The Stark Difference Between Earned Wage Access (EWA) and Financial Loans
Money struggles are the bane of the Philippine workforce. The minimum wage of 537 pesos hasn't increased since last 2019. Yet since then, the price of basic goods has continually increased. It's no wonder that many Filipinos result to borrowing from their closest well-off neighbor or family, or taking a risks by applying for financial loans.
Loans or utang are still taboo topics. There is a stigma that comes with your peers knowing you took a loan, regardless of the reasons. So, people who are in great need of it will apply for it discreetly.
Why Do People Resort to Borrowing Money?
There are many reasons why someone borrows money, even if they are employed. According to the survey done by statista.com on the 4th quarter of 2021, here are the top 5 reasons why a Filipino applies for a financial or personal loan:
The least percentage is 0.6%, which applies to people who get loans for Leisure Travel.
Under Basic Goods are utilities, grocery, housing, education, and health services. Most of which are paid monthly, quarterly, or yearly and sometimes increase unexpectedly. So, no matter how earnest your household budgets for these goods, unavoidable circumstances can still come that need immediate financial help.
Now, the biggest question is: should you get a loan?
Earned Wage Access Vs. Financial Loan
Loans are the default and daunting option that you feel you should take. However, it's not the only option. Earned Wage Access, or EWA is a great way to control your budget and pay off any additional payments that suddenly arise.
Here are some key differences that you need to consider before you inquire about a possible loan from anyone or any establishment:
Also see: What is Earned Wage Access (EWA)?
Your Money Vs. Their Money
If you decide to ask for a financial favor, the money you receive will not be yours. Since you will be borrowing money, the loaner has the right to ask for it whenever they want or need it. You need to keep reminding yourself that there you owe somebody something, and your reputation is on the line if you can't afford to pay it on time.
However, with EWA, you will get the money that you already earned. Even if you get it earlier than the expected payday, you will have no financial obligation to give it back. You earned it, after all! Earned Wage Access allows the employee to access their money when they need it.
Many people who get loans have to face the reality that they have to return a large sum of money, adding to the financial stress they already experience.
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Increasing Interest
Your integrity isn't the only one you are losing in the process of borrowing money, you will also lose additional money to pay for the interest that incurs after you get a loan. In 2019, the average interest for personal loans ranges from 6% to 36% depending on the lender. Imagine how much it increases this year and its continual increase in the coming years.
EWA has zero interest. Since it is not a loan, you don't have to pay it back, and interest rates don't apply.
Interest rates may sometimes be arbitrary, but still a headache all the same.
The Difference in Accessibility
In certain establishments, you need to present a slew of legal documents and personal information to even be considered qualified for a loan. Once you do pass the requirements, they will evaluate you. They will loan you an amount based on their evaluation. Releasing might take longer depending on the lender's process.
So, to be qualified for a loan is sometimes a privilege.
On the other hand, EWA doesn't need many documents. It is a perk that your business can give you, and once they register your name for the app, you can access it without mountains of requirements and long waiting times. It's something anyone from any socioeconomic background can access.
The Financial Stress
Financial stress is something anyone from the workforce tries to avoid. You might find yourself thinking of nothing except how to pay your bills on top of the loan you just took. This financial stress can affect your health, relationships, and mental health. Unless you know how to manage the stress, it will affect your ability to work and think properly.
If you want a less stressful way to get extra cash immediately, it's best to get money from your own earned wage.
If you use Earned Wage Access, on the other hand, you will worry less knowing you're only getting the money you already earned. Additionally, you may have better peace of mind without the additional fees and interest rates.
Make EWA Your Financial Solutions with PayDay Today!
At one point, many of the Filipino workforces will need to make tough financial decisions that might leave them deeper into debt than before. Financial stress can cause in decline in productivity and overall morale. If you are an employee who has experienced being in tight financial situations, maybe it's due time for your company to enroll in an EWA solution.
Earned Wage Access (EWA) is one of the benefits that can help eliminate the need to apply for loans. This solution can help you during medical emergencies, sudden bill increases, investments, and other payments. Your company's Human Resources (HR) will find this perk beneficial for your fellow employees. Take the step toward better financial management by talking to your HR about PayDay Today!
Have them send us an email at sales@goodkredit.com or marketing@goodkredit.com. You can also ask them to call us: (032) 231 7623.