Loans 101: Borrowing with confidence

You are working from home with a laptop that is starting to conk out. You have managed to pay the downpayment for your teens’ tuition but are not quite sure how to fill in the rest. Your small business is picking up but you know it can thrive even more if only you had the funds to expand.

Whether you are a young go-getter or providing for a family, you have probably thought of taking out a loan to augment your financial needs. However, you wish that some words in the fine print were explained further.

Say no more, because here is a rundown of common loan terminologies that will help you make a more informed decision about borrowing money.

Principal
This is the amount of money you borrow. The principal decreases as you pay off your loan. Make sure to borrow only what you can manage to pay.

Interest rate
The interest rate of your loan is how much the lender charges you for the money you borrowed. It is expressed in percentage and is usually computed on a monthly or a yearly (per annum) basis.

Term
Your loan term or tenor is the length of time you will be paying for your loan. This can be anywhere between months or years depending on the amount you borrow, and your agreement with the lender.

Amortization
An amortization scheme is the schedule of calculated installments designed to pay off your loan (principal plus interest rate) within a given term.

Grace period
When the lender gives the borrower some time in which the payment of amortizations may be paused, a grace period has been granted.

Loan agreement
This is a contract between the lender and the borrower containing all set conditions about a loan. It is usually a written form containing the terminologies above.

Default
Failing to make payments for a loan according to the schedule indicated in your loan agreement means you are in default.  This may negatively impact the possibility of being able to take out another loan in the future.

Whether it is simple electronics, funds for education, or home improvement projects, there is a financing option available for you. Nowadays, taking out a loan is made much easier and can even be done through a smartphone! Make your first borrowing experience fast and hassle-free with Tala, a financial technology company trusted by over 6 million users worldwide. Since 2017, Tala has provided over 1.6 million Filipinos access to fast, easy, and secure loans.

With the Tala app, there is no need to waste precious time on tedious paper work or visits to a bank. Tala allows anyone with an Android smartphone to apply for a loan – just answer some questions, upload a valid ID, submit a selfie and receive a decision within minutes regardless of financial history. Applicants will also appreciate Tala’s flexible loan sizes, minimal one-time fee and wide range of cash-out and repayment options.

Tala is keen on providing Filipinos with means to improve their financial literacy. Aside from offering an accessible and secure option to borrow money, Tala also has an arsenal of helpful content for those eager to advance their financial independence through knowledge.

To know more about Tala and start your journey, visit https://tala.ph and download the app from the Google Playstore.

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Tala is operated by Tala Financing Philippines Inc., a licensed financing company with SEC Registration No. CS201710582 and Certificate of Authority No. 1132. Always study the terms and conditions and the disclosure statement before proceeding.