Continue.
5. Now, enter the details for your card and click on Continue.
6. Confirm your enrollment by clicking on the Confirm & enroll button. With that, you have completed the setup.

Pay online

Users can use either their app or the official website to make online payments.

1. Open the My account section, and click on Pay Online.
2. Here, enter the amount you want to pay.
3. Select your preferred payment option
4. Click Confirm payment to process your payment.

Over-the-counter payment

Users who don’t have access to online banking services can also opt for over-the-counter payments. They can visit any near partner store and deposit their payments to the executives present there.

Tips to repay your loans faster

Make bi-weekly payments. Home Credit allows applicants to make payments once every two weeks. Using this approach, you will be able to make 26 half-payments each year, which translates into an extra full payment on the year, thereby shortening the life of the loan by several months or even years. If you choose this method with a 30-year mortgage, you can shorten it to 26 years.

Round up your monthly payments. If your auto loan costs you ₱220 each month, bring that number to ₱250. The difference is too small to make a substantial dent in your budget but large enough to knock a few months off the life of your loan and save you a significant amount in interest. For a potentially even bigger impact, consider bumping up your payments to the nearest ₱100.

Make one extra payment each year. If the thought of bi-weekly payments seems daunting but you like the idea of making an additional payment each year, you can accomplish the same goal by committing to one extra payment a year. This way, you’ll only feel the squeeze once a year, and you’ll still shorten the life of your loan by several months or even years. Use a work bonus, tax refund, or another windfall to make that once-a-year payment.

Refinance. It is one of the best ways to repay your loan early. If interest rates have dropped since you took out your loan or your credit score has improved dramatically, this can be a smart choice. It’s important to note that refinancing makes the most sense if it can help you pay down the loan sooner. You can accomplish this by shortening the life of the loan, an option you may be able to afford easily with your lower interest rate.

Pros and cons

Still on the fence about applying for a personal loan? Understanding the upsides and downsides of this loan may assist you in making a wise decision. Here are some upsides and downsides of a personal loan.

Pros

• Easy & fast approval. As long as you have complete requirements, you can get approved in minutes.
• Flexibility. You may tailor your payment plan with Home Credit loans. These features may assist anyone with a limited budget finance a large purchase through monthly installments without using a credit card.
• Loan management made simple Borrowers may use the company's app to keep track of their improved loans and avoid missing payment deadlines. They may see information about their loans, such as their payment schedule, status, and the personal loan offer.
• Options for early repayment Customers can return the entire loan amount with 2021 Home Credit Philippines before the term finishes. If the complete payback is made within 15 days of the contract signing, you will not be charged any interest or fees.

Cons

• High rates of interest. Because you’re still borrowing from a private lender, the major disadvantage of Home Credit loans is the high-interest rate. You may use its regular loan calculator.
• A simple way to amass debt The issue with purchasing gadgets, appliances, and other comparable products is that they depreciate assets, meaning they lose value over time. Unless you’re buying a phone for your business or a laptop for your freelancing work, the owner isn’t usually generating much use of that spend.
• Possibility of earning unnecessary debt When you have an easy way of purchasing big-ticket items without credit or collateral, it can be quite easy to rack up debt from expensive tech items and appliances. Be sure to loan only when necessary to keep your finances healthy.

Legal regulation of personal loans in the Philippines

All loan agreements must specify general terms that define the legal obligations of each party. For example, the terms regarding repayment schedule, default or contract breach, interest rate, loan security, and collateral offered must be clearly outlined.

There are standard legal terms involved in a loan agreement that all sides should know, regardless of whether the contract is between family and friends or between lending institutions and customers.

• Involved parties This refers to personal information about the borrower and lender that should be clearly stated in the loan agreement. That information should include the names, addresses, social security numbers, and phone numbers of both sides.
• Choice of law This term refers to the difference between laws in two or more jurisdictions. For example, the laws governing a specific part of a loan agreement in one state may differ from the same law in another state. It is important to identify which state laws will apply.
• Severability clause This term states that the terms of a contract are independent of each other. Thus, if one condition of the contract is deemed unenforceable by a court, that doesn’t mean all conditions are unenforceable.
• Entire agreement clause This term defines the final agreement and supersedes any agreements previously made in negotiations, whether written or oral. In other words, this is the final say, and anything said or written before no longer applies.

The real cost of a Home Credit loan

According to their official statement, the effective interest rate (EIR) of Home Credit's personal loans in the Philippines ranges from 29% to 75%. EIR is the rate that measures the actual cost of borrowing your loan. Home Credit does not provide the information on additional fees, but the actual cost may include:

• The monthly interest charge ranges from 1.2% to 3%. The interest rate is applied to the total amount due or outstanding balance. The interest is compounded monthly, and borrowers continue to pay it until the loan is fully paid. The overall interest rate depends on the amount you are borrowing and your credit score.
• Processing fee. Lenders charge a fixed service fee to cover the cost of processing the loan application, including credit checks and administrative costs. The loan processing fee is deducted from the loan amount. When computing how much to borrow, take this fee into account to make sure you’ll get exactly the amount to cover your financial need. The company's applicable loan processing fees are around 3% of the total loan amount. For example, if you borrow ₱10000, the processing fees will be ₱300, and the amount you will receive in your account will be ₱9,700.
• Membership fees. If you want Home Credit to issue a credit card under your name, the bank charges an additional membership fee of ₱75 every month from the day of its activation.

Conclusion

The application process for a Home Credit personal loan is straightforward. If you are in a crunch and want to take a quick personal loan to get out of that situation, the Home Credit loan is a good option for you. However, be aware of debt traps. Constantly evaluate how a loan will affect your finances before applying for one, primarily if the lender uses high-interest rates.

If you have any questions or concerns about your proceeding with a loan, you may contact the company's customer service department in various ways: online form, call, or email. You can receive answers to your questions or offer ideas regarding any services using the online form.