Whats is finance? Check out the choices available!

Finance refers to the management of money and investments. It involves activities like budgeting, investing, borrowing, and forecasting financial health. Financing is the process of providing funds for business activities, making purchases or investments. There are several types of financing and loans available to Filipinos. Understanding the options can help make informed financial decisions.
Types of Finance Available in the Philippines
Several financial institutions in the Philippines offer personal loans, business loans, mortgages, credit cards, and other services. Banks, cooperatives, microfinance groups, and online lending platforms provide access to capital for Filipinos.
Personal loans from banks allow borrowing a lump sum for any legal purpose. Terms range from 1-5 years with interest rates starting around 6% per annum. Cooperatives and rural banks also offer salaried loans. Microfinance loans provide smaller credit to low-income individuals.
Business financing includes term loans, lines of credit, and SME loans for working capital, assets, or business expansion. Interest rates start around 6% yearly. The government’s Pondo sa Pagbabago at Pag-asenso program also aids MSMEs.
Credit cards allow revolving credit lines for everyday purchases. Features include rewards programs, instalment plans, and balance transfers. Popular issuers include BDO, BPI, Metrobank, and Citibank.
Home loans, also called housing loans or mortgages, provide long-term financing for real estate purchase. Loans extend 10-30 years with interest rates from 5.5% per annum. Bank mortgages often require at least 20% downpayment.
What is Financing?
Financing simply refers to the act of providing funds for business activities, purchases, or investments. It involves borrowing money that has to be repaid over time, usually with interest.
Financing provides access to capital to individuals and businesses who may not have the full funds upfront. It allows them to acquire assets, expand operations, or finance large purchases by spreading costs over future periods. Common financing options include loans, bonds, shares, leases, and credit arrangements.
Comparison of Personal Loans, Credit Cards, and Mortgages
Personal loans provide lump sum cash that can be used freely. Credit cards offer revolving credit lines for everyday spending. Mortgages provide financing specifically for real estate purchase.
Personal loans offer fixed amounts usually ranging ₱100,000 to ₱1 million with 1-5 year terms. Credit cards have flexible credit limits typically ₱100,000 and above. Mortgages provide millions in housing loans over 10-30 years.
Interest rates are lowest for mortgages starting around 5.5% yearly. Personal loans are around 6-24% per annum. Credit cards have the highest rates from 2-3% monthly.
Personal loans have fixed repayments with maturity dates. Credit cards require minimum payments monthly. Mortgages involve equal instalment payments until fully paid.
Eligibility for mortgages depend on income and property value. Personal loans assess income regularity. Credit cards weigh income and credit record.
Car Financing in the Philippines
Car loans allow spreading out auto payments over 1-7 years instead of full cash purchases. Interest rates range from 6% to 15% per annum.
Banks like BPI, BDO, Metrobank, PSBank, and RCBC offer car financing with 20-50% downpayment and terms of up to 7 years. Dealerships like Toyota, Nissan, and Ford also provide manufacturer-backed car loans.
Minimum requirements include steady income source, proof of billing, valid IDs, and downpayment. Interest rates differ per bank and car model. Secured loans require the car as collateral while some unsecured loans are also available.
Online lending platforms like AutoDeal and Autosweep also offer easy car loan applications. Their loan estimators help choose affordable repayment plans.
Home Financing in the Philippines
Owning a home is a major milestone for Filipino families. Home financing helps make this achievable through mortgages and housing loans.
Banks offer different types of housing loans that extend 10-30 years. Interest rates start around 6% per annum with minimum 20% downpayment. Low-cost mortgages from government agencies are also available.
Pag-IBIG offers affordable loans covering up to 90% of property value over 30 years. SSS and GSIS provide housing loans to members with 2-3% interest rates. Private banks also design subsidized mortgage products in partnership with developers.
Aside from income, borrowing capacity for home loans depend on stability, repayment history, property appraisal, and collateral. First-time homebuyer benefits like discounted interest rates are also offered by some banks.
Surgery Financing in the Philippines
Elective medical procedures like cosmetic surgery can be expensive. Surgery financing allows breaking up costs into more affordable payment arrangements.
Hospitals and clinics may offer in-house financing plans, long-term payment terms, and credit card arrangements. Banks also have personal loans and credit cards to cover surgery costs and payment terms of up to 5 years.
Some health insurance and HMO providers include surgery loans as part of coverage. For example, health cards by Medicard provide credit line for aesthetic procedures.
Financing makes cosmetic enhancements possible for more people. Careful consideration of repayment abilities and evaluating options offers the best surgery financing fit.
Online Financial Services: Ease and Security of Transactions
Digital banking offers convenience through online financial services and transactions. Apps and websites provide 24/7 access to accounts, payments, applications and more.
Mobile and internet banking enable viewing balances and statements, transferring funds, paying bills, and checking transactions easily. Apply for credit cards, loans, or open accounts fully online for hassle-free onboarding.
Security features like biometrics, encryption, and OTP authentications protect against fraud. Anti-phishing warnings and secure networks keep customer data safe.
E-payment facilities like QR codes, online transfers, and mobile wallets provide contactless convenience. Paying digitally helps track expenses and manages finances effectively.
Online loan and investment platforms widen access to financial products. Comparison tools aid decision making for optimal deals. Digital finance improves customer experience through technology.
Online Loans vs Traditional Financial Institutions
Online lending platforms offer quick cash digitally while traditional institutions involve in-person applications. Each option has trade-offs to weigh.
Fintech apps boast speed with approval in 24 hours or less and near-instant disbursement. Traditional loan processing takes 1-2 weeks.
Interest rates are often higher on digital loans given accelerated processing and smaller operations. Large banks offer lower rates due to cheaper capital and overhead costs.
Online lenders rely on algorithms analyzing alternative data for credit decisions. Traditional institutions consider income, employment, credit history and relationships.
Those without collateral or established credit history may find it easier to get approved for small online loans. Banks with stricter lending criteria may be more selective.
Convenience and immediacy make online loans worthwhile for urgent capital needs and stacked expenses. Traditional loans work better for long-term financing given lower costs.
Is it Safe to Take Out Financing?
Financing allows accessing lump sums for major goals and purchases. Like any debt, it carries risks if used irresponsibly. Some tips for staying safe when taking out financing:
- Only borrow what is absolutely needed to avoid overleveraging. Assess current obligations first.
- Compare interest rates across multiple lenders to find the most affordable financing. Lower rates save on long term costs.
- Read terms carefully and ask questions to fully understand fees, charges, penalties, and obligations.
- Avoid borrowing for depreciating assets like gadgets or vacations. Consider financing assets that may appreciate like house, education, or business growth.
- Have a realistic repayment plan with allocated monthly budgets to pay comfortably and avoid delinquency.
- Build savings buffers and maintain credit discipline to continue qualifying for low rates in the future.
- Seek professional advice to ensure financing aligns with long-term financial goals and risk appetite.
When used prudently, financing can be a strategic tool to pursue passions, grow investments, and build assets at different life stages. Being an informed borrower helps maximize benefits while minimizing risks.
Final words
Finance enables acquiring assets, managing budgets, and accessing opportunities. Financing offers a way to fund large purchases, business growth, and investments. Understanding the various financing options available can empower Filipinos in making optimal financial decisions.