OFW Loans: A Quick Guide For Beginners
Do you have a family member abroad? They are doing their best to keep your life afloat at home. When they come back, chances are they do have extra savings left. To some, OFWs can use it for gifts. If they have the chance, it can be used as an opportunity to build something new with their newfound knowledge.
Overseas Filipino Workers (OFW) are responsible for bringing many remittances to the Philippines. So it is no surprise that there is a specific loan catered to them. The way how it functions is just as important as any other loan. You get extra perks for being an OFW since you can be prioritized. Not only that, there are specialized agencies for you. Here is how you can apply for a loan for new OFWs or OFWs returning home.
How to qualify for an OFW loan
While having a loan is helpful, ensure that you have settled past loans before you apply for another one. An OFW loan works just like all loans offered by financial institutions. These loans are further grouped into land-based, sea-based, and OFW-dependent.
After knowing which is yours, you must submit documents such as the employment contract, latest statement of account, and other papers. Depending on the type of OFW loan you apply for, specific information may be asked. It is important to note that the loan can only cover delayed remittance and OFW processing. In other words, it is not a source of income. You will still receive cash, but it will not last long.
Consider the interest rates
All loans have interest rates. Essentially, it is the amount charged by the lender against the money. The rates are expressed in percentages. Here is how it is computed:
- Interest rate = Principal x time x interest rate
The exact numbers used in the formula will vary depending on what you borrowed. A principal is also the amount you borrowed. It also applies to the time spent. To make it easier, place the time in months as so: 1 is to one month, and 12 is one year. Doing it by day makes it trickier to pinpoint the exact amount of interest needed to pay. Use a calculator for faster computation.
Expect extra processing fees
Depending on the financial institution, they may place additional fees on loans. It gives an actual interest rate and charges to avoid paying more.
Lenders may ask for processing fees, documentary stamps, or repayment fees. While it does sound like it is counterintuitive, it is part of the process. If you find an institution that does not include these fees, you can go for that for more cash.
Additional requirements for application
Some institutions may require you to prepare additional documents as written, like the processing fees. However, it ensures that the loan will be processed under your name. The exact requirements will vary; look up the financial institution’s website or contact customer service for further information.
Wrap up
Whether you are an aspiring or returning OFW, the loan gives financial aid. You and your family will get the most out of it.
Author’s Bio:
Frank is an energetic salesman. On his free days, he spends his time writing and reading about financial plans and educational loans to help the parents and the next generation gain more insight about multiple educational opportunities.