Need Financial Aid? Check Out 7 Types of Loans in the Philippines

Princess Anaviso

Princess Anaviso

Last updated April 30, 2024

Loans offer a quick and convenient way to access financial aid. Whether it’s to fund an immediate need or support a life goal, a loan can help you manage your finances better. You can use a loan for any purpose—be it to pay for hospital bills, buy a house, or bankroll a vacation.

To know exactly how best to finance your need, explore the many different types of loans in the Philippines. Consider factors such as the purpose of the loan, your paying capacity, the interest rate, and repayment terms, among others.

Check out this guide to make an informed decision.

7 Types of Loans in the Philippines

It’s easy to take out a loan if you meet all the requirements, but that doesn’t mean you should apply for the first loan you see. Consider all the available options—there could be a more suitable choice with faster approval, better rates, and more flexible payment terms.

Here’s a list of loan types you can get from various loan providers nationwide:

💸 Personal Loan

types of loans in the philippines - personal loan

Among the different types of loans, a personal loan is one of the most common ones. Personal loans are unsecured, which means you don’t need to surrender collateral to get approved. You do, however, need a good credit standing to increase your chances of approval. 

You can get a personal loan for almost any purpose, including:

  • Medical emergencies (e.g., procedure costs, hospital bills)
  • Home improvement projects (e.g., home expansion, home repair)
  • Education (e.g., tuition fees, books, and school supplies)
  • Vacation (e.g., travel and accommodation, tour packages)
  • Wedding (e.g., venues, catering, honeymoon costs)
  • Big-ticket purchases (e.g., smartphones, appliances, furniture)
  • Debt consolidation (e.g., credit card debt, paying off other loans)

You can borrow as much as ₱2 million, or even get concurrent personal loans from different providers to cover your financial needs. Compare some of your options below:

Provider
Loan Amount

Monthly Add-on Rate

Minimum Annual Income

Approval Time

UnionBank Personal Loan
unionbank-logo-300x92
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Up to ₱2 million
1.29% 
₱250,000
As fast as 5 minutes
UNO Digital Bank Personal Loan
uno digital bank
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₱10,000 to ₱500,000
2%
₱420,000
7 banking days
Metrobank Personal Loan
metrobank
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₱20,000 to ₱2 million
1.25% to 1.75%
₱350,000
7 banking days
BPI Personal Loan
bpi logo
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20,000 to  ₱3 million
1.2%
180,000
5 to 7 banking days
Tonik Credit Builder
tonik
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Up to ₱20,000
Up to 4.84%
Inquire with Tonik
2 banking days
Tala Loan
tala

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₱1,000 to ₱25,000
0.43% to 0.5% daily
None
24 hours
HSBC Personal Loan
2560px-HSBC_logo_(2018).svg
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30,000 to ₱500,000
0.65%
168,000
5 to 7 banking days
CIMB Personal Loan
CIMB-Logo-1
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30,000 to ₱1 million
As low as 0.83%
180,000
2 banking days
Maybank Personal Loan
Maybank logo 2011-1
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50,000 to ₱1 million
1.3%
300,000
5 to 10 banking days
RCBC Bank Personal Loan
rcbc-logo-2
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Up to ₱2 million
0.90%
360,000
5 to 7 banking days
SB Finance Personal Loan
SB-Finance-e1631324202933

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₱30,000 to ₱2 million
2%
₱180,000
5 banking days
CTBC Bank Personal Loan
ctbc-Mar-28-2022-12-20-39-62-PM
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₱500,000 to ₱2 million
1.39% to 1.79%
180,000
1 to 5 banking days
PSBank Personal Loan
PSBank-300x207-1
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₱20,000 to ₱250,000
1.75% or 2.5% 
₱180,000
5 to 9 banking days

Just make sure you have an adequate income source to pay back your loans, lest you end up with inflated interest charges. Take note that the annual percentage rate (APR) of personal loans can go as high as 36%.

Still, you do get to enjoy flexibility in repayment. Payment terms can be as short as 12 months and as long as 60 months. With a suitable repayment plan, you can work within your budget and pay off your loan with a timeline that works for you.


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💸 Auto Loan

types of loans in the philippines - auto loan

Technically, you can also purchase a car with a personal loan—you might just not get the best value out of it. A car loan is the answer if you’re looking to purchase a vehicle, as this loan is designed specifically and solely for that purpose.

Car loans are secured loans. You need to give the lender collateral, which, in this case, is the car you’re purchasing. 

Are you torn between a personal loan vs. a car loan? Keep in mind that when applying for a car loan, you need to shell out a downpayment, which is typically around 20% to 30% of the car’s value. Only then will the loan provider take care of the rest. 

Also, some car loan providers impose limitations on the type, age, and state of the vehicle you can purchase. Some car loans are available only for brand-new vehicles, while others that allow used vehicles accept only cars for personal use not older than five years. If you have no qualms with all these criteria and have the budget for a downpayment, go with a car loan.

Another advantage of a car loan is that, since it’s a secured loan with collateral, the APR is lower compared to an unsecured loan like a personal loan. The highest APR for a car loan is only about 20%. Rates vary, so compare banks and loan providers to find the best deal. 


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💸 Mortgage Loan

types of loans in the philippines - mortgage loan

Planning to fund your dream home? Consider a mortgage loan. Mortgages are exclusively used for high-value purchases of real estate properties like houses and plots of land.[1]

With a mortgage loan, you can borrow more than just a few million. With a good credit standing, you can borrow as much as ₱10 million, provided you can prove your capacity to pay it back. 

Similar to an auto loan, a mortgage loan or a home loan is a type of secured loan wherein the property you’re looking to buy serves as your collateral. Also, mortgages cover only up to 90% of the total property value, so you have to shell out at least 10% for the downpayment. 

On the upside, mortgage loans generally have a lower APR that doesn’t exceed 10%. Also, with prolonged payment terms of up to 30 years, you can enjoy repayments that are easier on the wallet. 

If you want an even lower interest rate, get a home loan from government agencies like Pag-IBIG. You can borrow up to ₱6 million and get an APR as low as 6.5% if you choose a five-year payment plan. 

Look for more types of home loans to find a better deal.

💸 Home Equity Loan

Did you know that you can leverage your home equity and take out a second mortgage? This is known as a home equity loan,[2] which lets you arrange a deal with a loan provider and borrow money worth up to 90% of the value of your property.

You can use your home equity loan for any purpose, including the renovation, expansion, or reconstruction of your home. Use it to buy another property or start building a new one.

Generally, you can use your home equity loan the same way you would a personal loan—pay for medical bills, tuition fees, travel costs, etc. The sky’s the limit as to where you can use your borrowed funds.

Just like a home loan, a home equity loan also offers low interest rates that typically don’t exceed 10%. However, unlike a home loan, the payment terms are a bit shorter, with the maximum usually just around 10 years. 

Also, note that the amount you can borrow is based on the value of your property. If you purchased a house with a low value, you’re limited to borrowing a certain percentage of that amount.

💸 Student Loan

types of loans in the philippines - student loan

Need a loan without collateral in the Philippines to fund your education? If you’re a salaried individual, you can take out a personal loan to pay for your tuition and other school-related costs. 

But if you’re still a student with little to no source of income, explore student loan options available to individuals with no steady income stream. 

Student loans are mostly offered by government-backed entities. For example, the Commission on Higher Education (CHED) has a student loan program that offers up to ₱60,000 per school year, payable up to 12 months with 0% interest. The Social Security System (SSS) also offers an Educational Assistance Loan Program (EALP) of up to ₱200,000 per term, payable for up to five years. Said program is available to SSS members as well as their children, spouse, or siblings.

💸 Small Business Loan

If you’re planning to start a business, a personal loan simply won’t cut it. The Bangko Sentral ng Pilipinas (BSP) recently ruled that personal loans can’t be used for starting a business—you have to apply for a small business loan to launch your new venture.[3] But worry not, as most banks, lenders, and government agencies offer small business loans in the Philippines.

Aspiring entrepreneurs have lots of financing options. Get as much as ₱20 million if you choose to borrow from banks. In terms of rates, the APR for an SME loan in the Philippines can go as high as 20%. 

If you want lower interest rates, borrow from government agencies. Just be informed that not only will you have to submit more requirements, but you can borrow only smaller amounts.

Aside from your source of income and credit standing, lenders also consider factors like your business plan, cash flow, debt-to-equity ratio, and working capital before your business loan application gets approved. Before you apply for this loan type, do your homework and plan how to make a profit and grow your business.

💸 Online Loan

types of loans in the philippines - online loan

Need funds just to get by? If petsa de peligro has your wallet wailing, a short-term online loan can tide you over until the next payday.

Out of all the types of loans in the Philippines, online loans are by far the most accessible. They are essentially short-term loans you can access online through various smartphone apps. Since these loans are mostly online, the barrier for entry is minimal, and the approval process is lightning-fast, usually within minutes.

There’s just one catch: they also have the highest probability to bury you in debt. 

Online loans usually come with high APR rates. Since they offer loan amounts as low as ₱3,000 and payment terms as short as three months, they tend to charge steep monthly add-on interest rates that can go as high as 15%. 

While they can be legitimate sources of funds in a pinch, online loans can leave you mired in debt if you irresponsibly rely on them. Use online lending platforms only in extreme cases where you have nowhere else to draw money from. 

Quick Comparison of Loan Types in the Philippines

Easily compare the key features of each loan type below:

Loan Type Purpose Loan Term APR or Interest Collateral
Personal Loan Flexible Up to 5 years Up to 36% No
Auto Loan Buying a car Up to 5 years Up to 20% Yes
Mortgage Loan Buying a home Up to 30 years Up to 10% Yes
Home Equity Loan Flexible Up to 10 years Up to 10% Yes
Student Loan Education Up to five years Up to 10% No 
Business Loan Business Up to 10 years Up to 10% Yes
Salary Loan Short-Term Up to 2 years Up to 40% No
 

How to Choose the Right Loan for You

Taking out a loan is a huge financial commitment, so get one that matches your needs and paying capacity.

Now that you know what loan options you have, you can further narrow down your choices by considering the other factors listed below:

👉 Loan Purpose

Carefully sift through the different types of loans so you can nail down the right one. The first step is to know what you will use the money for. 

Need a home? Get a mortgage loan. Need a car? Get an auto loan. Want to start a business? Get a business loan. Need cash for anything else? Consider getting a personal loan—or, if you’re eligible, a home equity loan. 

Whatever you choose, make sure you use the loan for the correct purpose so you can maximize its value.

👉 Annual Interest Rate

Once you know what type of loan to get, compare your loan options from different providers.

Look especially at the APR or the interest rate for the whole year. It can vary from lender to lender, so take your time looking for a loan with a lower APR. This way, you avoid unreasonable interest charges. 

While you’re at it, consider other added costs like application fees and late payment fees.

👉 Collateral Requirement

One way to avoid a high APR is to look for loans with collateral. If you’re applying for an auto loan or a home loan, you’re basically set—interest rates for secured loans are generally lower. 

However, if you'd prefer not to risk your property getting seized, get a loan without collateral. That way, you won’t have to worry about losing one of your possessions. 

When applying for an unsecured loan, just make sure you have a good credit standing and no unpaid balances with previous lenders.

👉 Repayment Terms

If you choose a shorter loan term, you can enjoy lower interest rates. But the catch is you’ll have to pay off your loan right away. 

If you choose a longer loan term, you’ll have to deal with higher interest rates. But at least you have more time to pay back your loan. 

Different types of loans offer different loan repayment terms. Choose one that will give you the most wiggle room. This way, you manage your debt responsibly without robbing yourself of your daily comforts. 

👉 Maximum Loanable Amount

When choosing among the types of loans in the Philippines, consider the amount of money you can borrow. For example, if you need at least ₱1 million, choose high-value loans like home loans, home equity loans, or business loans. However, if you need only a few thousand pesos, you can make do with a personal loan.


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Final Thoughts

Now that you know the different types of loans in the Philippines, you can make an informed decision. Don’t make the mistake of taking out a loan without knowing everything you can about it. Always choose the right loan product to avoid financial mishaps and get the most value out of your loan experience. 

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Princess is a seasoned writer with over seven years of experience in digital marketing and corporate communications. She took master's degree units in Creative Writing at the University of the Philippines Diliman and graduated with a bachelor's degree in English Language and Literature from Saint Louis University. Beyond writing, she enjoys reading novels, watching series, and crocheting. Follow Princess on LinkedIn.

FINANCIAL TIP:

Use a personal loan to consolidate your outstanding debt at a lower interest rate!

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