A concerning trend among my generation (24 to 34 years old) is the use of online lending applications to supplement financial needs.
There had been recurring talks among people my age who became buried in loan payments and now, multiple lending agents are calling them all at once to collect dues.
It is worrisome and I personally feel anxiety about hearing these kinds of problems. As much as I wanted to help, I am also paying off a personal loan I took to invest in some value-adding assets for my career.
It is perfectly understandable that people my age would now be financially responsible for many things, raising a family, house bills, businesses, and medical expenses. Loans really help offset the immediate costs with the guarantee that you can pay them over a long period of time.
With more people getting access to credit, it is no wonder that banks like BPI are reporting a 90 percent increase in personal loans in the first quarter of 2023.
However, many people who have no access to credit are tempted to use non-bank, no-collateral online lending applications such as Snapera, Wowpera, Loan Quick, Pera Lending, MocaMoca, Peso Loan, Pera Moo, and Pautang Peso.
While taking out loans in these apps is very easy and requires little to no requirement to get approval, the interest rates are often high and their collection methods are unconventional.
A friend who found themselves buried in loan dues has been threatened that their personal information will be leaked online. Their fear is that their company may find out about the problem this way, and they will lose their job.
I am concerned for the people who are going through the same thing as it must take a great deal of mental toll and pressure to owe more than they earn.
Central Bank Governor Felipe Medalla recently said that with the rise of non-bank lending, people are at risk of overborrowing. He said people should not borrow more than they can pay.
I take this statement to heart. Borrowing money is sometimes unavoidable, but it is an adult’s responsibility to pay back those loans.
If you find yourself in need of borrowing money, here are some tips I can give you:
Take a loan from a reputable bank.
Bank loans are safer and will only offer you a limited amount you are capable of paying off according to your credit score. They require deposit collaterals and a lot of requirements, but that also assures you that if you miss a payment, you will still be able to pay off the loan.
Opt for online lending apps regulated by Central Bank.
Use apps such as GCash that offer loanable amounts according to your credit score, which increases or decreases depending on how much you use the app.
Take out loans in government-run institutions such as SSS and Pag-Ibig.
These two institutions offer loans to their members with low interest and realistic payment plans. SSS salary loans are payable for two years and take a very minimal amount from one’s monthly salary.
Don’t take out a loan to pay off another loan.
For personal loans, stick to one or two loans at a time. Maintaining multiple loans at a time is digging one’s grave and can easily cause you to overborrow.
Keep track of dues and deadlines.
Personally, I use an Excel file to map out my monthly dues and how much I need to allocate from my income to pay off a loan as fast as I realistically can. Keeping track of your loan payments avoids incurring penalties.
I do not judge people who have found themselves buried deep in loan dues and payments. There is no condemnation for needing money and finding the solution in lending apps.
However, if we can just save one single person from falling into this fate, we might save a life from destruction.