Personal loan - all you need to know - Philippines Loan

Personal loan – all you need to know

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What you need to know about personal credit in the Philippines?

For many Filipinos, personal credit can be the answer to immediate financial needs. Personal loans can be of great help if suddenly there is a need for a certain amount of money that can be repaid monthly with fixed interest amounts. The minimum interest rate of a commercial bank loan in the Philippines is 8.59% (data for 2018).

Unsecured personal loan / secured loan. Which is more profitable?

Unsecured personal loan / secured loan
Which is more profitable?

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Unsecured personal loans are one of the most common types of personal loans. “Unsecured” means that the loan is not backed by collateral. In this regard, lenders charge higher annual interest rates.

A secured personal loan is a loan that is secured by collateral, such as a car, house or other real estate. Examples of secured loans can be auto loans and mortgage loans. Such loans are considered less risky, so their rates are much lower than those of unsecured loans.

Fixed and variable rate loans.

Most loans have a fixed rate, that is, the monthly payment remains unchanged throughout the term of the loan. This loan is convenient for those who are afraid of growth rates on long-term loans.

Interest rates on loans with an unfixed interest rate are tied to the base rate set by the bank. Depending on how this base rate changes, monthly payments may increase or decrease. Loans with a floating rate is beneficial for a loan with a short maturity, since the likelihood of interest rates in the short term is unlikely.

Loan consolidation.

Loan consolidation means the summation of several loans into one new loan. This method of combining loans will save on interest. Loan consolidation helps simplify debt payments by combining all debts into one fixed monthly payment.

Joint loans.

Joint loan is intended for borrowers who have a limited credit history or do not have it at all. The co-founder promises to repay the loan if the borrower does not.

Credit card.

A credit card is one of the most common types of credit in the Philippines. However, a credit card is an expensive way to get cash. Interest rates, as a rule, are higher than for purchases, plus advance cash payments, which make up about 5% of the loan amount

Features of personal loan.

Features of personal loan

Clients take personal loans to manage any personal funds and other expenses. Personal loan is not limited to certain spending. Unsecured personal loans can be used at the request of the client without any restrictions. Personal loans or unsecured loans do not have a specific range. The loan amount may vary. Factors that affect the approval of unsecured loans are maintaining a credit rating, paying off previous loan amounts, credit card balances and a profession. Annual income is also an important factor that influences personal loan approval. Banks and lenders take into account annual income and other sources of customer income, since unsecured loans do not have collateral.


  1. Credit card customers may be able to borrow significantly more credit amounts.
  2. Repayment of the loan will be made a fixed amount, which is paid every month, along with a small percentage.
  3. The interest payable on the loan amount is usually predetermined. Sometimes the amount may be increased as the client delays the payment of interest and debt on time.
  4. The client is obliged to pay on time to fully repay the loan amount. The length of the loan can affect the interest rate.
  5. A client can combine two or more debts into one personal loan, which can reduce repayment costs.
  6. Personal loan interest rates are comparatively lower than other secured loans.

The features of a personal loan are the complete flexibility of the final use of the loan. This means that there are no restrictions on how the borrower spends the loan amount. Secured loans, such as a mortgage loan or a car loan, can only be spent on a car or house, depending on the type of loan.

The second feature of a personal loan is that such loans do not require customers to provide any property or asset.

Consumer credit is issued very quickly. As a rule, it takes from an hour to several hours.

Currently distributed express loans. Making such a loan will take a few minutes. To get such a loan you will need a minimum list of documents, and in some banks only a passport will be required.

How and where in the Philippines to get a personal loan with a low interest rate?

Most borrowers in the Philippines take into account the interest rate when applying for a loan. According to Bangko Sentral NG Pilipinas, the interest rate is one of the main factors for 47% of Filipino borrowers. The best personal loans in the Philippines are loans at low rates, usually from government agencies and banks.

Low interest rates are not the only things to look for when choosing a lender. Attention should be paid to fees, payment methods, processing time and even qualification requirements.

Before applying, you need to check whether you are eligible for a loan. In addition, you need to check your credit history. Existing debts or loans may cause failure. In addition, you must provide all the necessary documents and honestly answer all questions when a representative of the bank calls to verify the data.

The list required for a loan is different for hired and self-employed clients.

Self-employed clients must provide a passport, proof of income (audited financial results for the last two years), bank statement (for the last 6 months), proof of residential address and proof of business continuity.

Employees must bring a passport, bank statement for the last 3 months, 2 passport size photos.

Lenders in the Philippines advertise two types of interest rates: monthly replenishment and effective interest rate.

The effective interest rate or annual interest rate reflects the real interest that you need to pay on the loan. Therefore, this rate should pay special attention when choosing a loan.

Depending on the bank or financial institution that a potential borrower addresses, interest rates vary from 1 to 3%. Moreover, some banks charge an additional fee for processing the application. Application processing fees range from 1000 to 2000 PHP, depending on the lender.

Several banks and financial institutions offer flexible payment terms, giving borrowers the freedom to choose the most suitable agreement for them. Payment terms can vary from 3 to 60 months. The longer the loan term, the higher the interest rate. However, some banks offer a fixed interest rate.

If the borrower cannot make a monthly repayment on the due date, he will be charged for late payment. This is usually 3-4% per month

Where to get?

Below is a list of personal loans in the Philippines with low effective rates:

SSS Salary loan. The effective interest rate is 10%.

SSS Salary loan

Salary loan has the lowest interest rate in the Philippines – 10%. Loan repayment is very convenient for busy borrowers, since the monthly payment is automatically deducted from the salary. Not surprisingly, most Filipinos choose this loan to meet their short-term money needs. A distinctive feature of a payroll loan is a loan restructuring program (LRP). This program allows borrowers who have late payments to easily pay their overdue loans at a lower annual rate, which is 3%, without paying a penalty. The loan repayment period is up to 5 years.

Multipurpose loan Pag-IBIG effective interest rate of 10.75%.

loan Pag-IBIG

Pag-IBIG Multi-Purpose Salary Loan is another popular low-interest personal loan among Filipinos. He has many similarities with SSS payday loans. The effective interest rate on this loan is 10.75% and allows for a monthly repayment of the loan due to deduction from wages.

BDO Kabayan Personal Loan. The effective interest rate is 17.06-17.08%.

BDO Kabayan Personal Loan

This loan is available only for Filipinos who have at least 2-3 years of work experience abroad. BDO loan is a secured loan. This means that collateral is required in the form of a savings, current or term deposit account. Borrowers can borrow at least 10,000 PHP, and a loan is paid from 6 to 36 months.


Loan duration Monthly surcharge Effective interest rate
6 months 0,84% 17,08%
12 months 0,79% 17,07%
18 months 0,78% 17,06%
24 months 0,78% 17,06%
36 months 0,79% 17,06%


Personal loan BPI. The effective interest rate is from 23.05 to 25.74%.

Personal loan BPI

Personal loan BPI provides an affordable option for Filipinos, who need to borrow money through a loan with a low interest rate starting at 25.03% per annum. This loan allows you to borrow up to three times the size of your gross monthly income. The BPI loan amount varies from 20,000 to 1 million PHP payable after 12.18.24, 30 or 36 months.

Loan duration Monthly surcharge Effective interest rate
6 months 1,2% 25,6%
12 months 1,2% 25,74%
18 months 1,2% 25,59%
24 months 1,2% 25,33%
36 months 1,2% 25,03%

Personal loan BDO. The effective interest rate is from 25.98 to 26.76%.

Personal loan BDO

BDO personal loan is a loan for Filipinos and foreigners living in the Philippines. The interest rate on this loan starts at 25.98% per annum. The loan amount can vary from 10 000 to 1 million PHP. You can repay the loan in 6, 12, 18, 24 or 36 months.


Loan duration Monthly surcharge Effective interest rate
6 months 1,3% 26,27%
12 months 1,25% 26,63%
18 months 1,25% 26,76%
24 months 1,25% 26,58%
36 months 1,25% 25,98%

Security Bank Personal Loan. The effective interest rate starts at 29.48%.

Security Bank Personal Loan

The loan amount of this bank varies from 30 000 to 1 million PHP. You can repay the loan within 12, 18, 24 or 36 months.

Citibank Personal Loan. The effective interest rate is 32.05%.

Citibank Personal Loan

This bank approves loans within 24 hours and has the longest loan repayment period in the Philippines. You can borrow any amount from 20,000 to 2 million PHP and repay it within 12, 24, 36, 48 or 60 months.

Who is eligible for a loan:

  1. Borrower not less than 25 and not more than 65 years
  2. Annual salary of 260,000 PHP or minimum monthly income of 21,667 PHP
  3. Permanent employee with a minimum gross annual income of 260,000 PHP
  4. If self-employed, must have a minimum gross income of 300,000 PHP, the business must exist for at least 3 years.
  5. Must be a credit card holder. The card must be issued 12 months before applying for a loan and have a minimum credit limit of 30,000 PHP.

Making a loan is not a big deal. To do this, just take four simple steps:

  1. Tell an employee of a credit institution or bank what exactly you are looking for. You can increase the chances of approving a loan by sharing some personal data with borrowers.
  2. Choose the loan that best suits your needs. Sort out loan offers according to interest rates, payment terms and credit requirements.
  3. Submit your application.
  4. The bank will contact you after reviewing your loan application. It usually takes 2 to 3 business days.

In order not to waste time, you can send the following information to the bank’s customer service department and a representative will contact you regarding the requirements for your application:

  • Referral code
  • Credit amount
  • Loan term (12, 18, 24, 36 months)
  • Loan purpose
  • Full Name (Last Name, First Name, Patronymic)
  • Date of birth (mm / dd / yyyy)
  • Place of Birth
  • Civil status (single or married, widower or separately)
  • Home address
  • Residential status
  • Home phone
  • Mobile phone
  • E-mail address
  • Are there any other loans?
  • Is there a credit card?
  • Employer / Company Name
  • Employer / Business Address
  • Years of work or in business
  • Phone number
  • Employer address
  • Gross monthly salary.

Getting a personal loan for Filipinos with a bad credit history.

A bad credit rating that is below 630 should not prevent you from getting a personal loan. Some online lenders serve people with a bad reputation. These companies take credit ratings and history into account when deciding whether to grant you a loan, but they also have more flexible requirements than banks.

While personal loans from reputable online lenders may be good options for many borrowers, NerdWallet recommends that you first visit your local credit union when buying loans. Most credit unions offer flexible lending conditions and lower interest rates than online lenders, especially for people with a bad credit history. The maximum annual interest rate in a federal credit union is 18%.

If it is not possible to get a loan through a local credit union, NerdWallet recommends comparing offers from several lenders before signing any loan agreement. The rates for bad credit borrowers may vary depending on the requirements of underwriting lenders. The easiest way to compare actual rates is to complete pre-qualification.

Prequalification process.

Pre-selection for a personal loan is a preliminary stage of the loan approval process. This gives lenders a preliminary look at the creditworthiness of the potential borrower, as well as a preliminary calculation of the loan, which the bank will eventually be able to offer. However, pre-qualification does not guarantee credit; Lenders will verify the information before final approval.

The prequalification process usually includes the following steps:

The borrower fills in a prequalification form by sharing information such as income, occupation, and existing debt.

The lender performs a soft credit check, evaluating the credit rating and history. This gives the lender a sense of how risky a borrower can be.

The lender either denies or provides prequalification. If a potential borrower passes a preliminary screening, he receives information about the loan, which he can receive, including the rate and amount of the loan.

A potential borrower can accept or reject a pre-qualified offer. If accepted, the formal approval process continues, which may require additional information and verification.

Pre-qualification does not apply to personal loans. This is often the case when applying for other financial products, such as mortgages and credit cards.

What information does the borrower receive in the prequalification process?

Since rates and conditions vary among lenders, NerdWallet recommends pre-qualifying several personal loans to compare offers. Pre-screening gives access to potential loan conditions, such as the amount claimed by the borrower, and the interest rate, although these numbers may change after the lender has detailed access to the borrower’s finances after the loan application is officially submitted.

Does pre-qualification affect credit rating?

If the borrower is pre-applying for a loan, this should not affect his credit rating. Lenders conduct a soft credit check to determine creditworthiness, but this request will not appear in the credit report. This means that you can pre-qualify with multiple lenders to find the best and cheapest loan option.

If the borrower continues to file a loan application, the lender will check the financial history and conduct a thorough credit check on the borrower, which will be displayed in the credit report for up to 12 months, and temporarily withdraw points from the borrower’s account.

How can I increase my chances for approval?

Credit rating, which reflects the ability to manage debt, is the most important factor for most private lenders. For this reason, creating a strong credit history is the best way to increase the likelihood of prequalification. To do this, it is necessary to pay bills in a timely manner, maintain a low balance and fully pay credit card balances every month.

What is the difference between pre-qualification and pre-qualification?

As for personal loans, there are very few differences between prequalification and preliminary approval, and some lenders may use the terms interchangeably.

Pre-approval is most often associated with larger loans, such as mortgages. The borrower can also receive pre-approved credit card offers from any bank or other issuer.

What happens after prequalification?

By applying for a loan online, pre-qualification can be obtained within a few minutes. Then you need to follow the formal application process, which includes the provision of financial documents, such as bank statements and recent tax returns, which the lender uses to verify the information you provided during the prequalification.

I got an adverse action. What does it mean?

Adverse actions sound scary, but this is just a notification that you were denied a loan because of the information in your credit report or because of too low income. As a rule, they are sent only if you are actually denied, and not if you have not been prequalified.

The lender will report the adverse action in person, by phone or in writing, and will include information about the credit agency that provided the report, why you were denied, your current account and factors contributing to this, as well as information about how you can to do. get a free copy of your report.

If you did not qualify, you will not be able to apply. At this point, you can consider other ways to find quick money, or try to improve your chances of approval by increasing your credit rating.

What are bad loans?

Bad credit is a type of personal loan offered to borrowers with weak, bad or absent credit. There are many different loans and many different types of financial institutions that offer them – banks, credit unions and online lenders, among others.

One of the characteristics of bad credit loans is that they tend to be expensive. This is due to the fact that lenders charge higher interest rates to borrowers with bad credit than borrowers with good credit.

So, what is a good credit rating, and what is bad? As a rule, a FICO score below 630 is considered bad.

How do bad loans work?

When you have bad credit, it means that you have a history of paying off your debts either late or not. This makes it more risky for lenders to allow you to borrow money. From their point of view, you already have a history of non-payment of debts, so why should they expect to be different with them? If they lend you a thousand dollars, there is a real risk that they will not be returned.

To compensate for this risk, lenders charge higher interest rates (the cost of borrowing money) from borrowers with bad credit. Thus, they make more money on these risky loan agreements, which negates the very real possibility that many of their borrowers will not be able to fulfill their obligations (they will not be able to pay off their debts).

Even Filipinos with a bad credit history have options.

There are two main types of bad loans: secured and unsecured.

  1. An unsecured bad loan means that borrowers sign a contract and promise to repay their loan in accordance with the terms of their loan. If they are unable to repay their loan, the lender can enforce the money owed through a collection agency or other legal mechanism. Typical unsecured bad loans include installment loans, credit cards and student loans.
  2. A secured bad loan requires the borrower to use a valuable item — for example, a car, a house, or a piece of jewelry — as collateral to “secure” the loan. This means that if the borrower cannot repay the loan, the lender is legally allowed to seize and sell it in order to recover its losses. Typical secured loans include mortgages, car loans and Lombard loans.

Credit ratings for borrowers with bad credit history.


Type of loan Annual interest rate Risk to borrower
Payday Loans 400% High risks
Title Loans 300% High risks
Cash Advances 400% High risks
Bad Credit Installment Loans 100% Low risks

Are personal loans for borrowers with a bad credit history dangerous?

Loans with bad credit history — or loans without credit checks — are risky if the lender does not check the loan or the ability to repay the loan, this is a sign that it does not offer a responsible loan to the borrower. Payday Loans and Title Loans – the fastest way to spoil finances. Getting a payday loan is never worth the risk. Four of the five payday loans are either extended or renewed, and a regular payroll borrower spends more than half a year in debt to his creditor paying wages. And all this for a loan that should have only been the last two weeks! No matter how you look at it, the odds add up against you. Instead, you can find bad credit loans from lenders who offer personal loans in installments. Personal loans in installments are provided with longer terms, lower rates and – unlike predatory loans to salaries and titles – are designed to pay off.


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