How to Get a Personal Loan with Low Interest Rate in the Philippines

by Moneymax, on category "Personal Loan"

October 23, 2019


Personal Loan with Low Interest Rates in the Philippines | Moneymax

This article was originally published on September 26, 2018 and was updated on October 23, 2019.

Like you, majority of borrowers in the Philippines take the interest rate into account when applying for a loan. According to the Bangko Sentral ng Pilipinas financial inclusion survey, the interest rate is one of the top considerations for 47% of Filipino borrowers.

The best personal loans in the Philippines are those with low rates, usually from government agencies and banks. Getting a personal loan with low interest rate helps you save money, as it keeps the interest payments low over the loan’s duration.

Lenders typically advertise two types of interest rates: the monthly add-on and effective interest rate. Also called the annual percentage rate, the effective interest rate reflects the true interest you’re paying on a loan.

On the other hand, the monthly add-on interest rate is calculated by combining the amount of the loan and the annual interest rate, then multiplied by the number of years you hope to repay the loan. This results to a more expensive monthly amortization cost for the borrower. Thus, when comparing personal loans, try searching for a lower monthly add-on interest rate.

Where to Get a Personal Loan with Low Interest Rate

1. SSS Salary Loan

Effective Interest Rate: 10%

Personal Loan with Low Interest - SSS Salary Loan

The SSS salary loan (1) provides the personal loan with the lowest interest rate in the Philippines at 10% per year, meaning that the monthly payments will not fluctuate monthly. Qualified SSS members can borrow one month’s or two months’ worth of their monthly salary credit and repay the loan in 24 monthly installments.

Loan repayment is also convenient for employed borrowers, as their monthly amortization is automatically deducted from their salary. No wonder it’s the Filipinos’ top-of-mind choice for their short-term cash needs.

Another great feature of this low-interest personal loan is the Loan Restructuring Program (LRP). The LRP makes it easy for delinquent borrowers to settle their overdue SSS loans at a lower annual interest rate of 3% without having to pay the penalty fee. Also, the repayment term is flexible up to five years.

Read More: Fast and Easy SSS Salary Loan Application

2. Pag-IBIG Multi-Purpose Loan

Effective Interest Rate: 10.75%

Personal Loan with Low Interest - Pag-IBIG Multi-Purpose Salary Loan

Another popular personal loan with low interest in the Philippines is the Pag-IBIG Multi-Purpose Loan (2). Sharing many similarities with the SSS salary, the Pag-IBIG loan offers a low fixed rate of 10.75% and allows monthly repayment through payroll deduction. The loan is payable in 24 monthly installments.

Qualified Pag-IBIG members can borrow 80% of their total accumulated value (TAV). The TAV is a sum of all monthly Pag-IBIG contributions, employers’ share of contributions, and the total dividends earned.

Read More: Quick Guide to Pag-IBIG Salary Loan Application

3. Security Bank Personal Loan

Monthly Add-On Interest Rate: 1.89%%

Personal Loan with Low Interest Rate - SB Finance Personal Loan

One of the low-interest personal loans in the Philippines is the one from Security Bank (3). Loan amounts range from PHP 30,000 to PHP 1 million, payable in 12, 18, 24, or 36 months. The annual interest rate starts at 29.48%. Easily apply online through their website and get your loan approved within a week.

Security Bank Personal Loan
Loan Term (in months)Monthly Add-on RateEffective Interest Rate
12 – 36 months1.89%29.48%

Read more: 7 Reasons a Security Bank Personal Loan Makes a Practical Choice

4. Citibank Personal Loan

Monthly Add-On Interest Rate: 2.42%

Personal Loan with Low Interest Rata - Citi Personal Loan

Citibank is known for approving a loan within 24 hours (4) and having the longest repayment term—up to five years—in the Philippines. But what many people don’t know is that it provides a Citi Personal Loan with low interest. You can borrow any amount from PHP 20,000 to PHP 2 million and repay it in 12, 24, 36, 48, or 60 months.

Read More: How to Get a Citibank Personal Loan: A First-Timer’s Guide

5. BPI Personal Loan

Monthly Add-On Interest Rate: 1.20%

Personal Loan with Low Interest - BPI Personal Loan

BPI provides an affordable option (5) for Filipinos who need to borrow money through its personal loan with low interest rate starting at 25.03% annually. You can borrow an amount that’s up to thrice your gross monthly income. The loan amount for BPI personal loan ranges from PHP 20,000 to PHP 1 million payable in 12, 18, 24, 30, or 36 months.

BPI Personal Loan
Loan Term (in months)Monthly Add-on RateEffective Interest Rate
121.20%25.60%
181.20%25.74%
241.20%25.59%
301.20%25.33%
361.20%25.03%

Read More: Easy Guide to Applying for a BPI Personal Loan

6. BDO Personal Loan

Monthly Add-On Interest Rate: 1.25% to 1.30%

Personal Loan with Low Interest - BDO Personal Loan

For Filipinos and foreigners living in the Philippines, BDO offers a personal loan (6) with low-interest rate starting at 25.98% annually. Loan amounts range from PHP 10,000 to PHP 1 million payable in six, 12, 18, 24, or 36 months.

BDO Personal Loan
Loan Term (in months)Monthly Add-on RateEffective Interest Rate
61.30%26.27%
121.25%26.63%
181.25%26.76%
241.25%26.58%
361.25%25.98%

7. BDO Kabayan Personal Loan – Secured

Monthly Add-on Interest Rate: 0.78% to 0.84%

Among all banks in the Philippines, BDO offers the lowest interest rate on a personal loan under its BDO Kabayan Program. However, it’s available only to OFWs with at least two to three years of overseas employment.

This BDO loan is a secured loan, which is why it’s a personal loan with low interest rate. This means it requires collateral in the form of a savings, current, or time deposit account with BDO. OFWs can borrow at least PHP 10,000 up to 90% of their BDO deposit account balance. The loan is payable for six, 12, 18, 24, or 36 months.

BDO Kabayan Personal Loan – Secured
Loan Term (in months)Monthly Add-on RateEffective Interest Rate
60.84%17.08%
120.79%17.07%
180.78%17.06%
240.78%17.06%
360.79%17.06%

Read More: What are the Best OFW Loan Options in the Philippines?

How to Get a Personal Loan with Low Interest Rate

Personal Loan with Low Interest - Calculating Interest Rate

Just because a lender offers a personal loan with low interest doesn’t mean everyone can actually qualify for it. This is true especially for banks that conduct credit checks to evaluate a borrow’s ability to repay a loan. They look specifically at a loan applicant’s credit score.

You have a great chance of getting a low interest rate for a personal loan if your credit score is high. But if it’s low, you might be approved with a high interest rate or worse, get rejected for a personal loan.

That’s why it’s very important to check your credit score. If you know yours is good, you can negotiate with the bank for a lower interest rate. On the other hand, if your score is bad, you’ll have the opportunity to improve it before you apply for a personal loan.

Final Thoughts

While banks and government agencies are known for their strict loan requirements, these lenders still cater to the everyone’s financial needs with their personal loan with low interest offerings. As long as you practice financial discipline and maintain a good credit history, you can easily qualify for low interest rates and eventually, save money on interest payments.

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