Should I Borrow Money from Private Lenders?

Venus Zoleta

Venus Zoleta

Last updated June 30, 2023


Looking for private lenders that offer personal loans in the Philippines? When times are hard and cash flow is a problem, it’s helpful to know what options are available to you. But before you borrow from a private lender, you have to know first what you’ll be getting into.

What are Private Lenders?

Private lenders in the Philippines are non-banking companies or individual investors that provide short-term personal loans, mostly catering to OFWs, small business owners, and car buyers. Filipinos who can’t qualify for bank loans often turn to these money lending companies in the Philippines to cover their urgent financial needs.

Is it really better to get a private loan from such entities than from a bank? Consider the pros and cons of getting personal loans from private lenders to make the right decision.

Advantages of Borrowing Money from Private Lenders

Private Lenders in the Philippines - Advantages

Private lending institutions in the Philippines attract borrowers because they offer easy access to funds by simplifying their loan application process. Below are some advantages of borrowing money from a private lender.

1. Fewer Requirements and Restrictions

Compared to banks, private money lenders in the Philippines require fewer financial documents and are more relaxed in their conditions for loan approval. When you apply for a personal loan with a private lending company in the Philippines, you’ll be asked to submit only a valid ID or two, proof of billing, and proof of income such as latest payslips or income tax return.

2. No Credit History Check

A borrower’s credit history and credit score are a big deal with banks. That isn’t the case with private lenders. They don’t base their loan decisions on a borrower’s credit standing. Instead, they evaluate the ability to repay a loan through the submitted income documents.

Because of this, personal loans from private lenders appeal to borrowers with a poor credit score or no credit history, as well as those with an unstable income.


3. Fast Approval

Private lenders won’t make you wait for weeks and months to approve your personal loan. Online lenders decide as fast as 24 hours from the time of application. While some lenders take two to three days to process a loan, it’s still a quicker turnaround time than that of banks.

Traditional banks take much longer to approve a loan because they spend time conducting data verifications, credit investigations, and background checks.

Private lending companies also release funds within the day of application or approval, or the next day at the latest.

Disadvantages of Borrowing Money from Private Lenders

Private Lenders in the Philippines - Disadvantages

Beneficial as it may be, borrowing from private lenders could also be very risky. Take these factors into consideration when you plan to borrow from a private lending company.

1. High Lending Interest Rates

Private loans are known for their high monthly interest rates starting at 4% to 7.5% or higher, making the cost of borrowing expensive. Personal loans from banks in the Philippines have much lower monthly interest rates of 1.20% to 1.94%.

Why do private money lenders charge such high money lending interest rates compared to banks? Private lenders have a higher cost of acquiring funds, and they’re lending to borrowers with high credit risk.[1]

Private lenders get the funds they loan to borrowers either from private investors who are earning profits from their investments or from banks that lend money at higher rates. This increases a private lender’s cost of funds that they have to repay to investors or banks. They pass on that high cost to borrowers through high interest rates.

Also, such lenders carry a high risk of lending money to borrowers with a bad credit score or no credit history. It’s less likely that such kind of borrowers will repay their loans compared to those with a good credit score. Private lenders compensate for this high credit risk by charging high interest rates.

Apply for a personal loan through Moneymax

Read more: What Happens If You Stop Making Loan Payments?

2. Short Repayment Period

Most private lending companies in the Philippines expect borrowers to repay their personal loans within a very short period, ranging from two to 18 months. The longest repayment term for a private loan is 24 months.

Combined with high monthly interest, a short loan term can lead to a high monthly mortgage. If you’re on a tight budget, repaying a private loan monthly can be very difficult.

In contrast, banks offer longer repayment terms (six to 48 months) on personal loans in the Philippines. 

Read more:

3. Risk of Losing Collateral

Some private lenders ask borrowers to declare collateral on their loans such as a house, lot, or car to raise their chance of getting approved for a personal loan. You may have secured a loan easily with collateral, but once you fail to pay back your loan, the lending company may take away your valuable asset.

4. Risk of Getting Scammed

More than 2,500 private lending companies in the Philippines are registered with the Securities and Exchange Commission (SEC),[2] which means they’re legally operating in the Philippines.

On the other hand, fake private lenders rip off borrowers through online lending scams. Promoting their loans on Facebook, Twitter, and other social networking sites, scammers pose as legit private lending companies. They trick people into providing their personal information (which makes them susceptible to identity theft) and paying a processing fee before releasing the loan proceeds.

But after the victims have deposited the payment for the processing fee, they’re blocked from the social media accounts of fake lending companies. Eventually, these scammers close all negative comments from their accounts or even deactivate them.

Read more: Online Scams in the Philippines to Watch Out for

Private Lenders in the Philippines

Below is a list of private lending institutions in the Philippines. Make sure that you read the terms and conditions first before applying for a loan.

For a more complete list, click this article: Explore Your Online Cash Loan Options in the Philippines!

1. Asteria Personal Loan

Important Features:

    • Loan amount: PHP 2,000 to PHP 20,000 (up to PHP 10,000 only for first-time borrowers)
    • Interest rate: 2% to 5%
    • Loan terms:
        • 61 days in four installments
        • 10 weeks in five installments
        • Three months in six installments


2. Cash Mart Personal Loan

Important Features:

    • Loan amount: PHP 3,000 to PHP 30,000
    • Interest rate: 0.0571% to 0.8% per day / 20.8415% to 292% per year
    • Loan terms:
        • Weekly in three to five installments
        • Biweekly in one to five installments
        • Monthly


3. Cashwagon Instant Cash Loan

Important Features:

    • Loan amount: PHP 8,000 to PHP 40,000
    • Interest rate: 12% per month/Up to 144% per year
    • Loan term: Three to six months


4. Robocash Instant Loans

Important Features:

    • Loan amount: PHP 1,000 to PHP 10,000 for first-time borrowers/Up to PHP 25,000 for repeat borrowers
    • Interest rate: 11.9% per month/Up to 143% per year
    • Loan term: Three to six months

5. Vidalia Online Loans

Important Features:

  • Loan amount:
      • Salary loan: PHP 20,000 to PHP 50,000
      • Personal loan: Up to PHP 100,000
      • Small business loan: PHP 20,000 to PHP 100,000
      • Business loan: PHP 100,000 to PHP 500,000


    • Interest rate: 4% to 6% per month
    • Loan term: Two to 12 months

6. First Circle

Important Features: 

    • Loan amount: Up to PHP 2.5 million (business loan)
    • Interest rate: 1.44% to 5.29% per month
    • Convenience fee: 1.99% of the principal loan amount
    • Loan term: Up to 6 months

7. Radiowealth Finance Corporation

Important Features:

  • Loan amount:
      • Multi-purpose loan: PHP 10,000 to PHP 250,000
      • Business loan: PHP 10,000 to PHP 3,000,000


    • Interest rate: 3.5% to 4% per month
    • Loan term: Three to 12 months

8. Global Dominion Financing Corporation

Important Features: 

    • Loan amount: Up to PHP 5,000,000 (business loan)
    • Interest rate: From 1.5% per month
    • Loan term: Six to 12 months

9. AEON Credit Service (Philippines) Inc.

Important Features: 

    • Loan amount: Up to PHP 50,000 (personal loan)
    • Interest rate: 2% per month
    • Loan term: Six to 12 months


Important Features: 

    • Loan amount: Up to PHP 100,000 (personal loan)
    • Interest rate: 2.5% per month
    • Loan term: Six to 12 months

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Final Thoughts

Now that you know where to find private companies that lend money in the Philippines and just how much lending interest they charge, will you still borrow from them?

Always weigh the pros and cons. If you need a short-term loan to fund an emergency and you lack the documents required by banks, a private loan may be a viable option. Just be sure to deal with a legitimate private lender.

However, a personal loan from the bank is a smarter option if you’re looking for a loan with a low interest rate and a long repayment term, and you have a good credit history. Check out the best deals on personal loans in the Philippines with the help of Moneymax!

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Venus has almost 20 years of combined experience in content marketing, SEO, corporate communications, and public relations. Most of her career was spent creating informative articles on personal finance and digital marketing. She also invests in stocks, mutual funds, VUL, and Pag-IBIG MP2. Venus graduated cum laude with a Journalism degree from the University of the Philippines Diliman. A hardcore Hallyu Tita, she loves bingeing Korean shows on Netflix while bonding with her cats. Follow Venus on LinkedIn.


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