Lenders for Personal Loans in the Philippines
Filipinos are known for their tenacity in chasing their aspirations, which is why a large portion of the population are entrepreneurs rather than employees. In support of their entrepreneurial endeavors, they often turn to government aid and loans.
However, personal loans in the Philippines have become a point of concern. Many entrepreneurs steer clear of these loans due to misconceptions and fears that they will negatively impact their businesses or dreams. In this article, we aim to dispel these myths and shed light on the benefits of personal loans.
What is a Personal Loan?
A personal loan, also referred to as a consumer loan, is a sum of money requested for a variety of reasons, such as business funding, paying for education, or debt consolidation. The loan amount can be used without any restrictions imposed by the lender, and with the option of low-interest personal loans in the Philippines, it becomes a sustainable solution for your financial needs.
When can a Personal Loan Help Me?
In a world filled with unpredictability, it's not uncommon to experience sudden financial struggles. You may be financially secure one moment and the next, in need of a loan. Here are a few scenarios that may lead you to seek a low-interest personal loan in the Philippines.
The Short-Term Solution: Personal Loans in the Philippines
If you're in need of quick cash, a personal loan can be your solution. No collateral is required, making it easy to apply for at any bank in the Philippines. To help you understand more about personal loans, we've compiled this FAQ.
What Exactly Is A Personal Loan?
As the name implies, personal loans online approval is a loan that can be used for any personal purpose. Unlike a housing loan or car loan, you have the freedom to use the funds for any expense, such as tuition fees or travel.
There are two types of personal loans: secured and unsecured. A secured personal loan requires collateral, such as a house or car, while an unsecured loan does not. In the Philippines, unsecured personal loans are more common, but secured loans are also available.
How Do Personal Loans in the Philippines Operate?
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 the loan over a specified period of time (also known as the loan tenure or tenor). If you're taking out a secured loan, you'll need to provide collateral.
You'll make monthly payments to repay the loan, including both the principal and interest. During the early years of the loan, the majority of your payments will go towards interest, but as time goes on, a larger portion of your payments will be applied to paying off the principal.
Interest rates vary by lender. For example, a Security Bank personal loan has an effective interest rate of 29.48%, while another personal loan has a rate of 26.62%. You can use our personal loan calculator to check the latest rates.
What Are the Different Types of Personal Loans and Which One Should I Choose?
Most banks only offer one type of personal loan in the Philippines, which can be used for any purpose. However, some non-bank institutions in the Philippines offer alternative loans, such as salary loans, online loans, and payday loans. These loans are easier to apply for, but they come with high interest rates and short repayment terms. The best and safest option is a personal loan from a bank, as they have lower interest rates if you meet their eligibility criteria.
Am I Eligible to Apply?
Eligibility criteria vary by lender. Non-bank lenders tend to have a more lenient screening process, while banks have stricter requirements. However, if you have a steady source of income, one of our lenders should be able to help you.
What Documents and Requirements Do I Need to Apply?
The basic requirement for a personal loan in the Philippines is proof of income, such as a payslip or bank statement showing consistent income for at least six months. The rest of the requirements may vary by lender and may include forms, a co-borrower if you're applying with a non-bank lender, proof of address, and valid IDs for verification.
Understanding Personal Loan Interest Rates
The interest rate is a fee you pay for borrowing money. It's important to keep in mind that the interest rate is often presented to you as a monthly rate, but the total interest you pay over the life of the loan may be higher than you expect. To get a better understanding of the actual interest rate, you should multiply the monthly interest rate by the number of months in your loan term.
The Difference Between Personal Loans and Online Loans
A personal loan is a multi-purpose loan that can be obtained from banks and other lending establishments. An online loan is simply a type of personal loan that you can apply for online, making the process paperless and convenient.
Online loans are becoming increasingly popular in the Philippines and there are now several providers offering different types of financial products to cater to various needs. The right online loan for you depends on the amount you need and the time frame in which you need it.
Choosing a right option
Choosing the right personal loan can be subjective, as different loans cater to different needs, such as home loans, car loans, and salary loans. When considering a loan, think about the incentives and rates offered and whether a bank loan or non-bank loan is better for you.
Banks usually have more strict requirements, while non-bank loans have a more lenient screening process, but higher interest rates and less favorable payment terms. If you're eligible for a bank loan, start there for lower interest rates and more flexible payment terms. If not, consider non-financial institutions like Acom, RFC, and Global Dominion, and compare which one offers the most reasonable rates and payment terms that will not strain your cash flow.
In the Philippines, there is no law mandating imprisonment for failing to pay a loan. It is treated as a civil case at most, and the worst-case scenario is being blacklisted by banks for future loans.
