Loans without collateral

Find out more about loans without collateral

Most people are familiar with borrowing where you take an asset such as a mortgage, title deed, or a car among others to a lending institution as part of security. These types of loans, where security is needed have been a huge hindrance to access to credit in the Philippines. Only those who have these types of assets can acquire loans. It locks all those who need quick access to cash but has no collateral. If you find yourself in a situation where you need quick cash and have no asset that can be used as security, don’t despair as help is just within reach. No collateral loans can save your day, helping you meet your immediate cash needs without being required to attach an asset as security. Here we provide information on loans without collateral.

What are loans without collateral?

These are unsecured loans where a borrower is not required to provide a property or an asset to get credit. Here, the borrower will get a loan on the basis of their creditworthiness. To be clear, a borrower attaches an asset such that when they are unable to pay it back, the property can be sold off to settle the balance. This means that only those who have property or assets can access secured loans, leaving out a large group of borrowers due to a lack of these requirements. Unsecured loans allow such people to borrow money without collateral.

Pros and cons of collateral and non collateral loans

What are the qualifications does the applicant need to meet? 

Most people have a notion that borrowing without collateral in Philippines is a difficult task but once you have fulfilled all the requirements, you can get your money instantly. So, what is needed?

• Credit score and history: An applicant must be credit-worthy. However, some lenders may lend to applicants with poor credit history on the basis that they have the potential to furnish their loan
• Credit score and range

• Regular income: Lenders normally impose an income requirement to ensure that as a borrower, you have some means of repaying the loan. As evidence of income, a borrower may be required to produce a bank statement, payslip, letter signed by an employer for those who are employed, or tax returns for self-employed.

• Debt to income ratio: An evaluation of the debt to income ratio is required to ascertain whether a borrower can pay monthly installments. Here, the borrower needs to provide information on other loans and obligations they have committed themselves as well as their total earnings. The debt to income ratio needs to be lower for a personal loan.

Documents needed when applying for a loan?

These are the typical documents that you will need during the loan application process

• Complete and submit the loan application; personal information is required as well as stating the reason why the loan is needed
• Documents that prove identities such as Driver’s license, national ID, passport, or any other
• Document showing evidence of employment and income such as letters, bank statements, tax returns, and payslips; whichever applies to the borrower depending on whether self-employed or otherwise.
• Proof of address where one may be asked to produce a utility bill, lease agreement, voter’s registration card, auto insurance, or any other document that gives information on a stable living situation.

Where to obtain no collateral loans in the Philippines?

There are several financial entities that offer business or personal loan without collateral in the Philippines. They include banks, multipurpose cooperatives, and private lending companies.

• Banks: Although not all may qualify, banks lend on the basis of providing sufficient documents and proof of the financial capacity to repay.
• Multipurpose cooperatives: These are financial entities that offer their customers services that are aligned with the support of a specific group or community. They normally limit their membership to a certain segment such as people working in a certain industry or company. For one to qualify, he or she must have met a given number of payments.
• Private lending companies: If you are looking for a lending company in the Philippines without collateral loans, you only need to look at the list of registered establishments. In the recent past, this area has experienced exponential development. However, caution and due diligence are required when selecting a private lending company to ensure that you do not fall into the hands of exploitative lenders.

What type of loan can you get without collateral?

Banks, online and alternative lenders offer businesses and individuals a variety of unsecured loans to meet their needs. The types of financing that are available from these financial establishments include:

• Personal loans
• Cash loans
• Invoice financing 
• Merchant cash advance
• Equipment financing 
• Student loans
• Credit cards, among others.

What are the steps of getting a no collateral loan?

If you have decided to apply for a no collateral loan, follow these steps:

• Determine the amount you need 
• Ensure you have a good credit score or history
• Consider the available options based on your qualifications 
• Select the best type of unsecured loan that fits your needs 
• Shop for the best personal or business loan rates
• Select a lender and make an application 
• Provide the required documentation
• Get your loan and make payments as stipulated in the agreement.

Loans with no requirements of collateral are within reach in the Philippines. This comes as a big relief for millions who are locked out of secured loans. It even gets better with the fact that these loans can be accessed online, where the whole process can be done without leaving your house or disrupting your busy schedule. The whole process is done online. All you have to do is be punctual with monthly payments and improve your credit score to ensure continued access and fair rates.