Finding the Best Personal Loan in the Philippines
There are several reasonable ways to get cash. Applying for a personal loan is one, and it doesn’t have to take much time if you know what you’re doing.
eCompareMo has partnered with the country’s leading banks and lending companies to give you the power to choose the best Personal Loan product for your every need.
|EastWest Personal Loan|
|PBCOM Personal Loan|
|Chinatrust Personal Loan|
|HSBC Personal Loan|
|RCBC Personal Loan|
|Maybank Personal Loan|
|Security Bank Personal Loan|
|UCPB Personal Loan|
|Leverage Personal Loan|
|Welcome Finance Personal Loan|
- What is a Personal Loan and How Does It Work?
- What Is A Good Reason To Get A Personal Loan?
- What Are The Pros And Cons of Personal Loans?
- Top Personal Loan Providers in Philippines
- 1. EastWest Bank Personal Loan
- 2. Chinabank Savings Easi-Funds Personal Loan
- 3. Leverage Personal Loan
- 4. Welcome Finance Personal Loan
- Different Types of Loans in the Philippines:
- How to Apply for a Personal Loan
- Personal Loan Eligibility and Requirements
- Traditional Banks vs. Online Lenders
- How to Calculate Interest Rate on a Loan
- Loan Charges and Fees
- Reasons for Personal Loan Rejection
- How do I increase my Loan Eligibility
- Personal Loan Frequently Asked Questions
- How to make Loan repayment?
What is a Personal Loan and How Does It Work?
A personal loan is money borrowed from banks and private lenders that fulfill immediate financial needs. It can come handy in different situations as it can be a quick and easy way of paying down higher interest credit card debts, tuition fee payment, home renovations, and solving other financial emergencies.
According to a recent study by the Bangko Sentral ng Pilipinas (BSP), approximately 22% of borrowers use it for emergency medical expenses.
It is an unsecured type of loan, which means that it does not require a collateral such as your car or your house to get approved. That said, the chances of getting your loan approval is easier and funds can be released in just a few days.
Personal loans come with terms that are usually pretty simple. When applying for a personal type of loan, you will be sealing an agreement with the lender that you will repay the loan with fixed monthly installments, which typically last from 12 months to 60 months (1 to 5 years).
The payment terms may vary depending on your loan provider, as will your interest rates. Keep in mind that interest rates can only be fixed and will not change in time once your loan is already approved.
Even though personal loans have become the preferred financing options of many, it has its fair share of pros and cons. Let’s take a closer look.
What Is A Good Reason To Get A Personal Loan?
- For purchasing big-ticket items
- Funding a business venture
- Financing an emergency fund
- Credit card payoff
- Financing home improvements or renovation
- Financing education
- Medical expenses
- Travel fund
One of the many reasons people take out a personal loan is to finance a big-ticket purchase, such as a gadget, furniture, appliance, or as down payment or financing for a car.
Starting or growing a business is one of the best reasons people to get a personal loan. Many people with outstanding loans use it for business purposes or to make investments. Borrowing money from a bank or from other lending offices is their best bet to finance their dreams of starting their own business.
Emergency expenses are also a big reason why people find themselves needing to take out personal loans. Medical expenses, funerals, and other emergency purchases can be expensive, and it can easily rip-off your account. It’s always better to be ready than to be sorry so don’t hesitate in taking out personal loans especially if you are dedicating it for emergency purposes.
One of the best reasons to use a personal loan is paying off your credit cards because of its lower interest rates. With lower rates, you can reduce the overall time spent repaying your outstanding balance by minimizing the total interest accumulated. This allows you to pay off credit cards in certain terms and with a clear end date in sight.
A personal loan can be a great option to finance your home remodeling plans. Whether you want to put in a new roof, install solar panels, remodel your kitchen or add a swimming pool, a personal loan can be a big help.
While there are plenty of reasons for people taking out loans, financing your own education or, in the case of parents, their child’s education, personal loans can be a great way to consolidate such expenses. This will not only give you enough time to pay for it, especially if you are not financially capable of settling it at once, using a loan to compensate this need lets you have a smooth financial flow all year round.
Medical expenses are definitely part one of the reasons why people acquire personal loans. These don’t have to be just for emergencies, other examples of medical expenses include dental services such as orthodontics or braces, cosmetic surgeries, fertility treatments and other procedures which can cost you thousands and thousands of pesos.
While your average vacation might not require you to take out a personal loan, what about a honeymoon or a luxury cruise? That’s where things can get pricey and where you might want to apply for a personal loan. Personal loans can also be used to help you see the world. Whether you’ve just graduated, and you want to go on a trip or you’re celebrating an anniversary, there are lots of reasons for personal loans to help fund your dream vacation.
What Are The Pros And Cons of Personal Loans?
Are personal loan options too good to be true? Before you go out and apply for one, you might want to look at the pros and the cons of getting an unsecured personal loan. Below, we break down the upside and downside of personal loans.
If you need to borrow money, there are several reasons why a personal loan might be a good choice. For instance:
- It has many uses. Personal loans allow for flexibility and can be used for a number of purposes. They’re good for debt consolidation, tuition fee payment, emergency expenses, and many more. Rates are reasonable depending on your credit score.
- Build a credit profile. If you don’t have diversity in the types of credit you have used, a personal loan can help. One of the benefits of personal loans is that they count toward your credit score in terms of types of accounts you have.
- Fast approval. If you are in need of a quick cash, a personal loan can be your best option as you can get approved in as fast a s 24 hours.
- No collateral needed. Personal loans are much easier to access than other types of loans. Typically only a few credit checks are required to qualify borrowers.
Despite their benefits, personal loans aren’t always the best way to borrow money. Here are a few of their drawbacks:
- Higher interest rates if you have a poor credit standing. Although more widely observed in more progressive countries than in the Philippines, some personal loan interest rates are priced depending on risk, or a borrower’s credit standing.
- Various fees and charges. Certain personal loans penalize borrowers for early repayment, have high interest rates and poor terms.
- Fixed and stricter payment terms. Lenders who offer loans to individuals with a poor credit standing often impose stricter repayment terms on these borrowers.
- Requires a good credit history. Due to the fact that these loans are considered high risk, most lenders require a good credit standing.
- Potential for scams. A final risk of taking out a personal loan is that not all loan offers are legitimate. Scammers sometimes offer fake personal loans applications in order to get hold of your personal information, which they use for to steal your identity. In some cases, they also charge you with an upfront fee and then disappear with the money. This is known as an advance-fee scam.
Different Types of Loans in the Philippines:
There are several types of loans commonly offered in the Philippines. Loans come in different demands and terms. Depending on their need, borrowers may avail of a personal loan, business loan, home loan, or vehicle loan. Information on these common types of loans are now readily available online where rates comparison and application can be done within minutes. These loan products cater to different kinds of financial needs.
They can vary depending on the loanable amount, length of payment terms, and how the interest rates are calculated. Here are the most common available loan products in the market:
- Secured loan
- Unsecured loan
- Pag-IBIG: Short-term multi-purpose loan, a housing loan, and a calamity loan. Borrowers may opt to have their multi-purpose loans renewed after repaying for six months.
- SSS: Salary loan, different types of business and housing loans, as well as a calamity loan. Borrowers who have paid at least half of their salary loan can reapply for a bigger loan amount.
- GSIS: Consolidated loan, policy loan, and emergency loan.
1. Personal Loan
This type of loan is offered for any type of immediate financial need. It is subdivided into two categories: secured and unsecured loan.
This loan product requires the borrower to have some sort of collateral as payment security for loan lenders. Collaterals can be in a form of real estate such as home or commercial properties, cash, inventory, blanket liens, or unpaid invoices.
In the event that the borrower fails to pay the loan amount that he/she has borrowed, lenders will take the asset and use it as a payment for the loaned money.
Unsecured personal loans in the Philippines are the most common, granted by banks with no collateral. It is considered of higher risk since it doesn’t have any form of security.
It can be used for home renovation, travel expenses, or your child’s education. These unsecured personal loans come with a fixed monthly interest rate, under the criteria of eligibility and credit history standards.
Related: Types of Personal Loan
2. Housing Loan
A home loan, or housing loan, is made specifically for the purchase of a residence. It can be used when you’re planning to buy a vacant lot, house and lot, townhouse unit, a condominium unit, and even for home construction or renovation and repair.
Among all types of loans, this offers the longest tenure, which may reach up to 20years. Once the payment scheme has been completed, the title will be transferred to the owner.
It may be set with a fixed interest rate at a certain period, and a yearly repricing is applied. Most financial institutions provide a housing loan calculator for borrowers to see an estimate of monthly amortizations.
3. Auto Loan
Owning your dream car is made easier with auto loans. You can choose to apply for a car loan with banks or car dealerships, known as in-house financing. The difference is that banks require a 20% deposit that you will have to pay upfront, but it’s coupled with lower monthly amortizations.
In-house financing, on the other hand, offers lower down payments, but with steeper monthly amortizations, which can reach up to four to five percent higher than banks.
Both options offer an all-in type of financing where other expenses are also covered, such as LTO registration, first year car insurance, and for some, even free accessories.
The car’s deed of sale is leased to the borrower until it is paid in full. Until all repayments have been completed, you don’t really own your car. Loan tenures can be from three years, and up to six years. An auto loan calculator is provided to see the estimated monthly amortizations.
5. Business Loan
Businesses big or small will often need more money to expand their operations. This type of loan may be used for the operational needs of the business, such as the purchase of manufacturing equipment, operational costs, or even vehicles for business use.
This funding arrangement has been established by banks where they provide capital through secured business loans. The business owner/s’ properties or other appraised assets are set as collateral.
The types of loans offered are often specific to the bank, the most common of which are small or medium-sized enterprise (SME) loans. SMEs in the Philippines are those that have less than 200 employees, with assets valued from P3 million (micro), up to P100 million (medium), according to the Department of Trade and Industry (DTI).
SME loans are granted to businessmen or aspiring entrepreneurs to start or grow their business. And unlike home loans, business loan interest rates are often repriced every few months.
5. OFW Loan
An Overseas Filipino Worker (OFW) loan is a loan product tailor-fit to the financial needs of overseas workers. Whether they are land-based or sea-based, OFWs can apply for a cash loan that can be used for their business ideas, deployment fund, debt consolidation, or education fund, among others.
Apart from OFW loans offered by banks, Filipino migrant workers can also seek financial help from the government through the OWWA loan. This loan product is offered by the Overseas Worker Welfare Administration (OWWA), a government agency that focuses on the welfare of Filipino workers abroad.
6. Government Loan
Apart from private financial institutions, consumers can also borrow money from the government. In the Philippines, government agencies, such as the Pag-IBIG Fund, Government Service Insurance System (GSIS), and Social Security System (SSS) offer affordable cash loan to its members. Individuals may avail of a loan from these sectors by completing a set of required documents and having a minimum premium contribution to the government agency they are applying with.
Often, the loanable amount depends on the premium payment made by the member. Employed members can settle their loan payments through their monthly payroll. On the other hand, self-employed and voluntary members can pay their salary loan through SSS-accredited banks or authorized payment centers.
Government-imposed contributions through SSS, Pag-IBIG, and GSIS provide loans for Filipino employees who have met the minimum months of regular contribution.
Employed (private sector) and self-employed Filipinos are mandated by law to contribute to SSS, while public sector employees contribute to GSIS.
On the other hand, Pag-IBIG is open for both public and private sector employees, as well as voluntary contributions.
Eligible individuals may apply for the following services:
Top Personal Loan Providers in Philippines
Here are the country’s leading banks and lending companies that’ll give you the power to choose the best personal loan product for your every need.
Here are some of the top personal loan providers in the country:
1. Chinabank Savings Easi-Funds Personal Loan
|Interest rate||1.55% to 1.75% per month|
|Loanable amount||Up to 1M|
|Payment Terms||12-36 months|
|Payment Method||Post-dated checks|
Chinabank Savings Easi-Funds Personal Loan Application
- Complete the required documents and submit it to your provider.
- Wait for the call from the representative of the lending company you select to verify the information you provided. Make sure to double check the details, such as your desired loan amount and tenure.
- Wait for about 5 to 7 workings days for the approval of your loan. (This will all depend on your credit score. Applicant with a higher credit score can get their loan as fast as 1 to 3 days.)
2. EastWest Bank Personal Loan
|Interest rate||1.49% - 1.89% per month|
|Loanable amount||Up to 2M|
|Payment Terms||12-36 months|
|Payment Method||Post-dated checks|
EastWest Personal Loan Application
- Completely fill out the Personal Loan Application Form.
- Read through the terms and conditions.
- Prepare scanned copies of the additional supporting documents.
- Wait for the call from the bank for the status of your loan.
3. Leverage Personal Loan
|Interest rate||3.50% per month|
|Loanable amount||Up to 1M|
|Payment Terms||12 months|
|Payment Method||Post-dated checks|
Leverage Personal Loan Application
- Fill-out the form and complete all the necessary documents.
- Verify the information you provided when a representative of your chosen lender calls you.
- Wait for the feedback of the lender when will you get your loan proceeds. This usually takes for about 3 to 5 working days.
4. Welcome Finance Personal Loan
|Interest rate||1.60% - 3.00% per month|
|Loanable amount||Up to 500k|
|Payment Terms||12 – 36 months|
|Payment Method||Post-dated checks and Bank Transfers|
Welcome Finance Personal Loan Application
- Fill-out the form and complete all the necessary documents.
- Wait for the call from the representative of your chosen lender. Double check if there are any discrepancies in your loan application.
- Get your loan proceeds within 2-7 working days.
How to Apply for a Personal Loan
When applying for a personal loan, you need to first check your qualifications before you proceed with the application.
You can start by examining your credit record—if you have any existing debt or loans from other banks. Pre-existing loans or outstanding debts may have an impact on your application and can be a factor for declined applications. If you are now sure about your eligibility to apply for a loan, follow these six simple steps to nail your application for a personal loan.
Step 1: Compare your options
When comparing your options, start by making sure you know what type of loan you’re looking for. This depends on your needs.
Step 2: Find a lender
Search for a financial institution that offers cash loans. Check the loanable amount, interest rates, and loan tenure when searching for lenders.
You can compare loan rates online to save time and money as you will not need to go from one bank branch to another or make multiple phone calls.
Step 3: Check the eligibility criteria
Making sure you’re eligible first so as not to waste time applying for a loan you don’t qualify for.
While the basic eligibility criteria you need to meet varies by lender, these are the most common points lenders consider on your application:
- Age. The minimum age to apply for a loan is usually 21 years old.
- Credit standing. Outstanding debt from banks and utility providers, as well as a pre-existing loan, may hinder you
- Employment. Most lenders will require you to be employed and working a stable job. Some lenders may consider alternative forms of income such as retirement or investments.
- Income. This eligibility criteria varies from one lender to another. No matter how much money you have in the bank, you won't be approved for a personal loan if your regular income cannot sustain the monthly loan repayments. Banks require borrowers to meet a minimum annual or monthly income requirement. This is usually higher for self-employed borrowers than salaried employees.
Just because you meet these requirements doesn’t mean you’ll be approved for a loan. You need to be able to show you can afford what you borrow without straining your budget. Lenders will look at your income, outstanding debts and employment in order to determine if whether or not you’re an eligible applicant.
Step 4: Complete the necessary documents
Once you have your chosen provider in mind, provide the required documents mandated by the lender of your choice. Check the list of the qualifications and the common requirements needed.
Make sure that you submit all the necessary documents that the bank requires from you on time so that your application will be processed at once.
Step 5: Answer the credit investigators with all honesty
Apart from scrutinizing the required documents sent in, banks and lenders also conduct credit investigations on their borrowers. This evaluation is done to verify information and ask more details about the borrower’s financial information. All you need to do is just honestly answer all the questions asked from you when a bank representative calls you for a background check.
Step 6: Wait for the lender’s feedback
After the credit investigation, the lender will notify you of the status of your loan application. Expect a call you or an email on the result of your application.
The loan application process usually takes three to five working days, depending on the provider that you have chosen.
- Full approval
Pre-approval is also called conditional approval and usually takes less time because the lender is simply assessing your strengths as a borrower. It’s given pending more information from you, such as additional pay stubs or documents relating to your assets or debts. The lender will still need to fully underwrite your application and check your credit before issuing full approval.
Full approval is given when you’ve supplied enough information for the lender to decide on your application. Your lender will provide you a loan contract or loan agreement that outlines how much you’ll be borrowing; how much you need to pay back and other important details regarding your loan.
Once approved, you can get your loan through branch pickup, have it credited to your bank account, or ask the Manager’s Check to be delivered to your billing address.
Personal Loan Eligibility and Requirements
Make sure that you are eligible for a loan application before applying for one. Check these requirements:
- Must be a resident of the Philippines with a valid Philippine billing address
- Must be at least 21 years of age or older
- Must have an annual income that meets the requirements of the chosen lending company
- Must have a postpaid landline or a postpaid mobile phone under your account
- Must have a Tax Identification Number (TIN) and SSS/GSIS No.
Traditional Banks vs. Online Lenders
Access to credit has never been easier than today. If you are wondering how traditional banks and online lenders differ from one another, we will break it down for you. From requirements to loan terms, collaterals and more, here are the differences between traditional banks and alternative lending institutions as well as their pros and cons.
Traditional banks as lenders are known for their stringent requirements. Traditional bank loan requirements include nearly perfect personal credit scores and potential collateral agreement for up to 100% of the total loan amount, a concrete business plan, various financial statements and cash-flow projections.
It is undeniable that traditional banks offer much lower rates and better repayment terms than alternative lenders. So if you think that you have a good chance of qualifying for a bank loan—and knowing yourself and your needs, you can and you will be able to wait for the approval process—then most certainly, traditional banks are worth heavily considering.
Here are the pros and cons of acquiring a personal loan from traditional banks:
|Wider and deeper breadth of options||Higher upfront requirements|
|Lower interest rates||Slower processing speed|
|Lesser risk as industry is heavily regulated||Requires good personal credit|
Getting a personal loan from an alternative lender is a great option for those people who are not able to meet the minimum requirements that banks and other credit unions impose. Since the first step to your application can be handled virtually, the application process can be faster. Most important, private lenders tend to be more lenient when it comes to the applicant’s personal credit history.
However, keep in mind that private lenders are not as regulated as traditional banks, which is why the risk is higher.
If you really need a quick access to cash, it is best to do your homework and research on reputable private lenders so that you will not end up in a critical financial situation but in a good lending position.
Here are the pros and cons of acquiring a personal loan from private lenders:
|Fewer requirements and restrictions||Higher interest rates|
|No credit history check||Shorter payment terms|
|Faster approval||Risk of losing collateral|
|Convenient as you can apply anywhere as long as you have access to the internet||Risk of getting scammed as industry is not as regulated|
|More accessible if personal credit is low||Absence of physical branches for some|
How to Calculate Interest Rate on a Loan
There are different calculations for every type of a loan. You just need to first identify the type of loan you are applying for and your desired loan amount before you can calculate your monthly payment.
The interest rate is calculated when you divide the amount of interest with the amount of principal. Typically, it is expressed as a percentage and noted on an annual basis.
Interest rates may range from 1% to 3%, depending on the bank or financial institution you apply with.
Below is a sample computation for personal loans with a principal amount of P20,000:
|Interest Rate||Fixed rate of 1.26% per month|
|Loan Tenure||12 months|
|Total Interest Payable||PHP3,024 for 12 months|
|Total Amount Payable||PHP23,024.04 for 12 months|
Luckily, there is a tool that helps loan borrowers in determining these factors in advance. It’s called a Loan Calculator.
A Loan Calculator is an online tool that guides loan borrowers in projecting how much they’ll spend on loan repayment. By keying in the loan amount and payment term, you can instantly see and adjust your payable monthly amortization and interest rate.
Loan Charges and Fees
- Monthly interest charge
- Disbursement Fee
- Returned check fee
- Amendment fee
- Processing fee
- Late payment fee
- Early payment fee
- Documentary stamp tax
- Notarial Fee
Monthly interest rate charges are applied to the total amount due or outstanding balance and any unpaid personal loan fees and charges.
Disbursement fee is not common in the Philippines. Every time the loan amount, or a portion of it, is disbursed to you, a disbursement fee is taken out of your total acquired loan. To save money on this fee, simply cash out your loan proceeds once.
The bank will return your check if your checking or current account has insufficient funds or is closed, or if there's an erasure or alteration on your check. You will be charged with a returned check fee of P1,000 to P2,000. Be careful when issuing checks to avoid this fee, or better yet, use other loan payment channels such as auto debit arrangement and online banking.
An amendment fee is paid each time you have your personal loan details change. For each modification of details, you will be charged more or less than P500 depending on your bank or provider.
Varies from PHP1,000 to PHP2,000, depending on the lender.
Banks charge around 3% to 4% per month.
Penalty fee for paying off a loan before its maturity date
The Bureau of Internal Revenue (BIR) requires a Documentary Stamp Tax (DST) that costs PHP1.50 per PHP200 of loan amount over PHP250,000 for personal use or any loan amount for business purposes. Like the processing fee, the DST is deducted from the loan proceeds. Loans under PHP250,000 for personal use are exempted from the DST payment.
This is also known by many as the attorney’s fee. This personal loan added fee covers the cost of collection and litigation when a borrower defaults on a loan.
Reasons for Personal Loan rejection
Ever wonder why the majority of loan applications in the Philippines get declined by lenders? The stringent requirements of financial institutions aren’t always to blame; often it's simply due to lack of consumers’ knowledge on how to make sure their personal loan will be approved.
Though there are numerous important areas banks or lending companies will be focusing on, it is vital that you are prepared to give the flawless, whole package for credit check for guaranteed personal loan approval.
If you’re planning to apply for a personal loan, here are some of the reasons why loans are rejected and some ways on how you can prevent it from happening.
1. Providing incomplete information and documents
As with any banking transaction, an application form is required. This will carry all your information—from personal (listing down assets and liabilities) to the common ones (date of birth, addresses, contact numbers).
Always check the information you provide. Any inconsistencies in your details, or documents that are missing or look dodgy, can result in a delayed loan application or even an outright decline.
2. Asking more than your collateral
For secured transactions, you need to get the appraised price of the collateral, and the value must be enough to cover your loan amount. However, expect that the lenders will not provide you the exact 100% amount of your collateral as your loan. Thus, consider interest or down payment, when computing how much you can loan.
3. Poor credit standing
If you have bad credit or an over limit credit card history, you might need to clear your records first before getting another loan. Every creditor is persistent and serious with back checking potential debtor, and if they found out any negative financial history, they’ll automatically decline your request for a loan.
4. Outstanding debts
All banks have a credit card database that presents them with all your accounts since the first time you swiped your Mastercard or Visa card. If you voluntarily canceled a card and paid all debts, then you don’t have to worry about anything. However, for those with canceled card/s due to inability to pay, this will reflect negatively on your next lender. It’s best to settle all accounts with other banks before jumping into a new one.
5. Multiple loan applications
Too many credit card and loan applications are signs of financial instability to most lenders. If your provider notices that you have other applications other than your application with them, then most likely than not, you will not be approved with your loan. Don’t try hitting two birds with one stone. Process one application at a time and find out for yourself why you got rejected, find solutions to it before you go on with your next loan application.
6. Unstable employment history
Another item on the list is the verification and analysis of your employment history. Banks and big lending companies want to guarantee that you have a stable source of income and have the ability to pay for your loan. Most banks require applicants to have been in the same company for two years or more, as they appear to be more secure financially.
Although employment stability is important, some lenders are not strict with this guideline, so long as the applicant has stayed in the same field of work, they consider it as the same line of employment.
How do I increase my loan eligibility
If you’re planning to apply, here are some useful insights that might help you pass that background check and quickly get an approval for your loan:
1. Open and maintain a savings account
One way to show banks and lenders that you’re financially capable and responsible is to have your own savings account. Make sure that you contribute regularly to your savings. This will prove them that you are likely to be able to cope up regular loan repayments.
2. Establish a decent credit history
Your credit history will be the concrete evidence of your settlement behaviors and morals. Keep in mind that bounced checks, unpaid previous loans, credit card felony and such, can ruin your loan application process. However, an excellent credit history will provide you nothing but a favor loan to you.
3. Be truthful
As part of the loan process, banks will continuously verify all information that you have filled out in your application form. Expect a call from them to confirm these data. Make it a point that your line is always open because if they can’t reach you right away, your application will be rejected immediately.
4. Uphold an outstanding credit rating
Having a good credit history is essential, but it’s also important that you have decent credit rating. It will help to speed up the loan process. You must have a good account history with any companies that has provided you credit, either telecommunication companies or other financial institutions. Overlooked payments or debts might have a bad impression to your credit rating.
5. Check if you are really qualified to apply for personal loan
Before deciding whether you can apply for a loan or not, you must ask yourself these questions first:
- Am I of legal age?
- Do I have a good credit rating?
- Do I have a savings account on any bank?
- Do I meet the minimum income requirements of these organizations?
- Do I have a job?
- Am I capable of paying the monthly due in time?
- How much do I want to borrow?
If your answer is Yes to all of these questions, then no doubt you are finally ready to apply for a personal loan.
6. Take time to check and compare loan interest rates and terms
Taking time to search first before applying for a personal loan will be a big help to you. Through comparison, you will not only get the best offers, but you can also find banks with lowest interest rate and short payment terms.
Personal Loan Frequently Asked Questions
Can I get a Personal Loan without collateral?
Yes. This type of loan is called an unsecured loan. Lenders who provide this type of loan don’t require any collateral from the borrower. However, expect higher interest rates with this type of loan.
How can I borrow money with bad credit?
The first step to acquire a loan even if you have bad credit is to improve your credit score so you can prove you can comfortably afford the loan you need.
You can start by making timely payments to your existing sources of debt, especially on credit cards. Reduce the balance on your cards to under 30% of the credit limit allowed and don’t apply for any new credit just yet.
If, however, this is an emergency and your application for a loan has been turned down repeatedly due to poor credit or no credit, it might help to ask a bank or credit union loan officer for an in-person interview to convince them you are creditworthy.
Be sure that if you get interviewed, prepare yourself with documents that prove you’re a good risk. Lending institutions love stability. If you can show them that you’ve lived in the same house (or city) and worked the same job (preferably for the same employer) for several years, it definitely helps your case and you will surely nail your loan application.
How much can I borrow?
You may get as much as four times your gross monthly income, with a minimum amount of PHP20,000 to PHP3 million maximum, subject to approval.
The period of time for the loan payment will depend on your chosen amount and payment term. Keep in mind that the longer payment term means higher interest rate. Furthermore, you can use an online loan calculator to project how much interest you will be paying with your chosen loan amount and payment terms.
How long does it take to get approved for a Personal Loan?
Depending on your loan provider, the average personal loan application process takes about 3 to 7 banking days.
What happens if I fail to pay the monthly repayment?
Your unpaid amount will be charged a late payment penalty fee ranging from 3% to 10%, depending on your chosen lender. That is why you should avoid payment failure as much as possible. It will not only save you a few extra pesos but also the headache of thinking how you can repay your growing debt with the additional penalty fees.
How to use a Personal Loan calculator
- Key in your desired loan amount.
- Enter the payment term (from six months to 60 months) and monthly interest rate.
- Click the calculate button or automatically see an estimate of your monthly amortization and total loan payment.
- Tweak the fields to see different results.
This financial tool helps you decide which payment term works best for you—a simple and accessible way to help you save time and money.
How to make Loan repayment?
There are a few ways to make sure you make you pay your loan on time. Here are some:
1. Always save for emergencies.
Don’t waste your money on unwanted purchases and always keep in mind that you have a scheduled payment coming. As much as possible, if you already have your money on hand, keep those amounts that’ll be used for your loan repayments.
2. Don’t incur more debt.
If you are currently paying for a previously acquired loan, try living on a tight budget and avoid incurring additional debts. Save at least 10% of your monthly income so that if ever you will need an extra cash, you won’t need to borrow money from anyone anymore.
3. Set your priorities straight.
Don’t just settle with you repaying your loan. Always make it a goal to save an extra amount of cash. Also, avoid giving in into distractions as you’ll surely will abuse your paycheck. Focus on one thing at a time and that is repaying your acquired loan.