Why Get a Personal Loan? Exploring 6 Loan Purpose Examples

When it comes to the topic of personal finance, few tools offer you the versatility and accessibility of personal loans. These financial instruments have become a cornerstone for individuals like you seeking to fulfill various needs and goals, be it in the short or the long term.

In this blog, we will explore the 6 most common purposes a personal loan serves and delve into how these loans can empower you to achieve your goals.

What is a Personal Loan?

Personal loans represent a fundamental aspect of financial assistance. These are typically provided by reputable institutions to individuals looking for a financial lifeline and can be used for different purposes. Unlike targeted loans such as auto or home loans, personal loans such as bank personal loans or those offered by credit unions, or online lenders are commonly unsecured, meaning they lack collateral such as a vehicle or property. Instead, eligibility and loan terms are chiefly determined by your creditworthiness and income.

Some of the key features of personal loans include:

• Unsecured: Personal loans do not require collateral, making them more accessible to borrowers of different backgrounds. However, this also means that interest rates may be higher compared to secured loans.
• Fixed or Variable Interest Rates: Personal loans may have fixed interest rates, which remain the same throughout the loan term, or variable interest rates, which can fluctuate based on market conditions.
• Fixed Loan Amounts: Lenders typically offer personal loans with fixed loan amounts, although the specific amount may vary depending on factors such as the borrower's creditworthiness and income.
• Fixed Loan Terms: Personal loans have fixed repayment terms, usually ranging from one to seven years. Shorter loan terms typically result in higher monthly payments but lower overall interest costs, while longer loan terms may have lower monthly payments but higher total interest costs.
• Credit Check: Most lenders require a credit check as part of the loan application process to assess the borrower's creditworthiness and determine the interest rate and terms of the loan.
• Fast Approval and Funding: Personal loans often have a quick application and approval process, with funds disbursed to the borrower's account within a few business days of approval.

What Are Some Reasons for Getting a Personal Loan?

Upon securing approval for a personal loan application, the loan becomes a versatile financial tool capable of serving various purposes tailored to your circumstances and financial objectives. Here are some examples of the purposes of a personal loan:

Car Repairs

When unexpected car repairs crop up, a personal loan can serve as a practical solution to cover the expenses. Whether it's a sudden breakdown, routine maintenance, or unforeseen repairs, having access to funds can ease the financial burden associated with keeping your vehicle in good working condition.

With a personal loan, you can quickly secure the necessary funds to address your car repair needs without tapping into your savings or resorting to high-interest credit cards. This allows you to address the issue promptly, ensuring that your vehicle remains safe and reliable as you cruise down EDSA or major expressways.

Home Improvement

Regular maintenance and home improvement projects are essential for preserving and elevating property value. Whether you're updating kitchens or renovating bathrooms, these enhancements not only enhance your quality of life but also boost the resale value of your property. 

Personal loans offer you a practical solution for financing such endeavors, allowing you to access the necessary funds to make your home more comfortable and functional. With the flexibility and convenience of personal loans, you can begin renovation projects with confidence, knowing you have the financial means to achieve your dream home.

Education and Training

Education and training are fundamental for personal and professional advancement. Whether you're pursuing higher education at college or vocational school, or seeking certification, the associated costs can be significant. Personal loans provide a flexible financial solution for covering tuition fees, textbooks, and other educational expenses. 

Additionally, another purpose of a personal loan is to finance your child’s education. With a personal loan, you can secure the funds needed to invest in your child's future by covering tuition fees, purchasing educational materials, or supporting their academic pursuits. This option ensures that you can provide your child with access to quality education and opportunities for growth without financial constraints.

Travel and Leisure

Traveling and immersing yourself in diverse cultures not only creates lasting memories but also offers great opportunities for personal growth and learning. Whether you're embarking on a solo adventure, organizing a family getaway, or celebrating a milestone event, travel enriches your life, broadens your perspectives, and fosters connections with the world around you. 

One often overlooked purpose of a personal loan is to provide you with a means to fund travel expenses, covering essentials like airfare, accommodations, and activities. With access to financial support, you can fulfill your dreams of visiting bucket list destinations wherever they may be.

Entrepreneurship and Business Ventures

For many, owning a business is not just a dream but a catalyst for innovation, economic progress, and the pursuit of personal passions. However, starting a business demands capital, posing hurdles for many aspiring entrepreneurs in securing funding.

Personal loans serve as a practical solution, providing accessible financing for business initiatives, be it starting a new venture or scaling an existing enterprise. By taking out a personal loan, you can access the necessary capital to transform your ideas into reality, fueling growth, driving innovation, and unlocking opportunities for personal and professional fulfillment.

Emergency Funds

No matter how much you try to plan, life always manages to throw a curveball. That's why having an emergency fund is crucial. These funds act as a safety net during unforeseen events like sudden car repairs or medical emergencies. 

Opting for emergency funds or personal loans instead of resorting to high-interest credit cards or payday loan offers enables you to get the monetary help you need without the burden of long-term financial strain.

How RCBC Can Help You

RCBC offers a versatile personal loan that is designed to help you meet various financial needs. With an RCBC Personal Loan, you can access flexible financing options designed to empower you on your financial journey. 

With RCBC, you can get a non-collateral personal loan, provided that your gross income is at least ₱30,000 per month. This loan lets you borrow up to Php 1 million, catering to both your short-term and long-term financial requirements, with the flexibility of repaying it through manageable monthly installments.

Key features of RCBC's Personal Loan:

• Generous Borrowing Limit: Need substantial funds? RCBC allows you to borrow up to Php 1 million, ensuring you have access to the financial resources necessary to meet your needs, whether big or small.
• Quick Approval Process: Say goodbye to long waiting times. Once you have submitted the necessary RCBC Personal Loan requirements, you can expect to get approval within just 5 to 7 banking days.
• Flexible Repayment Options: RCBC understands that every individual's financial situation is unique. That's why we offer flexible repayment terms, allowing you to choose from 6, 12, 24, or 36 monthly installments, depending on what works best for you.
• Competitive Interest Rate: Worried about high interest rates eating into your budget? RCBC offers a competitive interest rate of just 1.3%, ensuring that you can manage your repayments without unnecessary financial strain.

How Do I Qualify for a Personal Loan?

Qualifying for a personal loan is based on several key factors that lenders assess to gauge your creditworthiness and ability to repay the loan. To be eligible to apply for an RCBC personal loan, you must meet specific criteria based on your employment status.

For employed individuals:

• Citizenship: Applicants must be Filipino Citizens or Dual Citizens
• Age: Must be at least 21 years old upon loan application and at most 65 years old upon loan maturity
• Contact Information: Must have a valid mobile number, residence landline, or office landline
• Employment Status: Must be locally employed at a company registered with the Securities and Exchange Commission (SEC)
• Employment Tenure: Minimum employment tenure of 2 years
• Gross Monthly Income: Must have a minimum gross monthly income of Php30,000

For self-employed individuals:

• Citizenship: Applicants must be Filipino Citizens
• Age: Must be at least 21 years old upon loan application and at most 65 years old upon loan maturity
• Contact Information: Must have a valid mobile number, residence landline, or office landline
• Business Operation: The business must operate in the Philippines for at least 3 years
• Profitability: The business must have been profitable for the past 2 years
• Gross Monthly Income: Must have a minimum gross monthly income of Php100,000

What are the Requirements for a Personal Loan?

To apply for an RCBC Personal Loan, applicants must prepare and submit the following requirements:

• Accomplished RCBC Personal Loan Application Form: This form serves as the primary document for initiating the loan application process.

While similar, it is important to keep in mind that there are slight differences between the RCBC Personal Loan requirements, the RCBC housing loan requirements, and the RCBC car loan requirements. Here are the things you need to submit for a personal loan:

For Employed Applicants:

• Certificate of Employment (COE) or Latest Income Tax Return (ITR): A COE verifies your employment status, while the latest ITR provides proof of income. Both documents demonstrate your ability to repay the loan.
• Two Valid Government-Issued IDs: These IDs serve as proof of identity and help establish the your credibility.
• Tax Identification Number (TIN): The TIN is required for tax-related purposes and is necessary for processing the loan application.
• Utility Bill: A recent utility bill (e.g., electricity, water, or internet bill) serves as proof of residence.

For Self-Employed Applicants:

• Business Papers: Depending on the type of business structure, you must provide either a Business Registration from the Department of Trade and Industry (DTI) or Securities and Exchange Commission (SEC) and a Mayor’s Permit.
• Latest Income Tax Return (ITR) or Audited Financial Statements: You must submit either your latest ITR or audited financial statements to verify your income.
• Latest 3-Month Bank Statement: This document provides a snapshot of your financial transactions and helps assess your financial stability.

Personal loans offer you versatile financial solutions to achieve your goals and manage life's uncertainties effectively. With RCBC's Personal Loan, you can access flexible financing options designed to meet your specific needs. By gaining a deeper understanding of the purpose of and reasons for obtaining a personal loan, you can confidently pursue your financial goals. From unexpected car troubles to financing home improvements, investing in education, or addressing emergency expenses, personal loans empower you to navigate various financial challenges and opportunities with ease and convenience. 

With RCBC's commitment to customer satisfaction and streamlined application processes, you can access the funds you need to achieve your aspirations and secure your financial future. Submit your RCBC Personal Loan Application Form today!