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If you have short-term money needs, a personal loan can be the answer. With no collateral needed, you can easily apply for a personal loan at any bank in the Philippines. To learn more about the basics of personal loans, we've compiled this FAQ for your convenience.
True to its name, a personal loan is a loan for any personal expense. Unlike a housing loan or a car loan, you can use a personal cash loan for anything you want, be it tuition fees, travel, or anything else.
There are two types of personal loans available: secured and unsecured. A secured personal loan requires collateral, such as a house or car, to back the loan. For unsecured personal loans, you don't need to put up any kind of collateral. Unsecured personal loans are much more common in the Philippines, though secured loans are also available.
When you take out a personal loan in the Philippines, you enter into an agreement with the lender (usually a bank) and promise to repay your loan over an agreed length of time (also known as the loan tenure or loan tenor). If you're taking out a secured loan, you will also need to put up a collateral.
To repay your personal loan, you make monthly payments for the loan tenure until you've fully repaid both the principal of the loan and the interest. During the early years of the loan, the majority of your monthly payments will be used to repay interest, however, as time passes, a larger proportion of your payments will go into paying down the principal.
Rates vary from bank to bank. For example, a Security Bank personal loan has an effective interest rate of 29.48%, while another personal loan has an effective interest rate of 26.62%.
Most personal loans from banks in the Philippines offer attractive interest rates for their personal loans. While standard monthly interest rates are around 1.5% to 2%, you can get lower deals for more specific types of personal loans like OFW loans or personal loan for business expansion. Depending on the specifications of your needs, you avail the lowest rates on personal loans from these banks.
|Bank||Monthly Interest Rate|
|CTBC Personal Loan||As low as 1.39%|
|Security Bank Personal Loan||As low as 1.69%|
|Eastwest Bank Personal Loan||As low as 1.89%|
|UCPB Personal Loan||As low as 1.5%|
The best bank for your personal loan needs will vary according to your qualification and/or your preference. There are banks who offer low interest rates but their payment terms may not be as attractive. Meanwhile, you may get a loan with better tenure but a less appealing interest rate. Quick loans from non-traditional lending companies will grant loans with less paperwork but their interest rate may be a lot more than what banks offer. Depending on what you value most, you'll get the best deals for every category from different loan providers.
|Low Interest Rate||CTBC (1.39% per month)|
|Bigger Amount||Security Bank (Up to ₱2,000,000)|
|Longer Tenure||Equicom Savings Bank (Up to 5 years)|
|Fast Approval||Security Bank, CTBC Bank|
|Minimal Documents||Security Bank, CTBC Bank, Eastwest Bank|
You can borrow loan amounts as much as ₱2,000,000 when you apply for a personal loan from a bank, though it will still be subject for evaluation and may or may not be approved based on your capacity to pay. Meanwhile, private lenders on the average mostly offer from ₱10,000 to ₱200,000. Private lenders, unlike banks, don't usually have a standard maximum loan amount. However, many of them do base their approved loan amount on the borrower's income.
For your reference, below are the different personal loan providers and the maximum amount of loans they offer.
|Provider||Max Loan Amount|
|CTBC Personal Loan||₱2,000,000|
|EastWest Bank Personal Loan||₱2,000,000|
|Security Bank Personal Loan||₱2,000,000|
|Welcome Finance Personal Loan||₱1,000,000|
There is a type of personal loan for every financial need. To get the most out of what banks and private lending companies have to offer, applying for a specific personal loan that's appropriate for your needs (starting a business, home renovation, etc) and/or branded for your profession (Doctors loan). This will give you more flexibility to pay back the amount you've borrowed.
As a general rule of thumb, you must submit the complete documents required by the bank or loan provider. Even a single missing requirement such as a valid ID or an incomplete form will take out a day or two from the loan application verification, thus delaying the disbursement of your loan further.