debunking personal loan myths

5 Common Personal Loan Myths Debunked

Tue, 10/12/2021 - 07:56

Bust out your thinking cap, let’s get to cracking these personal loan myths the neoway.


Let’s start off with a bonus myth: Personal Loans are bad. False. Personal Loans aren’t bad, you just need to be a good borrower.


Personal loans are misunderstood. Cool and hip, the Personal Loan is the flexible and convenient loan option for seasoned and first-time borrowers alike. Unlike its big siblings, Home Loan and Car Loan, you have the freedom to do whatever you want with your Personal Loan. Call it what you want—a helping hand, a nudge in the right direction, or that best friend supporting your next mega sale purchase. Your Personal Loan will be by your side to help you out.


But a discussion at the dinner table promises a barrage of solicited or unsolicited loan-taking advice. Time-aged wisdom can do more harm than good. There’s a reason they say some things just “age badly.” So, before you let everyone else’s opinion fog your judgement, you might want to separate fact from fiction and dig a little deeper.


Here’s the deal: Let’s get to busting these Personal Loan Myths and we’ll let you in on some advice that might come in handy when you do decide to take out that loan. No pressure, no judgement, just a bit of myth busting and tea sipping. Let’s get started, young padawan.



Personal Loan Myth 1: You’ll be tied down to debt for years.



Don’t let the loan terms scare you. Plan out your budget and schedule your monthly payments. Your personal loan will be fully paid in no time!


The truth, the whole truth, and nothing but the truth: Yes, you will be paying for your loan in regular monthly installments over the loan term, but whether you choose to pay them off in a couple of months or years is up to you. Flexible loan terms are available for Personal Loans, you just need to know where to look.


Traditional banks offer Personal Loans for longer terms with larger sums. The terms range from 6 to 36 months and the loan amount they offer can go as high as Php 2,000,000. Of course, loans can go beyond 3 years, with Auto Loans going up to 5 years and Home Loans going to 20 years or more!


For digital banks like Tonik, you can choose your preferred loan term from 6 months, 9 months, 12 months, 18 months, and 24 months. We even took customization a step further by letting you choose your own repayment date. Whichever works best for you.


The Tonik Quick Loan is designed to be short and sweet. Think about it this way, the shortest repayment term is the amount of time you should keep your eye cream after opening it, and the longest repayment term is just as long as your next phone plan. Don’t let the numbers scare you. At the end of the day, if your Personal Loan isn’t holding you back, there’s nothing to worry about.


Our advice: Before you take out a Personal Loan, determine what you’ll use it for and your budget constraints, if any. It might help to work out a monthly budget that already includes your loan payments and ask yourself, “is this budget sustainable?” Remember, you’ll be paying this for the duration of your loan term. Regardless of the repayment date and loan term you choose, you can incur late payment fees if you miss your payments.


Here’s a handy tip: Keep your Tonik Account funded with at least one month’s payment if you’re repaying your loan with your linked salary bank ATM. This is because your Tonik Account will be charged your balance due if in case your linked card fails. It’s always good to have a Plan B.


To help you plan your Personal Loan ahead of time, you can fiddle with our Loan Calculator.



Personal Loan Myth 2: Applying for a Personal Loan is difficult and complicated.



Research, research, research. Know the eligibility criteria and requirements of your bank before you take out a personal loan. This will lessen your stress and frustration later on!


The truth, the whole truth, and nothing but the truth: Tedious and tiresome loan applications are so yesterday. 3 to 10 banking days is the average waiting time for Personal Loan applications going the traditional route. Back in the day, those loans required a slew of documents, numerous banking days and phone calls to confirm, double-check, and sign-off on your application.


With the advent of digital banking and advances in technology, a borrower can apply for a loan and have it disbursed to their account in a day. All they need to do is logon or download an apply and viola, you have your loan application tool at the palm of your hand! Yep, neobanking is the new normal. So don’t let old school ways tie you down.


Don’t worry, you don’t even have to be a techie to apply for a Personal Loan the neo-way. In-app and even online applications are easy to follow, with straightforward instructions on-screen. One online lending firm guides you with the help of a bot.


On the Tonik App, your Personal Loan application will be guided every step of the way with on-screen instructions to help you get your Personal Loan Application approved in up to 15 minutes! Still a little unsure? Just drop a message to our Customer Care on Facebook, Viber, or Messenger and a Customer Care agent will be able to assist you with your questions 24 hours a day, 7 days a week.


Our advice: Read through your bank’s Personal Loan Application Eligibility Criteria before you start your loan application process. Have the requirements handy or saved on your phone in your bank’s accepted format for easy access when applying. For Tonik Quick Loans, all you need are the following: 


  • Valid ID 

  • Payroll Account Bank Statement or Pay Slip (latest 1 month) 


Also, keep your salary bank ATM card details handy for easy linking if you opt to use that repayment option and make sure that your card is 3D Secure enabled. You’ll know this is 3D Secure enabled when you receive a One Time Password (OTP) when making purchases using your card. Still not sure? You can also confirm this with your card’s issuing bank.


Here’s another pro tip for you: Make sure your Tonik Account is verified before you apply for your loan. All you need to do is submit any of the accepted government IDs through your Tonik App and wait 1 banking day for verification. Not only will you be able to apply for a Tonik Quick Loan, but your account will also no longer have any limits or a validity period, and you’ll be able to open up to 5 Stash Accounts, and enjoy up to 6% interest p.a. with up to 5 Time Deposit Accounts. 


Check out Tonik’s list of accepted government IDs below:  

  • Philippine Passport 

  • Philippine Driver’s License 

  • Unified Multi-Purpose ID (UMID) 

  • Social Security System (SSS) ID 

  • Professional Regulation Commission Identification Card (PRC ID) 

  • Postal ID (card type) 



Personal Loan Myth 3: It’s better to borrow from money lenders.

take away


Nope, your friendly neighborhood money lender may offer you a quick solution now, but the payback and harassment later on won’t be worth it. Just say no and choose the safe and legitimate option. You’ll thank us later. 


The truth, the whole truth, and nothing but the truth: No, a million times, no. Neighborhood money lenders offer an instant cash advance with little to no requirements. Sounds great, but what’s the catch? Interest rates that are through the roof and daily or weekly repayments. Often, a collateral is also a requirement. Not to mention the harassment if you miss a payment. 


And it doesn’t end there. Your friendly neighborhood money lender won’t just go after the borrower, they’ll also go after the borrower’s friends and family, too. SMS, calls, social media you name it, they’ll be there. The safety and security of a bank is lost with fly by night money lenders that will cause more trouble for you in the long run. The verdict? Just say no.


Besides, most banks look at your credit and borrowing history when you apply for a loan. Build up your credit score by showing them how great you are at paying off loans when you borrow from financial institutions. The more you borrow and pay off, the better your chances of being approved for even bigger loans when you need it.


Our advice: Take out that Personal Loan instead. Yes, interest rates can be a little higher. Traditional banks usually offer lower interest rates that range from 1.2% to 1.89% per month, while digital banks can go from 1.8% to 3.59% per month. On the other hand, financing firms can go from 1.5% to 18% monthly. But interest isn’t a bad price to pay for ease, comfort, and security. State-of-the-art tech protects your money and data, and the Philippine Deposit Insurance Corporation (PDIC) insures your money up to Php 500,000 per account. Sleep soundly knowing that your personal data and your money are safe with whichever financial institution you choose.


With Tonik, from the moment you log on to your App to the disbursement of your loan amount and even the repayment process, your transactions are secure. Want to know something even better? Your whole application process to payment won’t require you to leave your Tonik App or face an agent or bank representative. Especially in the new normal, that’s a win for digital banking. Your payments will be automatically deducted from your salary bank card or savings account monthly due date. Fees like the Processing Fee, Documentary Stamp Tax, and any late payment charges will be charged up front, so you don’t even have to worry about hidden charges.



Personal Loan Myth 4: Don’t take out a loan, save instead.

dont take


At Tonik, we love savings! But in a bind, digging into your savings or waiting for your savings to mature might not be the best option, especially in emergency situations. A personal loan is the safe and secure solution for you.


The truth, the whole truth, and nothing but the truth: Wise words from the grown-ups, but here’s how the financial gospel they preach can be outdated, too! Emergencies can happen and not everyone is equipped with a hefty emergency fund sitting in the bank. Maybe your emergency fund just isn’t there yet. Or maybe, you’d rather keep your savings in an account or investment that will render more returns. Whatever the case, digging into your savings isn’t the only solution. Similarly, waiting for your savings to grow to what you need might take more time than you have.


Our advice: Get to pencil pushing and get cracking on our loan calculator. Weigh out your options and go with the option with a better bang for your buck.


Don’t get us wrong, at Tonik, we think savings are GREAT! That’s why we reward our savers with the highest interest rates the Philippines has to offer with our Time Deposits. We also give our savers more ways to save with our Individual and Group Stashes.


But here’s when taking out a Personal Loan might be the better option for you: If pulling out your savings from an investment prematurely can cost more for you than taking out that Personal Loan, take the loan instead. Say your money is sitting in a Time Deposit, set to earn 6% interest p.a. in 6 months. If you withdraw early, not only will you lose out on the 6% interest p.a., but you could also lose out on the principal amount because of taxes deducted. Added up, your potential loses could cost more for you than what you’d pay for a Personal Loan.


Another case could be in an emergency. Without an emergency fund, you’re not left with many options. This is when a Personal Loan can step in to save the day. With a quick and easy application, all you need is one document to get you started. Regardless of the situation, the rule of thumb is to only borrow what you can afford to pay back.


Did you know that when you apply for a Tonik Quick Loan, you can calculate your monthly payments with our loan calculator built into the loan application? You can adjust your term duration and loan amount according to your needs. Want to give it a try? Test out our personal Loan Calculator today.



Personal Loan Myth 5: Personal Loans do more harm than good.



Treat your personal loan like an investment if you have the financial capacity to do so. Your personal loan today can get you that certificate course, bike, or tech purchase you need for tomorrow! 


The truth, the whole truth, and nothing but the truth: Nuh-uh. If you take away one thing from this, it’s that when used right, Personal Loans are pretty darn useful. At first glance, anyone can say that any debt is bad debt. But when used for the right purposes, debt can even be an investment.


Investments aren’t just stocks and funds. You can invest in yourself by pursuing higher education or funding an online class that can upgrade your career and bring you closer to your goals. You can fund a side hustle from home with a few thousand pesos as capital. You can pay for home renovations on a property and put it up for rent. There are numerous uses for your Personal Loan that can yield enough returns for you to not only earn back your interest, but also your principal.


Like we said above, Personal Loans are here to help you. Make your Personal Loans work for you, and you won’t regret it.


Our advice: We can’t stress enough that you should plan out the use of your loan. Remember, that loan repayment will be with you for at least 6 months, so make it count. If you have the financial freedom, then you can spend some time planning your Personal Loan game plan. As we mentioned above, there are multiple quick loans that cater to Filipinos. Many have been running for quite some time now and have truly helped loan borrowers at every step of their journey, life stage, career, you name it! However, as we seek to help consumers further, why not try something more convenient?


With Tonik Quick Loans, you can borrow any amount from P5,000 to P50,000. Interest is 7% monthly, but if you choose to link your salary bank ATM for loan repayment, you get a discount on your interest. You’ll only need to pay 5.42% monthly (that’s a savings of 1.584% interest or up to Php 14,000!). What’s more, you don’t even have to be a seasoned borrower to get approved, luv! In fact, we welcome first time borrowers, so step right up!


Some borrowers use their Personal Loan for debt consolidation. This is when you pay-off multiple debts, like several credit card dues, with one monthly installment that offers a fixed interest rate. Another way to do this is to pay off a debt with a higher interest rate using a loan with a lower interest rate. In the long run, this can save you thousands of Pesos in interest and any other fees you can incur.


Have we busted those Personal Loan myths yet, hun? We bet we did! Don’t worry, if you want to learn more about Tonik Quick Loans, visit our Personal Loans or FAQs page. When you’re ready, download the Tonik App on the App Store or Google Play Store and apply for your personal loan today! It just takes a few minutes. May the Force be with you.



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