13 Dec Utang and Other Loan Terms You Need to Know Before Borrowing
A loan or a debt is called utang in Filipino, and is one of the English keywords you should know if you’re looking to borrow money. First-time loan applicants may also encounter a series of new terms that may be intimidating, so we’re here to break down the loan language into simple words to make sure you know what’s what before you apply for a loan.
- Loan (Utang or Debt)
Taking out a loan simply means borrowing money. Before you apply for a loan, make sure you have a clear purpose for it, and you’re able to find the means to pay on time.
- Principal (Magkano Uutangin or Initial Amount)
Think of the principal as the main amount you borrow. This is also where other terms like your interest rate will be based on.
- Interest Rate (Cost of Borrowing)
Interest rates vary from per day, per month, or per year. This is what it costs to borrow money, expressed as a percentage of the principal. It’s important to take note of the interest, and how it’s computed because it decides the added fee you’ll pay for.
- Term or Tenure (How Long):
This is how long you’re signing up to repay the loan. A shorter time means higher monthly payments, but less overall interest, and vice versa.
- Collateral (Security):
Collateral is like a back-up plan for the lender. If you can’t pay, they might take something valuable you promised as a guarantee.
- Amortization (Repayment Plan):
Amortization is just a fancy word for your repayment plan. It’s the schedule that tells you how much to pay every month.
- Credit Score (Your Loan Report Card):
Your credit score is like a report card or grading system to measure how responsible you are as a borrower. Lenders use it as reference to see if they can lend you money with no worries.
- Default (Unpaid Dues):
Default happens if you don’t follow the loan rules, like missing payments. It’s not a good place to be; it can mess up your credit score.
- Grace Period (Extra Time):
A grace period is extra time given before they start charging you extra for being late. It’s like a little buffer.
- Co-maker or Co-borrower (Loan Partner):
Some loans might want a friend to join. This friend agrees to pay if you can’t. It’s like having a backup just in case.
- Sangla (Pawning):
Refers to the practice of pawning valuable items as collateral for a loan. An example would be OR/CR Sangla through Car4Cash, wherein you can submit your car’s OR/CR in exchange for a loan.
- Terms & Conditions (Rules of the Loan Agreement):
These are the rules and guidelines set by the lender, outlining the agreement between you and the lending institution. Understanding and accepting the terms and conditions ensures that you’re aware of the obligations, interest rates, and repayment terms associated with your loan.
- Encumbered (Promised to the Lender):
When your property is encumbered, your property is not completely yours. Until you finish paying back your loan, part of your encumbered property or asset is tied to the loan or promised to the lender.
So, there you have it – utang or loan terms in plain English. Understanding these words, preparing the complete requirements for your loan application, and borrowing from a reputable lender will help make your borrowing process smoother and less confusing.
At SB Finance, we aspire to be the launchpad for your dreams, providing caring and responsible assistance when you need it most. We’re also registered with the Securities and Exchange Commission (SEC), and supervised by the Bangko Sentral ng Pilipinas (BSP), so we ensure to give you:
- Fair Interest Rates: No excessive repayments, just reasonable rates
- Guidance in Every Step: Dedicated customer service
- Legal Protection: Your rights as a borrower are safeguarded by the law
- Dependable Support: Legit loan services that are helpful, especially during financial emergencies
If you need help with your loan application, reach us via email (email@example.com), our Customer Service hotline at (+632) 8887-9188, or Facebook Page (@SBFinancePH).
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