Finding the Best Personal Loan: 7 Questions to Ask Yourself

Reading time: 6 minutes

February 6, 2019



Before you apply for a personal loan, you need to know first what you are getting yourself into. A wrong choice could easily put you in serious trouble with your finances. Finding the best personal loan takes quite some time and effort. But all will be worth it when you got the right one to meet your financial goals. Thus, it is very important to shop around and compare different personal loans in the Philippines. When comparing loans, consider crucial features such as eligibility, loan amounts, interest rates, fees, and repayment terms. So that you can more easily decide which personal loan is right for you, ask yourself these seven questions:

1. Do I qualify for this loan?

One of the first things you must look for when shopping around for a personal loan is the bank’s application requirements. You will just waste your time and effort looking for the best personal loan if you do not qualify for the one you have chosen. Personal loan providers set eligibility requirements to assess a potential borrower’s financial capacity to repay a loan. To qualify for a loan, you need to meet those requirements and be able to submit documents that prove it. Personal loan requirements vary from bank to bank, so check them out and consider only those loans where you are likely to qualify. Here are the requirements you need to check:
  • Minimum age and maximum age upon loan maturity
  • Minimum gross annual income (Some banks require higher annual incomes for self-employed individuals than salaried employees.)
  • Landline and/or mobile phone number
  • If the personal loan is exclusive only for employees of accredited or top 1,000 corporations

2. How much do I need to loan?

Decide how much cash you really need. Borrow too little and you will be unable to fully cover your expense. Borrow more than you need and you will be paying back more interest than necessary. Compute the amount you need carefully. When you already have an exact amount in mind, look for a personal loan with a loan amount range that matches the amount you will borrow. Check the minimum and maximum loanable amounts of each personal loan you are considering. If you need only Php 10,000, and a certain bank’s minimum loan amount is Php 30,000, look for a personal loan somewhere else.

3. Which personal loans have the best interest rates?

When choosing the best personal loan, around 57% of Filipinos pay the most attention to the interest rates, according to Bangko Sentral ng Pilipinas’ financial inclusion survey. Indeed, interest rates are a crucial consideration when you are deciding which personal loan suits you best. Interest rates influence how much the loan will cost you throughout your loan term. Thus, you have to look for personal loans with low interest rates because they can reduce the cost of your loan, helping you save money. Here is a list of banks in the Philippines that offer low interest rates on personal loans:

Personal loans in the Philippines with the lowest interest rates

Maybank

Maybank’s enAble personal loan has one of the most affordable interest rates in the Philippines at 1.30% per month for employed and self-employed individuals. You can borrow as low as Php 50,000 or up to Php 1 million and repay it for 12, 18, 24, or 36 months through post-dated checks.

BPI

When you qualify for a BPI personal loan, you can enjoy a low monthly interest rate of 1.20% on an amount ranging from Php 20,000 to Php 1 million. You can choose to pay off your loan in 12, 18, 24, 30, or 36 months via auto-debit from your BPI deposit account.

BDO

BDO’s personal loan is available for qualified individuals who need to borrow at least Php 10,000 to Php 1 million. Its monthly interest rates vary according to your chosen monthly payment term: 1.25% for 12, 18, 24, and 36 installments and 1.30% for a 6-month repayment period.

PBCOM

PBCOM’s monthly interest rates for personal loans range from 1.332% to 1.960%. The loanable amount can go from Php 40,000 to Php 1 million, which is payable in 12, 18, 24, 36, or 48 months via auto-debit arrangement or post-dated checks.

Sterling Bank of Asia

One of the personal loans with low interest rates can be availed from the Sterling Bank of Asia. The bank offers a 1.45% month add-on rate to loan amounts from Php 50,000 to Php 1 million that can be paid off via post-dated checks from 12 months to 36 months.

Robinsons Bank

Available only to employees of JG Summit-accredited companies, Robinsons Bank’s personal loan comes with a monthly interest rate that starts at 1.40%. Customers can take a loan from Php 5,000 to Php 250,000 that can be paid in six, nine, 12, 18, 24, or 36 months via an auto-debit arrangement with a Robinsons Bank account or post-dated checks.

UCPB

UCPB’s SalarEasy loan comes with an interest rate of 1.50% on amounts ranging from Php 50,000 to Php 300,000 payable in 12, 18, 24, or 36 months via post-dated checks.

EastWest Bank

If you have an existing credit card for at least one year, you can avail of a personal loan for as low as Php 25,000 and up to Php 2 million from EastWest Bank with a monthly interest rate that starts at 1.49%. However, if your credit card is less than a year old or if you do not have one, the interest rate for the loan is at 1.89%.

Security Bank

Security Bank offers a personal loan with amounts ranging from Php 30,000 to Php 1 million. The monthly interest rates vary according to the chosen repayment term: 1.39% (12 months), 1.49% (18 months), 1.59% (24 months), and 1.69% (36 months). Monthly installments are paid via post-dated checks.

4. How can I get the best personal loan rates?

Here are some tips to secure low interest rates on personal loans:
  • Find out and compare your personal loan options. Take out the guesswork and hassle of assessing various interest rates. Use a free comparison tool that can show you the best choices based on your needs.
  • Be strategic when choosing a loan amount and repayment term. Check each bank’s personal loan rates against each loan term and amount to see which ones are optimal. The longer the loan term, the higher the interest rate will be.
  • Maintain a good credit record. Banks impose higher interest rates on borrowers with poor credit history. If you have bad credit standing, it’s best to put your personal loan application on hold until you have improved your credit score by paying off your debts.
  • Consider borrowing from a bank where you have been a long-time customer. Having a long banking history with a bank increases your chances of getting an approval or a favorable interest rate, as it is a good proof of your capacity to repay your loan.

5. What personal loan fees do I need to pay?

Finding the best personal loans involves checking not just the interest rates. The fees and charges that add up to the cost of your loan also matter. So be sure to check them when shopping around for personal loans. All personal loans in the Philippines require borrowers to pay a processing fee ranging from Php 1,300 to Php 2,500 and a late payment penalty fee, which is a percentage (from 3% to 8%) of the unpaid balance. Some banks may also charge a pre-termination fee, returned check fee, and other personal loan fees. You must take these fees into account because they will affect your finances. For example, if you think that you might be able to pay off your loan before the end of its repayment term, then look for personal loans without a pre-termination fee.

6. How long will I have to pay off the loan?

Consider also the loan or repayment terms and which one will result in monthly payments you can afford over a reasonable period. In the Philippines, the shortest loan term is 6 months, while the longest is 48 months. A shorter loan term means higher monthly installments, but the interest rate is lower than those with longer terms. On the other hand, a longer repayment term comes with lower monthly repayments. But this can set you back in the long term with more expensive interest payments. If you can afford the higher monthly repayments, it makes sense to go for a shorter loan term. But if you prefer lower monthly repayments, a longer loan term would work even if it means you will pay more interest throughout the period.

7. How much will I pay back every month?

Of course, your monthly loan repayments should be affordable to you. You can check the possible monthly installments by using a personal loan calculator. A calculator may also allow you to view the maximum amount that you can borrow. Most banks have a personal loan calculator on their website, allowing borrowers to check how much money they can borrow. To use a loan calculator, you just need to enter your preferred loan amount and term. The online calculator will instantly show you the amount that you will have to pay monthly.   There is no single best personal loan for everyone. Different borrowers have different needs. Only you can figure out which loan is right for you. But you can only do that if you spend time and effort in checking and comparing your options.