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First time to visit Moneymax? Our online platform allows you to check and apply for different personal loans in the Philippines based on partner, interest rates, fees, and other features.
Moneymax compares personal loans that can be paid back over terms of between 6 months and 60 months. The effective interest rate (EIR) you will be charged depends on your personal circumstances, and will be between 1.39% and 32.05%.
This is a representative sample of what it may cost: a loan of P50,000 over 24 months at 1.59% EIR would equate to monthly repayments of P3,030. The total cost of the loan that you would pay back is P72,720.
Such fees depend on the amount you want to borrow so make sure to check with the bank or loan partner you’re applying for.
What is a Personal Loan and How Does It Work?
When you get a personal loan, you are formally borrowing money from a lender to fund your personal expenses. You are expected to pay back the money you owe, plus interest and fees.
Personal loans are also known as unsecured loans because lenders do not require collateral from prospective borrowers. Filipinos typically use personal loans for different purposes:
- Medical emergencies
- Home improvement
- Debt consolidation
- Business opening or expansion
How to Apply for a Personal Loan in the Philippines
Applying for personal loans online is a convenient option for busy professionals and those with a busy lifestyle, who barely have time to go to the bank to file their loan application. You can complete the entire process in just a matter of minutes.
Considering to skip the trip to the bank? Here are the steps for online personal loan applications:
1. Fill out an application form for personal loans online.
Go to the website of your bank and look for the personal loan application form. Enter the required information about yourself, your job and income, the loan (e.g., purpose, amount, payment term, etc.), and other details. You can check here for the common personal loan questions during application.
Make sure you provide correct and complete information. If you miss or skip any fields on the form, the processing of your application will take longer, as the bank will need to contact you to ask for the missing details.
2. Prepare and send the required documents.
Scan or take clear photos of the documents required for your personal loan application. You will either email the scanned copies or photos of your documents or attach these files to the personal loan online application form.
You will also have to read the terms and conditions to complete your application.
3. Wait for confirmation from the bank.
Your online loan application is complete! You will just have to wait for confirmation through email or SMS that the bank has received your application. The bank may also contact you for further instructions.
What are the Personal Loan Requirements?
Before proceeding with your personal loan application, check first if you are eligible for a loan and then prepare the required documents.
- At least 21 years old
- Filipino citizenship (some banks accept applications from foreigners living in the Philippines)
- Minimum gross income set by the bank
- Proof that you are credible as a borrower, such as having a good credit history
- Valid government-issued IDs
- Pay slips for the last 3 months
- Latest income tax return
- Certificate of employment
- Audited financial statements in the last 2 to 3 years and SEC or DTI registration (for self-employed people)
Where to Apply for Personal Loans
Commercial banks in the Philippines are among the most credible lenders of personal loans. For more convenience, you can opt to apply at the bank where you have an existing deposit account.
You can apply for a personal loan in any of these top providers:
- Asia United Bank
- China Bank
- CTBC Bank
- EastWest Bank
- Robinsons Bank
- Security Bank (SB Finance)
- Sterling Bank of Asia
- Home Credit
- and other private lenders
Best personal loans that you can apply through Moneymax:
|Personal Loan Provider||Loanable Amount||Payment Terms|
|Citibank Personal Loan||P100,000 up to P2 million||up to five (5) years|
|EasyRFC Multi-Purpose Loan||P10,000 up to P150,000||up to 12 months|
|TALA Personal Loan||P1,000 up to P15,000||up to 90 days|
|GDFI OFW Personal Loan||P20,000 up to P2 million||up to 12 months|
|SB Finance Personal Loan||P30,000 up to P2 million||up to 36 months|
Banks typically process applications within five to seven working days. If you get an approval on your online personal loan, the bank will either issue a manager’s check or credit the loan amount to your deposit account with the bank.
How to Know If You Qualify for the Loan You Applied For
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
Getting a personal loan is a straightforward process. In the Philippines, it generally involves these steps:
- Comparing personal loans. Never skip this step because it will help you find the right personal loan for you. Compare different loans offered by banks based on the loan terms, loan amount, interest rates, fees, and repayment amount and terms.
- Personal loan application. Once you have picked the best personal loan, check if you qualify for the loan. If you do, you can start applying online or at the branch of the bank. You will submit the required documents as proof of your identity and income.
- Loan processing. Banks conduct credit history checks to determine your capacity to repay your loan. The bank will notify you if your loan is approved.
- The release of loan proceeds. In the Philippines, banks fund personal loans either by issuing a manager’s check or crediting the loan amount to the borrower’s deposit account.
- Repayment of the loan. You will pay your monthly installments until the end of the loan term through post-dated checks, automatic debit from your deposit account, or over the counter.
- Loan closure. When you make your final repayment, your loan will be closed.
All personal loans issued by different commercial banks in the country share three common features:
Fixed loan term
Most banks require monthly repayments over a period of 12, 18, 24, or 36 months. If you choose a shorter loan term, you will pay a higher monthly balance but at a lower interest rate than if you choose a longer loan term.
Fixed loanable amount
You can borrow from Php 10,000 up to Php 2 million, subject to the lender’s approval. The actual amount that the issuing bank may lend you will be based on your income and credit history. A high income and a good credit history can raise your chance of getting approved for a higher loan amount.
Fixed interest rates
Except for a few ones with variable interest rates, most personal loans come with fixed interest rates—they do not change throughout the duration of the loan.
Just like any financial product, personal loans come with benefits and drawbacks, which make them either suitable or unsuitable to certain kinds of borrowers. If you are not sure yet if getting a personal loan is the right decision for you, consider its pros and cons.
Pros of a personal loan:
- Lower monthly interest rates than credit cards. Monthly interest rates on personal loans range from 1.20% to 1.94%, while credit card interest rates go from 2.00% to 3.54%
- Ability to choose a loan repayment period. If you choose a longer period, your monthly repayments are lower, but you will be charged a higher interest rate.
- Fixed interest rates and monthly repayment amounts. This helps you manage your finances more easily.
- The borrower’s risk is lower than a secured loan. Because no collateral is required to take out a personal loan, you will not lose any of your assets.
Cons of a personal loan:
- Higher interest rates than secured loans (that are guaranteed by collaterals)
- Banks charge a pre-termination fee when you pay off your loan early.
- There are penalty fees for late repayments. If not managed well, the unpaid amounts might snowball into a bigger debt.
Personal loan providers charge an interest on the amount borrowed that must be paid every month.
Personal loans have lower interest rates than credit cards, making them a great choice for those who need quick cash for emergencies. But because personal loans are generally unsecured (meaning they are collateral-free), their rates are higher than secured loans such as auto loans and housing loans.
What is the difference between effective rate and add-on rate?
Banks that provide personal loans charge two sets of interest rates: monthly add-on rates and effective annual interest rates.
The add-on rate is the interest that the lender charges every month on the amount you plan to borrow.
On the other hand, effective interest rates show the actual cost of borrowing money. It includes the administrative or service fees that the bank charges for processing your loan application. This is why the effective interest rate—the one you’ll need to pay—is typically higher than the add-on rate.
The fine print that comes with your personal loan is an agreement between you and the lender that contains the guidelines on the use of your personal loan. The Terms and Conditions are also essential in helping you manage your personal loan responsibly.
Missing important information about your loan could lead to bad consequences, like paying fees and charges that you could have avoided had you read the terms and conditions carefully.
Basic Personal Loan Terms and Conditions
When reading the fine print, look for these crucial details:
- The date when your monthly installments will start and due date
- Repayment terms
- Any additional interest charges for missed payments and computation
- Fees and charges you will be required to pay
- Whether or not the bank will charge a prepayment fee if you fully repay your loan before it matures
- Computation of your monthly installments
- Situations when a borrower defaults on a loan
Ways to Improve Your Personal Loan Application
1. Improve your credit history.
When applying for a loan, financial institutions look at your credit history to determine whether or not you are a trusted and disciplined lender. If you pay your credit card balances on time every month, this shows that you have the ability to make the monthly payments on your loans. If you have had your credit cards for numerous years and are able to remain in good standing, this shows that you have the discipline to pay down personal loans spanning 2 or 3 years. If you want to know how you can improve your credit history, read the tips below:
- Pay your bills on time.
- Pay your bills in full.
- Spend less than your credit limit amount.
- Keep old accounts (longevity counts).
- Avoid external factors that impact your history negatively (e.g. foreclosure, bankruptcy, etc.)
2. Be realistic with your numbers
Apply for a loan amount that you can realistically pay. If you earn Php 25,000 a month, your monthly loan payments (all forms of credit) should not amount to more than 40% of your monthly income, or more than Php 10,000. If they total more than 40% of your income, will you have enough to pay down your other monthly expenses? Or vice versa, if majority of your income is eaten up by your other expenses, how will you pay down the balance on your loans?
Your monthly debt divided by your gross monthly income (Php 10,000/Php 25,000) is your debt-to-income ratio (DTI). It’s best to keep your DTI ratio low because banks won’t approve you for a loan you can’t afford.
3. Ensure you can show proof of income
When banks approve you for a loan, they expect to get their money back. This is the importance of having a regular stream of income. Employed individuals have better chances of getting their loan approved compared to freelancers. This is because if you’re an employee, you’re sure to receive your salary every month. Your payslips and certificate of employment show banks that you have the money to make your monthly loan payments.
Loans for freelancers or self-employed individuals requires additional documents during loan application. These documents include:
- your income tax return (ITR)
- your audited financial statements for the past years
- necessary licenses or permits such as a DTI business permit or a SEC registration
Filipinos working abroad applying for any OFW Loan options in the Philippines, the following are the usual requirements:
- Latest Contract of Employment
- Copy of VISA
- Photocopy of OEC (POEA Overseas Employment Certificate)
4. Compare loans
As with anything, it pays to do your research first. Before you go to the first institution you come across that offers a loan, compare personal loans from different financial institutions. Try to look for the one with the lowest interest rate and the mode of payment you prefer. Some providers only allow payment via postdated checks while others include auto-debit arrangements.
Picking a personal loan that is the most realistic will increase your chances of getting approved. Banks and private lenders won’t loan you an amount you can’t afford, so when applying for a personal loan, ensure that the interest rate, processing fees, and loan term are realistic in relation to your financial standing.