- Credit Lines: A credit line is a type of loan where the bank or lender approves a loan amount for you, but unlike traditional loans, the entire amount is not transferred to your account. You can withdraw money from the account whenever required within the loan limit. The interest rates for such schemes tend to be on the higher side, but you can avoid penalties by timely repayment of the amount withdrawn. Credit cards are excellent examples of the line of credit loans.
- Payday Loans: A payday loan is an ultra-short-term loan to overcome your immediate financial crisis until the arrival of your next paycheck. The maximum loan duration would be a couple of days or your next payday. The interest rates would be very high, and the lenders may demand post-dated checks or access to your salary account as collateral.
- Installment Loans: Almost every major financial institution in the Philippines facilitates a user to convert his short term loans to installment loans. It enables the borrower to have a clear picture of his monthly financial obligations and helps him to plan his economic activities accordingly.
- Merchant Cash Advances: Merchant Cash Advance loans or MCA are popular among merchants who are reeling under severe financial stress. Here, the lender infuses funds to the merchant’s capital, and in return, he gets entitlement over a portion of the sales through credit cards for a specified period. Continuous loss of your sales revenue can pose a threat to your cash flow, but for many small businesses, such a loan can be a salvation.
These loans have different requirements, interest rates, and repayment terms. It’s essential to compare different loan options and choose one that best suits your needs and financial capacity. Additionally, it’s crucial to repay the loan on time to avoid penalties and maintain a good credit score.