Loans are not free money but rather an amount that is borrowed and repaid according to predetermined terms. The number of Filipinos taking out a loan rose sharply from 29% in 2017 to 41% in 2019, as revealed by the Bangko Sentral ng Pilipinas (BSP). This is to be expected, as increasing volumes of Filipinos are becoming aware of the importance of good financial management and the access to services like loans.

So how does a loan work? There are always two parties involved in a loan transaction: the borrower and the lender. After entering the deal, you are legally bound to follow the terms and conditions of the loan as stipulated in the contract.

There are a lot of money lenders in the Philippines, and they all offer different types of loans to suit your needs. Per loan, there is a list of who can get it and what they need to do to get it. Lenders make confidential records of qualifications that potential clients must meet. Before you apply for a loan, make sure you can get one. This will save you time and hassle. And suppose you obtained a loan from a bank but you were unable to settle it by the due date. Even though you were able to repay your loan the Credit Information Corporation will mark this in your credit history (CIC). CIC is a government-owned organisation that collects and distributes credit information.

Lastly, lenders make money off of the interest you pay on whatever loan you take out, including those for education, transportation, a home, or a business. The cost of borrowing money from a lender is known as interest. As a result, you won't simply return the borrowed funds. You'll have to fork up extra cash in the form of interest on the loan. For this reason, manage how you use it and assure it's for worthwhile reasons.