Personal Loans in Philippines – FAQ

Personal Loans in Philippines – … image

The institute of lending is one of the oldest in the world. People borrowed money from other individuals or companies since ancient times and they continue doing it today. Especially, the lending/borrowing relationships are popular in developing countries where citizens often can’t cover their expenses regularly with own funds. That’s why speedy cash loans remain highly demanded.

Sadly, customers often don’t fully grasp the concept of lending. People fail to repay the loans they received, accumulate debt, and decrease own credit rating. They even can fall victim to loan sharks – illegal companies that impose exorbitant rates and cruel methods to return the money. Of course, it’s harmful to the clients’ finances and in some cases even health.

This guide with FAQ aims to help Filipino citizens to understand loans and find top offers. Read on to find out the basics of borrowing, reliable lenders, and ways to receive the most suitable loans.

What Personal Loans Are?

Let’s begin with the simplest practical information. Note that there are several loan types but we will focus on personal ones only. If you’re interested in business loans or credit cards/credit lines, feel free to ask us. Banks also can provide the exhaustive info about these products.

Basically, a personal loan is a financial offer delivered from one person/entity to another one. It’s a lump sum of money that must be returned within a specified period. Additionally, a borrower must return the interest. It’s an additional percent that acts as a lender’s salary for his financial services.

Thus, all the lending products feature the next parameters:

  • Amount. The sum you receive after the application approval.
  • Collateral. The property you can use to get better conditions. Not all loans require it.
  • Fees. Extra payments required by a lender, e.g. for processing or late payment.
  • Interest. The percentage you must return in addition to the initial amount.
  • Period. A certain time after which you must fully repay the loan.
  • Criteria. The minimum credit score, the needed documents, etc.

The thing is to get the offer with the most favorable requirements, including large amounts, lack of fees, low rates, and long periods.

Which Conditions Are Considered Good?

But what conditions are the best ones? Is it possible to find loans with zero interest at all? Or get a loan for ten years? Long story short, it all depends on your opportunities and goals. Clients who need some money to cover daily expenses can find extra short-term loans with a huge annual percentage rate (APR) but low final repayments. Simultaneously, borrowers who want to renovate or purchase a house can get lengthy offers with low monthly interest.

Thus, remember three key types:

  1. Short-term. Used for ongoing small expenses, e.g. on food, transport, and minor purchases. Terms vary between a few days and a few weeks. The best interest rate is around 0.5% per day or lower but the most common is 1% per day. Often, these loans feature lower requirements related to documents and various income proofs.
  2. Mid-term. Standard loans used for big purchases like appliances, gadgets, etc. They also can be used to pay tuition fees, cover vacation expenses or investments in the business. The maximum period is 1-2 years. Interests are calculated on a monthly/yearly basis and the best ones are somewhere between 5% and 10% APR.
  3. Long-term. The third type is for extremely huge investments only. For instance, mortgage and car loans fall into this category. People can repay money for decades and at pretty low rates. Interest below 5% per year is considered really good. Sometimes, lenders offer preferential periods with 0% rates, e.g. the first 1-2 years.

How Do Personal Loans in the Philippines Work?

When it comes to the Philippines, personal loans are similar to offers in other countries. Here you can apply to different lending companies. It is also possible to find offers from governmental teams like SSS or GSIS, from large banks like Citibank or RCBC, and various private teams, from large corporations to street lenders. Be sure to check the reparability of companies by exploring the official SEC’s list of lenders.

What about the lending mechanism in the Philippines? It’s similar to traditional standards, too. Firstly, a borrower should select the lending group and decide which loan type he/she wants to apply for. The next step is to prepare the required documents. The package includes government-issued IDs, proofs of income like payslips, and utility bills. Finally, a borrower fills the application form and sends it. After approval, the lender delivers funds. That’s it.

Today, more and more companies start working online only. Means, you can find the loan, fill the form, and get the funds without leaving home. Some businesses support only specific steps in the digital form, e.g. form sending or repayments.

Where Can You Apply for Loans Online?

As we’ve mentioned, there are three types of lenders:

  • Governmental groups.
  • Large banks.
  • Other private lenders.

The most digitally-friendly firms are banks. They support online chats, applications, distribution of loans, repayments, and more. Private groups also opt for digital ways of interaction. Government lenders are the most old-fashioned teams but they also start introducing the online application and evaluation tools.

Regardless of the chosen partner, you should remember about safety. Don’t pay any fees before you get the money, don’t send your sensitive info to suspicious lenders, etc. It’s even more important to remember about security when you make deals online because fraudulent companies can cheat on customers on the Internet easily.

How to Calculate Personal Loans?

Actually, it’s really simple. To find out how much you should repay, remember the amount, the term, the rate, and the applicable fees. The calculation algorithm looks as follows:

  1. Find the amount and tenure. Say, you want to take P10,000 for 1 month. Remember these figures, as they are important.
  2. Define the rates. For our example, it can be around 0.05% per day or 1.5% per month. This point is also essential.
  3. Calculate the total repayment. It will be P150 per month so the total returned amount is P10,150. As a rule, you should pay it on the due date.
  4. Don’t forget about fees and fines. Often, they come as lump sums, e.g. P1,000 for late payment or P100 for extra checks.

As you can see, nothing difficult with calculations! Be sure to correspond to all terms and rates. Some lenders list rates per day while others feature rates per month or year. Don’t get confused with the differences.

Can Personal Loans Be Transferred to Other Persons?

In short, no. All the personal loans are unique because they’re based on each borrower’s credit ratings, as well as other conditions. It’s impossible to transfer the loan to other clients. However, if you face problems with repayment, it’s possible to ask for the lender’s support. There are two options:

  1. Contact the initial lender. Don’t hesitate to talk to your bank’s representative or another employee. Usually, reputable lenders don’t want their clients to accumulate debt. That’s why they always try to help in repaying the loan. You can get a prolonged period or even a reduced interest rate.
  2. Find another loan. It’s known as refinancing. When the first lender can’t or don’t want to help, it’s a good idea to find another company. The most crucial thing is to get a new offer with better conditions than the previous one. In this way, you can reduce the interest and return the funds quicker.

Regardless of the issues you face, try to seek help in official contact centers of banks or other lending firms. Don’t deal with suspicious persons/entities that promise to pay off your debt. Most often, they’re just frauds.

Which Banks Offer the Lowest Interest on Personal Loans?

Let’s now look at the banks that work with Filipino citizens. There are dozens of offers but we will list only five, which are the most reputable and convenient. Surely, we try to find minimum interest possible. But don’t hesitate to conduct own research because terms may change.

Here are five top-rated local and international banks with the lowest interest:

  • BPI – 1.2% per month or 14.4% APR.
  • HSBC – 1.21% per month or 14.52%-15.48% APR.
  • Citi – 1.26% per month or 15.12% APR.
  • Maybank – 1.3% per month or 15.6% APR.
  • RCBC – 1.3% per month or 15.6% APR.

Thus, the mentioned banks offer good prices, as for now. But we suggest consulting in each bank, additionally. The catch is that conditions may change based on your credit score, job, and other factors.

Which Banks Offer the Best Personal Loans?

Apart from interest rates, there are more parameters you may be interested in. They include amounts, tenures, approval/processing times, documents required, and so on. To get top offers, you should consider all these points, not only the interest. For this, we also want to evaluate Philippine-based banks by the mentioned aspects:

  • The biggest amounts:
  • Citi – up to P2 million.
  • EastWest Bank – up to P2 million.
  • Security Bank – up to P2 million.
  • The longest periods:
  • Citi – up to 60 months.
  • Blend PH – up to 60 months.
  • China Bank Savings – up to 48 months.
  • The shortest approval time:
  • Cashcat – within 24 working hours.
  • Cashwagon – within 24 working hours.
  • The least documents required – quick cash online lenders like Cashcat often require only one or two valid IDs.

What Are the Highest Amounts to Borrow?

Exact sums are often the most important factor for Filipino borrowers. Hence, we will talk a bit more about this parameter. Want to receive the biggest amount like several million pesos or even more? Be ready to build your credit rating, provide extra documents, and prove that you’re a reputable citizen. Banks and other lenders just want to be sure that you can return such a big sum. Also, remember that long-term loans feature larger amounts, usually.

Below, we list a few trusted companies that have large amounts of loans.

Lender Amount, pesos Tenure, months
Asteria 2 – 20 thousand 6
Atome 1 – 10 thousand 6
BPI 20 thousand – 1 million 12-36
Cashwagon 7 – 20 thousand 6
CIMB 30 thousand – 1 million 12 – 60
Citi 20 thousand – 2 million 12 – 60
EastWest Bank 25 thousand – 2 million 12 – 36
Global Dominion 20 – 300 thousand 6 – 12
HSBC HSBC 6 – 36
Maybank 50 thousand – 1 million 12 – 36
RCBC 50 thousand – 1 million 6 – 36
Security Bank 30 thousand – 2 million 12 – 36
South Asialink 20 – 250 thousand 6 – 12
Sterling 50 thousand – 1 million 12 – 36
TALA 1 – 10 thousand 6

How to Find the Best Loans Overall?

But not only banking groups deliver lending services to locals! In the country, there are more companies that deliver loans. Moreover, there are several types of these offers. You want to know the exact types and places where you can get them. That’s why we designed another table with exhaustive info about local lenders and their lending products. The only thing we ask you is not to deal with loan sharks and illegal firms. Better, pay a bit more but be safe.

Loan type Lenders
Online Cash Loan Cashwagon, Asteria, First Circle, South Asialink, TALA, Atome, Global Dominion, FundKo
OFW Loan Global Dominion, Pag-IBIG, BDO, SSS, OWWA, BPI, PNB, China Bank, Landbank, UCPB
Doctors Loan Maybank, Global Dominion, Security Bank, Asialink Finance
Business Loan BDO, BPI, Metrobank, OWWA, PSBank, Security Bank, SSS, PNB, Maybank, Esquire, RFC, Global Dominion, First Circle
Salary Loan Maybank, Cashmart, Monily, Citi, Security Bank, SSS, Loan Ranger, TALA
Regular Bank Loan All the mentioned banks

How Can I Receive a Loan Quickly?

As you already know the best lenders in the country, let’s quickly discuss ways to receive the money. Generally, you should find the desired offer, check the conditions, complete and send the application, and wait. After approval, you will be able to get the money. Note that some steps can be finished online while others are offline-onlyю In any case, it depends on the lender.

Requirements divide into eligibility criteria and docs. Thus, the main requirements for all borrowers who want to get a personal loan are as follows:

  • Eligibility:
  • Adult age.
  • Local citizenship.
  • Enough income.
  • Good credit history.
  • Documents:
  • Valid IDs.
  • Recent payslips.
  • Income tax returns.
  • Employment info.
  • Financial statements.
  • Utility bills.

Small online firms may feature fewer requirements while governmental teams are stricter. Choose wisely and don’t forget about your eligibility and opportunities.