28 Jun Borrowing from 5-6? Here’s Why We Don’t Recommend It And Some Alternatives
Why do we loan from money lenders? When faced with financial challenges, why does this seemed to be the first option that comes to mind?
In money management, awareness of what are the available options in the market is always the most important. And the options will only be widest and broadest when we build credibility and develop a habit of setting aside a portion of our income. Financial institutions like, banks, credit card companies, Life Insurance companies provide alternative vehicles to augmenting funds in times of uncertainties.
Always remember, starting early is always key.
I’d like to share with you the Pros and Cons of borrowing from 5-6 and the better alternatives to it.
1. It is easily accessible, that’s the reasons it is the first alternative that come to mind.
2. It is a no collateral, no document loan, which can be paid daily, weekly, monthly,
3. Collection arrangement made by the money lender or they will probably ask for your
Very high interest rates, minimum 20% and can go as high as 60% for a Php 500 peso loan, the interest is Php 100.00. So high that the interest rates are even higher than the loan amount.
Here are the better alternatives:
1.Credit Cards offer the following options;
a. 0% interest conversion of 3 to 6 months
b. Conversion to 12, 18 or 24 months with a minimal processing fee of 250.00 and monthly add on interest rates which can range from .70% to 1.5%.
c. in-store purchases for appliances, gadgets and department store items offers both buy now pay later, and instalment of 3 months to 6 months, 0% interest.
d. Balance transfer from Bank A credit card to bank B credit card at a reasonable add on rate of about .49 to 2% per month.
2. Did you know that your traditional life insurance coverage also offers loan on the cash value option with a very simple requirement of filling out the cash advance application form and presenting your valid ID. Interest are pro-rated at a yearly annual interest of only 10%.
3. You may also check out the nearest bank or Cooperatives for personal loan options. Hope this article helps you better reflect on how you will manage unexpected expenses or collateral expenses with a more sensible way of spreading the cost across your preferred number of months or years of payment without you being eaten up by the interest posted against the loan amount. After all, your hard earned money has to be worth more.