What is a quick loan and how does it work in the Philippines?
A quick loan is a type of loan designed to provide fast cash with minimal requirements. Online quick loans have become incredibly popular in the Philippines because the whole application process can be completed from a smartphone or a computer.
Quick loans online are without collateral, and the application process requires minimal documentation. The loans are approved fast, sometimes within minutes, making it possible for the recipient to access the borrowed money on the same day.
The speed of approval and access to funds makes quick loans ideal for emergencies or unexpected situations. The amount of money you can borrow via a quick online loan is smaller, often up to ₱25,000 and has a short repayment term. However, the interest rates can be higher.
While quick loans are convenient and easy to get, it’s important to understand how they work and how much they cost.
What is the application process for quick online loans?
The quick loan application process is completely digitalized. You fill out an online form, upload your ID and documents, and wait for approval.
Steps in finding the best quick cash loan and applying for it
To find the best quick cash loan in the Philippines, start by comparing loans offers and lenders. On Moneezy’s website, you can quickly find and compare loan offers from top lenders.
Fill out Moneezy’s online application form with your information and the loan amount you would like to borrow.
Get pre-approved from lenders for the loan amount you need.
Compare loan offers and choose the one that best fits your needs.
Confirm your loan application with the lender and fill out any additional information.
Get pre-approved from lenders for the loan amount you need.
Receive approved loan agreement from one or more lenders. Read the loan agreements through and only sign when you have understood all the costs and potential penalties.
Once the loan is approved and signed, money will be transferred online or ready to be picked up at a payment partner.
How quick are quick loans, processing time
Online quick cash loans are known for their speed. Many lenders approve smaller loans in a matter of minutes. Larger amounts may take longer and additional documents.
Once a quick loan is approved, money is transferred on the same day.
Typically required documents for a quick cash loan:
A valid government ID
Proof of income
Active mobile number and email address
Different online lenders may ask for more documents before or after they review your online loan application.
Quick cash loan without collateral: is it possible?
Many online lenders offer quick cash loans purely based on your income, credit history, and ability to repay. That’s why they often require only a valid ID and proof of income instead of collateral.
Lenders take on more risk when they give out loans without collateral. This comes with its pros and cons for the borrower.
Here are the advantages and disadvantages of no-collateral quick loans:
Faster approval
Less risk of losing personal property
Simple online application process
Higher interest rates
Lower loan amounts
Stricter loan terms and penalties
Costs and Fees of Quick Loans Online
While quick loans online are fast and convenient, it’s important to understand the costs involved.
Interest Rates vs. APR of quick loans
When looking for quick loans, you’ll often see lenders advertise a low monthly interest rate. The monthly interest rate for some loans can be as low as 0,01%. But that is not the total cost of the loan.
Interest rate is the basic charge for borrowing money, usually expressed on monthly basis for quick loans in the Philippines.
Loan fees are extra charges for administrating the loan, that lenders add on top of interest, for example processing or service fees.
APR (Annual Percentage Rate) includes not just interest, but also the additional fees, giving you the true cost of borrowing over a year.
Let’s take a loan example:
A loan is advertised with a 1% monthly interest rate, but has an APR of 36%, when all fees are included.
How much is the total cost of the loan?
Loan Amount: ₱10,000
Loan Term: 3 months
Monthly Interest Rate: 1% = ₱100 per month
APR (interest rate + fees): 36% = ₱ 900 for the 3 months loan period
Total cost of the loan: ₱ 10,900
NB: This is just an example of the cost of a quick loan with APR: 36%. All loans in the Philippines are subject to the individual lender’s terms and approval.
Quick online loan fees
When you take out a loan, the costs always go beyond the interest rate. It is a normal practice both with quick loans and with bank loans. Each lender in the Philippines has their own list of fees.
Let’s look at the common loan fees that lenders charge:
Processing fee – charged for evaluating and setting up the loan.
Service or administration fee – covers administrative costs, such as maintaining loan records in their system, sending payment reminders or statements, processing payments and updating balances.
Document verification fee - some lenders charge a fee for verifying your ID, employment, or other documents.
Disbursement fee - some lenders deduct a fee for transferring the loan to your bank account or e-wallet.
Quick loan penalties
There are situations when loan penalties can be applied. Penalties can significantly increase the total amount you have to repay. Here is what you have to watch out for:
Late payment penalties – extra charges if you miss a payment deadline. Some lenders charge a specific amount; other ones calculate a percentage of the overdue amount. To avoid a late payment penalty, make sure to pay your monthly instalment on time.
Pre-termination penalty – charged if you pay off your loan early. Not all lenders impose this one, but some do to recover potential loss.
Knowing about loan fees, penalties and APR helps you avoid surprises and borrow smarter. To avoid unpleasant surprises, always read the loan agreement and check the APR of the loan you applied for.
If you are uncertain about the costs of the loan, ask the lender for a full cost breakdown.
Are you ready to compare and find the best quick loan for your needs?
