“Can I get a personal loan for bad credit history?”
It takes time to repair a bad credit report (or to build one if you have none), so you’re wondering if you can qualify for a loan now even if yours is in a terrible shape.
Well, your choices are rather limited. Generally, banks and government agencies deny loan applications from borrowers with a poor credit score. So these lenders are already out of the question.
Other types of lenders in the Philippines, however, do accept and approve loans for people with bad credit history. So yes, you can borrow money for any financial emergency even with a less-than-ideal credit record. But once you get approved for a bad credit loan, managing it isn’t as easy as you think.
Here’s everything you need to know about bad credit loans in the Philippines.
Table of Contents
- What is a Bad Credit Loan?
- How Can I Get a Loan Even with Bad Credit?
- What are the Benefits of Loans for Bad Credit in the Philippines?
- How Risky is It to Get a Loan for Bad Credit in the Philippines?
- Best Loans for Bad Credit in the Philippines with Guaranteed Approval
- 6 Tips When You Decide to Apply for Bad Credit Loans
- Final Thoughts
What is a Bad Credit Loan?
Simply put, a bad credit loan is just another name for a personal or multi-purpose loan that caters mostly to people with a bad credit history.
Take note, though, that bad credit loans are not just for people with a poor credit history. Those who don’t have credit at all can also apply for this type of loan.
How Can I Get a Loan Even with Bad Credit?
Most people think that loans for bad credit in the Philippines are quite hard to find. But these days have seen various financial innovations that make borrowing money much easier. Nevertheless, there are still tried-and-tested methods that will get you the money that you need.
Here are the ways to get a loan even with bad credit.
Note: This does not, in any way, promote any of these loans for people with bad credit. Understand the risks before applying for a loan for bad credit in the Philippines.
Family Members or Friends
If you need quick and instant cash, the first people that you may want to visit are your family or friends. It’s much easier to qualify, especially if they know and understand the financial situation you’re currently in. The good thing about this option is that you may be charged with little to no interest at all. However, remember that your relationship with them is the collateral. So, tread carefully and be diligent when it comes to repayments.
Private loan providers offer all sorts of loans: cash loans, instant loans, online loans, payday loans, salary loans, and emergency loans. Regardless of what they’re called, all these loans have minimal requirements and promise quick approval and disbursement.
These bad credit loan providers typically require only valid IDs and a completed application form. The internet makes the application process a lot faster and more convenient than traditional loans. Simply visit the lender’s website, fill out an online form, upload the requirements, and wait for a call from the company’s representative for data verification. Approval takes as fast as 5 to 10 minutes, and the loan proceeds are available for withdrawal on the same or next business day.
While you may easily get approved for a bad credit loan, you’ll be charged a higher interest rate because your credit risk is high. Monthly interest rates for loans from private lenders range from 4% to 7.5%, making them more expensive than loans from banks with monthly rates of only around 1%.
For those with a poor credit history, another way to secure a loan in the Philippines is to put up an asset such as jewelry or gadgets as collateral.
Pawn loans from pawnshops are secured loans. This means you can get approved for a loan (the amount depends on the value of your collateral) without looking at your credit report. However, if you fail to repay your loan on time, the pawnshop can put up your pawned item for sale to recover its loss.
The 5-6 lending scheme has such a bad rap because of its extremely high interest rate of 20%. However, 5-6 lenders have become deeply rooted in the Filipino culture that people—especially micro and small business owners—still borrow money from this type of lenders.
The rise of fintech (financial technology) in the Philippines comes with the proliferation of online lenders offering quick cash. For those who are in dire need of money, this is an ideal set-up, as the application can be done via smartphone or computer. The loan proceeds can also be deposited into your nominated bank account. You may not need to leave your home at all just to complete the process.
However, be wary when choosing an online lender. There have been reported cases of some online lending companies shaming borrowers for failing to settle their debts on time. The lenders in question would contact the borrower’s relatives and friends to shame the borrower. In some cases, the lender would compel the relatives or friends to settle the debts on behalf of the borrower. This is considered a form of unauthorized processing of information that can be penalized with fines and sanctions.
Should you experience this type of abuse, don’t hesitate to report the lender to proper authorities.
Car Collateral Loans
Got a car? If so, you can get quick cash with an OR/CR loan. Because it’s a secured loan, the only requirement is your car’s official receipt and certificate of registration (OR/CR). You won’t have to show your credit history as long as you own the vehicle. What’s more appealing about this loan is that some lenders don’t require borrowers to surrender their cars.
What are the Benefits of Loans for Bad Credit in the Philippines?
Much has been said about the drawbacks of loans for bad credit in the Philippines. People tend to forget that it still has its fair share of benefits. Here are some of them.
Credit History is Usually Not Required
As mentioned, bad credit loans are not just personal loans for bad credit. Those who have zero credit or are just borrowing money for the first time in their lives can benefit from lenders in this line of business. If you’re a financially responsible person with zero debt and credit but happen to run into an emergency, a loan of this type may provide you with an insightful borrowing experience.
Greater Chances of Getting Approved
A lot of bad credit loan companies usually don’t have strict requirements. Provide at least your personal information and valid IDs, and your application will have a good chance of being approved. However, this will depend on the type of lender you’re going for.
Quick Turnaround Time
Because some lenders don’t have strict requirements, they can get back to you as soon as possible. A lot of them are also available online, so depending on the process, the money could be deposited in your bank account in as fast as 30 minutes or so. Of course, this will depend on the amount you’re borrowing.
Money Can be Used for Any Purpose
Bad credit loans are essentially personal and multi-purpose in nature. This means that you can use them for any purpose, ranging from emergency and hospitalization to debt consolidation and even gadget purchases. But just because it can be used flexibly does not mean that you should use it for debt-generating activities, such as gambling.
No Collateral Required
This applies to online lending apps, family members, and even 5-6 lenders. You don’t have to surrender collateral to secure funds.
High Borrowing Limits
This is especially true for OR/CR loans. Normally, you can get up to 70% of your car’s value. Nevertheless, you can also take home large loan proceeds when you pawn your rare jewelry pieces and high-end bags.
How Risky is It to Get a Loan for Bad Credit in the Philippines?
Borrowing from lenders that provide bad credit loans isn’t only expensive but also risky. You’re expected to pay very high interest plus the principal at a short time, usually one to 18 months. The repayments will eat up a bulk of your monthly budget.
If not managed well, your situation can snowball into a debt trap. It’s worse if you got a secured loan, as you might lose your collateral when you fail to pay off your loan. Then it hurts your credit history more. And so, the vicious cycle continues.
So before you start applying for a bad credit loan, understand its risks, consider how well you and your budget can handle them, and proceed with caution.
Best Loans for Bad Credit in the Philippines with Guaranteed Approval
Not all providers of loans for bad credit in the Philippines are created equal, so you need to be careful and thoughtful when choosing one. Here are our top picks.
📌 EasyRFC Multi-Purpose Loan
Some financial emergencies don’t require large wads of cash. So, if you’re looking for a lender that can loan you an amount of money enough to tide you over, Radiowealth Finance Company’s EasyRFC Multipurpose Loan may be for you. The processing is fast, and you don’t have to pledge any collateral.
- Loan amount: PHP 10,000 to PHP 150,000
- Interest rate: 4% per month
- Approval time: As fast as 24 hours
- Payment terms: Up to 12 months
📌 Tala Cash Loan
Applying for a bad credit loan online? We can’t stress enough how convenient the Tala Cash Loan is. You can simply apply for it via your Android phone. It also doesn’t require any guarantor or collateral. Because the loan amount is not that high, this is an ideal solution for minor financial inconveniences.
- Loan amount: PHP 1,000 to PHP 15,000
- Interest rate: 11% for payment within 21 days; 15% interest rate for payment within 30 days
- Approval time: As fast as 24 hours
- Payment terms: 21 to 30 days
📌 SB Finance Car4Cash
If you’re looking for a high loan amount and you have a car, the SB Finance Car4Cash is worth considering. You can get the cash you need without ever surrendering your car. Just submit your car’s OR/CR and a few documentary requirements, and you’re good to go!
- Loan amount: PHP 100,000 to PHP 2 million
- Interest rate: 1.25% to 2% per month (depending on the age of the car and loan term)
- Approval time: Five to seven banking days
- Payment terms: 12, 18, 24, 36 months
📌 GDFI OR/CR Sangla
One of the loans for bad credit in the Philippines to consider is Global Dominion Financing, Inc.’s OR/CR Sangla. You can possibly get a high loan value while securing a low interest rate. Also, GDFI doesn’t require successful applicants to surrender their car.
- Loan amount: 50% to 70% of your car’s Fair Market Value (FMV) or GDFI valuation
- Interest rate: 1.3% to 1.5% (depending on the age of the car and loan term)
- Approval time: 24 to 72 hours
- Payment terms: Up to 48 months
Got a smartphone, a luxury watch, a jewelry piece, or a designer bag? You can get quick cash by pawning it online at PawnHero. This lender also accepts cameras, gaming consoles, sunglasses, soundbars, belts, and designer shoes as collateral. The storage, insurance, pick-up, and return delivery of the collateral are all free.
- Loan amount: Depending on the valuation of the loan item
- Interest rate: Starts at 2.9% per month (depending on the item’s condition, category, and age)
- Approval time: Within one day
- Payment terms: Depending on the category of the item (as items such as gadgets depreciate fast, and gold depreciate slow)
6 Tips When You Decide to Apply for Bad Credit Loans
If you decide that getting a loan for bad credit is the only way to go, here are some quick tips to help you minimize its risks:
- Shop around for lenders. Spend time reading reviews about companies that provide bad credit loans. Compare the lending companies and their offerings.
- Verify if a lender is SEC-registered. Check the Securities and Exchange Commission (SEC) website to ensure that you aren’t dealing with a scammer.
- Use an online loan calculator. Online lending companies have a personal loan calculator on their website. Use it to compute how much you can realistically afford to borrow and check the interest rate.
- Never lie in your loan application. If you have a poor credit record, don’t hesitate to tell the truth. The lender can easily detect any inconsistency in your information, and that can hurt your chances of loan approval.
- Submit complete requirements and application form. Incomplete loan applications get rejected. So make sure everything you submit to the lender is complete.
- Avoid applying for multiple loans. Considering applying to different lenders at the same time to boost your chance of approval? Just don’t, no matter how desperate the situation is.
Once you’re approved for a bad credit loan, take this as an opportunity to improve your credit score. Consistently pay your monthly amortizations on time. If you’re on the verge of defaulting on your loan, negotiate with the lender for a more flexible term. When you’ve paid off your bad credit loan without setbacks, you’re making it easier for yourself to get approved for personal loans in the future.
-  What is a Credit Risk? (Investopedia, 2021)
-  Online Lending Company Faces Data Privacy Raps for Allegedly Shaming Borrowers to Settle Debt (BusinessMirror, 2021)
-  SEC List of Online Lending Platforms | Lending Companies | Financing Companies
Venus is the Head of Editorial Content at Moneymax, with 15+ years of experience in digital marketing, corporate communications, PR, and journalism. She invests in stocks, mutual funds, VUL, and Pag-IBIG MP2. Outside of work, she’s crazy about cats and Korean dramas. Follow Venus on LinkedIn.