Online loan services come with fees and interest rates. Some fees are avoidable while some are mandatory. You need to take into account these fees to be able to accurately estimate the loan, and find an online lending platform that suits your needs, avoiding the risk of being charged unnecessarily expensive fees. Understanding fees also keeps you debt-free over time. If you need to find an online loan platform that openly and transparently publishes fees and interest rates, check out the MoneyCat app.
First of all, what is the “effective interest rate” (EIR)? EIR is known as the discount of estimated future cash flows over the loan term corresponding to the loan amount. In simpler terms, EIR is a ratio that measures the actual cost of borrowing.
EIR includes a variety of costs such as: monthly maintenance fee, application fee, personal loan processing service fee, etc. Most personal online loans in the Philippines have EIRs ranging from 10% to 30%.
What are components of personal online loans?
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So, what are the costs and details of personal online loans? Find out with us below.
Lending platforms will often charge a service fee for loan application processing which includes: processing costs for personal loan applications, credit check costs, and other administrative costs.
Personal loan processing fee is usually deducted from the loan amount. So, when calculating the amount to borrow, take this fee into account to make sure you get the exact amount to cover your financial needs. This is one of our advantages, unlike other lending platforms MoneyCat do not deduct any processing fee. The amount which is approved to our customers is the same we disburse.
Most platforms in the Philippines charge a loan processing fee of PHP 1,500 to PHP 3,000.
Disbursement fees aren’t as common as other personal loan fees, but they should be taken into consideration. In the Philippines, when applying for online loans, depending on the unit, you may have to pay a fee from PHP 10 to PHP 300.
Fees and interest rates you need to know before applying for online loans
This is an important fee that you must keep in mind. If you miss your payment due date, online loan platforms will often ask you to pay a late payment penalty fee. This fee ranges from 3% to 8% of the overdue amount or PHP 500 per month.
How is the late payment penalty calculated? For example, if you are late for a payment with a penalty of 5% and your outstanding balance is PHP 1,000, then the late fee penalty for your loan will be PHP 50.
To avoid this fee, make sure you always pay your monthly amortization by the due date.
The early payment penalty fee is also known as early payment fee, early termination fee, prepayment fee, accelerated installment fee or processing fee. In fact, several online lenders in the Philippines charge an early penalty fee if you pay off your loan before the due date.
If you think you can pay off your personal loan earlier than the due date, it’s best to choose online loans with no early payment fees. There are many loan companies and applications in the Philippines that do not charge early payment penalties to their customers.
In the Philippines, personal online lending platforms charge interest on the loan amount to be paid monthly. This interest rate is lower than credit cards. Therefore, online loans have become an effective financial solution for those who need quick cash in emergencies.
MoneyCat is transparent and clear about online loan interest rates applicable for the customers
At MoneyCat, we are transparent about online loan interest rates for our customers. For first time borrowers, the loan interest rate is 0% and there is no processing fee.
For the customers who borrow many times, the interest rate depends on the approved amount and term. But if you have a good credit score, you will get a better interest rate at MoneyCat.
Above is information on the fees and interest rates that you need to know before applying for online loans. Make sure you understand the costs involved to avoid the risk of high interest rates. If you are still confused in choosing an online lending platform with transparent and clear fees, check out MoneyCat.