Loans for emergencies

How to Get Emergency Loans in the Philippines

Let's face it; life doesn't always go according to plans. You might have budgeted your monthly income and allocated funds for different bills, but sometimes, irregularities happen, things beyond our control. 

These things have to be catered for, and most times, we lack residual funds to tackle them. Emergency loans are helpful for these types of cases.

Emergency loans are unsecured loans that you don't require much stress to secure. Typically, these loans are sent directly to the loanee's bank account, and it usually takes a day or two to arrive. 

Here, we'll disclose all you need to know about emergency loans. We'll also look at the pros and cons of getting them and how people in the Philippines can easily get these loans.

What are Emergency Loans?

Nothing is guaranteed in life. Today your life is going well, and the next, you're embroiled in a financial crisis. That's where emergency loans come in.

Emergency loans are personal loans offered to help people cover unforeseen and unexpected expenses and costs. These loans help cover unpredictable occurrences.

Most emergency loans are usually low figures in the Philippines; you can get an emergency loan as low as ₱5,000 and as high as ₱25,000. Since they are emergency personal loans, their duration usually lasts weeks. They are also easy to get and are mostly paid directly to your bank account.

Where to Get a Loan for Emergencies in the Philippines

Over the years, different means have been developed so that Filipinos can easily get access to loans for emergencies. If you are looking to get emergency loans in the Philippines, here are some places to get started.

1. Formal Lenders

These lenders are registered with the SEC and have several requirements. To get a cash emergency loan from a formal lender, they'll require the following documents:

• Government ID
• Proof of Income
• Proof of Billing

Aside from the required documents, most of these formal lenders usually have rules that govern their loans. The rules are different per lender, so you must read the terms and regulations of the lender to avoid future misunderstandings.

Pros 

These loans are secured and usually have low-interest rates. They are also flexible with the loans spanning longer durations.

Cons 

Though they are classified as emergency loans, they don't really act like one. The process of obtaining emergency loans from formal lenders is usually very tedious and long.

They require you to be physically present and go on to verify your credit before offering you the loan. They are not the best emergency loans for poor credit.

However, most of these formal lenders are now making their loans available to people online, allowing for easier verification.

2. Relatives and Friends

Friends and family are the most common source of loans in the Philippines. A 2021 report showed that roughly 61% of Filipinos borrow money from close friends and family.

Pros

It's no surprise why relatives and friends are the most common source of emergency loans. They don't require verification and are very flexible. All that's needed is a personal relationship.

Cons

The major problem with taking loans from relatives is the possible threat to strong relationships.

Failure to pay the loan fees can lead to relationship issues, friends turning into enemies, and family members losing their cordial relationships.

Another issue with these emergency loans is that the amount is usually low. How much you receive is based on the lender's financial position.

3. Online Lenders

They are one of the most popular sources of loans.

Pros 

These loans hardly require verifications. The lenders also don't need you to be physically present as you can easily get the loans through online applications.

Loan sharks also offer quick loans, and most times, you get the money up to 24-hours after the request. Most online emergency loans follow this format.

Cons

They have high-interest rates.

4. GSIS Loans

These are emergency loans Philippines government workers enjoy. These are some of the requirements for a GSIS loan.

1. You must not have missed any social insurance contribution payment.
2. The National Disaster Reduction Risk Management Council or the Sangguniang Panlalawigan/Panglungsod must have declared your area of residence to be under a state of crisis.
3. You are currently in service and not on no-pay leave.
4. You don't have a history of defaulting on government loans.
5. You must be a government employee or a resident within an area declared for a crisis.

Pros 

These loans are offered to people living in areas affected by some form of calamities like an earthquake or a tornado.

The loans are very flexible and can be owed for three years, and are paid in monthly installments with an annual interest rate of 6%.

The GSIS Wireless Automated Processing System (GWAPS) centers are also very accessible, and you can get loans as high as ₱20,000. The limit is higher if you already have an existing loan account.

Cons 

Unfortunately, these loans are only available to government workers residing in areas affected by calamities.

5. SSS Calamity Loan

Like the GSIS loans, the SSS Calamity loans are emergency loans meant for people affected by disasters such as floods, typhoons, and earthquakes.

Pros 

Though they have specific requirements, you can get these requirements easily.

You need two valid IDs, your UMID or SSS number, and a SSS loan application form.

Another major advantage of SSS loans is that you can suspend your monthly installments after paying for six months.

Cons

Asides from being available to only those affected by calamities, the annual interest rates of the SSS Calamity loan are significantly higher than that of other calamity loans. Their annual interest rate is 10%.

6. Pawnshops

Getting loans from pawnshops involves the usage of an item as collateral for securing loans. This is one of the most common ways to get a cash emergency loan in the Philippines and many other countries around the world.

Pros

These loans require little or no stress. They are also very fast, all you need is a valuable item to exchange, and you'll be given a loan.

Cons

If you fail to meet the loan agreement, you risk losing your valuable item. Most times, these items are far more valuable than the loan amount.

Also, there have been reports of pawnshops returning counterfeit items or selling parts of the items in their possession.

How to Choose a Lending Company

Every year, people lose millions of dollars to personal loan scams. They pounce on those in need of emergency loans and offer them ridiculous deals that usually end up as scams.

You sure don't want to be a victim of loan fraud. Here are some ways to detect if a lending company is deceiving you.

    I.     Check Their State Registration

Government rules stipulate that a lender must be registered in the state where they are offering the loan service. Before approaching any firm for a loan, go to your state's official website and check if they are registered there.

If you can't find their company name on the website, there's a high chance they are fraudulent.

  II.     They Should Have a Physical Address

Even online lenders must have a physical office that you can easily access on a map. If a lending company offers you loan deals, make sure they have a registered physical address. You can easily do this by searching them on Google Maps.

  III.     Avoid Loan Firms with a History of Pressure Tactics

Some loan agencies, mostly loan sharks, try to pressure people into collecting loan deals.

They mostly come in the form of offers that expire after a day. Once a lending company forces you to collect loans from them, there's a high chance they are hiding something fraudulent from you.

   IV.     Lack of Interest in Credit Worthiness

A reputable lending company will want to confirm if you'll be able to pay your loans, and they'll do this by asking and checking your credit history.

Fraudulent companies do not care about your credits and only want you to take that loan. Though some reputable companies offer loans to people with bad credit, these lenders use other means to determine your eligibility.

What are the Criteria for Obtaining an Emergency Loan?

While emergency loans usually require little or no verification before you can secure them, you must still meet a number of criteria.

Here are some criteria needed for an emergency loan.

• You must be 18 or above and will have to provide documents to verify your claim.
• You must provide proof of income. You can provide financial reports of your salary or profits from your business.
• You must have a good credit score and history. However, some lenders do not require this.
• You must provide proof of your address. This can be through a confirmation of billing.
• You must have a government-issued identification card that shows you are a Philippine citizen.

Final Thoughts

No matter how much you try to prepare, the unexpected always happens. You need an emergency fund to help you through moments like those. That's why lending agencies offer loans for emergency situations.

Emergency loans are quick unsecured loans that are used to manage unforeseen circumstances. This article has taken you through how to borrow emergency money, the types of loans, what to look out for before taking a loan, and the good and bad lending companies. We hope this guide will help you make the right decision when looking for an emergency loan in the Philippines.