How to Get Personal Loans in the Philippines [Guide for Filipino Borrowers]

You’re probably thinking right now about — getting a personal loan — but still undecided because of the various, otherwise shortlisted, options, and you’re just seeking another opinion here.

I don’t think this ranks high on Google search, but luckily you’ve found it. And you’re just on the right page.

Read on as this article provides a comprehensive guide for Filipino borrowers like you who are about to dip into the waters of borrowing.

Quick Outline

But if you want to check and read just a particular section, here’s a quick outline:

• Borrowing — Briefly Explained
  • What is borrowing?
  • Why do people borrow money?
• Secured and Unsecured Loans
• 15 Common Types of Loans in the Philippines
• Personal Loans
  • What are personal loans?
  • What are the common types of personal loans?
  • What are the advantages (pros) and disadvantages (cons) of personal loans?
  • What are the common requirements when applying for personal loans?
• Top 10 Personal Loan Providers in the Philippines
  • Family and Friends
  • Digital Wallets and Online Loan Apps
  • Buy Now, Pay Later and Other Installment Loan Apps
  • Informal Microlending Schemes
  • Credit Cards
  • Pension and Provident Funds
  • Pawnshops
  • Credit Cooperatives
  • Banks
  • Peer-to-Peer (P2P) Lending Platforms
• 10 Helpful Tips When Getting Personal Loans

Quick Disclaimer: All tips, top picks, and recommendations in this article, however well-researched, informative, and practical, do not necessarily constitute a professional or expert advice. You are thus encouraged to do further research and confirmations, make informed financial decisions on your own, and even seek guidance from your financial advisor if you have.

Start your reading here.

Borrowing — Briefly Explained

What is borrowing? Borrowing money, either planned or accidental, has since been part of human history. Everyone borrows at one time or another throughout their lifetime.

You borrow twenty pesos for your jeepney fare from your mom. You borrow a hundred for lunch from a coworker.

In many situations, you borrow for your convenience, i.e., to cover temporarily the cost of something you can’t afford at the moment and repay later.

It sounds that simple, but not really because as borrowed amount gets bigger and bigger, so are the requirements and responsibilities.

You can’t just take a loan without pulling into the big decision your clear financial goal and your capacity to pay it off.

In a nutshell, borrowing is getting into a debt for various short-term or long-term financial goals where the borrower agrees to certain loan terms and conditions that normally stipulate finance charges, interest, and repayment date, among others.

It is also one of the six basic components of financial literacy, the others being earning, budgeting, saving, investing, and protecting.

Why do people borrow money? Borrowing money comes at a cost, i.e., interest payments, social awkwardness, exposure to financial risks, but still you get into it for three basic reasons:

• You need a big money. You want to buy a house and lot that costs you millions, a car, or even just an appliance. You’re probably earning a regular income, but you just need a lump sum. And you think you can only afford it by borrowing and repaying it later even with added interest, and most likely, in installments.
• You can’t wait for it. You have clear financial goals, but it will take you long to achieve them by regularly stashing away portions of your income to your savings. By borrowing, you can have them the soonest or anytime you want.
• You have an emergency. Possibly, you don’t have an emergency fund, it’s not enough to cover the costs, or you don’t have the current access to your money.

Other than these, you borrow money or get into debts in your lifetime for more specific reasons such as to:

• cover temporarily your living expenses while funds are not yet available,
• pay your school tuition or finance your college education,
• process your job application and survive the career transition,
• buy your needs and wants,
• use your credit card limits for convenient payments,
• start up or grow your business,
• survive a financial emergency and calamity situations,
• prepare for expected expenses, e.g., for childbirth, wedding, and other special occasions
• purchase a car, a house, a parcel of land, and other investments, or even make some repairs or renovations,
• consolidate debts or pay off other existing loans, or just
• grab a good and promising opportunity

Secured and Unsecured Loans

Generally, there are two broad categories of loans — secured and unsecured — and the requirement of a collateral marks the difference.

A secured loan requires you as a borrower to offer a collateral, normally an asset or valued property, that can be seized should you default on your repayments based on the agreement.

For example, when you apply for a mortgage or an auto loan, the house or car itself serves as the collateral, and the lender keeps the deed or title until the loan is repaid in full.

Secured loans, such as mortgages and car loans, usually come with lower interest rates, higher borrowing limits, and longer repayment terms.

On the other hand, no collateral is required in getting an unsecured loan, and the lender takes more of the risk. This explains why interest rates are higher.

Common examples of unsecured loans include credit cards, student loans, and most personal loans.

15 Common Types of Loans in the Philippines

There are many types of loans based primarily on purposes, but these picked 15 are the most commonly availed in the Philippines.

[1] Personal Loan. It is money borrowed from a lender that can be used for nearly all personal purposes and financial goals from debt consolidation to big purchases and special occasions expenses. It is sometimes called a multipurpose loan.

[2] Salary Loan. It is a short-term personal loan given usually by banks and provident funds to employees based on their monthly salary. It is designed to cover various personal expenses. It is sometimes called a quick cash loan.

[3] Pawnshop Loan. It is a quick and easy way to borrow money without credit checks and voluminous paperwork. It only requires something valuable, e.g., a gold necklace or jewelry, subject to appraisal of the pawnbroker who decides for the loan amount.

[4] Mortgage. It is a loan used to finance the purchase or maintenance of a home, condominium unit, land, or other forms of real estate properties that in turn serve as the collateral. It is oftentimes just called a house loan.

[5] Auto Loan. It is also called a car loan as it is used to purchase a car or a truck. It is another secured loan, just like a mortgage, where the vehicle is used as a collateral.

[6] Calamity Loan. It is a special type of loan offered usually by SSS, Pag-IBIG, and other lending institutions to provide immediate financial aid to their members and clients in calamity-stricken areas based on the official declaration by the national or local government units.

[7] Family Loan. It is sometimes called an intra-family loan as it is a loan between family members. It is totally flexible based commonly on informal agreements, i., whether it comes with or without an interest, whether to repay in installments or lump sum, or whether a collateral is required.

[8] Small Business Loan. It is a type of loan specially designed for small businesses to cover cash flow gaps, purchase equipment and supplies, and expand operations. It is usually offered by banks and other financing institutions.

[9] Gadget or Appliance Loan. It is a special loan product that offers quick cash or fund for purchasing a gadget such as a smartphone or laptop or any other home appliances. Loan repayment is usually done in monthly installments, and it comes with varying interest rates based on terms.

[10] Student (or Educational) Loan. It is a sum of money borrowed to finance college education and higher education expenses which may include tuition fees, books and supplies, and even living expenses. It is normally paid off after graduation.

[11] Debt Consolidation Loan. In general, it is a personal loan used to pay off or consolidate existing debts. It is usually availed with the purpose of paying all small loans at once and enjoy lower interest rates.

[12] Home Improvement Loan. It is usually considered a personal loan availed to buy materials, pay contractors, and cover expenses for home improvement and renovation projects, e.g., adding a swimming pool and renovating the interiors.

[13] Home Equity Loan. It is a set amount of loan repaid over a set period of time that uses the home equity as a collateral. Home equity is the down payment you pay for the partial ownership of the house, hence the value of your interest in it.

[14] Land Loan. It is sometimes referred to as a lot loan as it is used to finance the purchase of a plot of land either for residential or commercial purpose.

[15] Credit Builder Loan. It temporarily holds the amount loaned in a bank account or a special fund while you make payments, building credit, and boosting savings at the same time. It is designed for people who have thin files and bad credit records.

Personal Loans

What are personal loans? Personal loans can be distinguished from other consumer loans in terms of the various ‘personal’ needs and financial goals that serve as the purposes of borrowing.

In almost all situations, personal loans have three elements — debt evidence such as a promissory note or signed loan agreement, an amount borrowed (principal), and the cost of borrowing (fees and interest).

What are the common types of personal loans? Personal loans also come in different types, and among them are:

• unsecured (no collateral required)
• secured (collateral required)
• fixed-rate (constant interest rate)
• variable-rate (fluctuating interest rate)
• debt consolidation (debt refinancing)
• co-signed and joint (with co-signer and co-borrower)
• personal line of credit (revolving credit)
• buy now, pay later (purchases divided in installments)

What are the advantages and disadvantages of personal loans? Applying for and getting personal loans come with advantages (pros) and these may include:

• You are not usually required a collateral to get personal loans.
• You are provided flexible borrowing limits and repayment terms.
• You can use the loan money for almost anything.
• You can have many options or various loan providers to choose from.
• You can get approved and have access to cash in a matter of hours or days.

On the other hand, these are the common disadvantages (cons) that make personal loans a little behind other consumer loans:

• Your personal loan may accrue high annual percentage interest rates (APRs) that may even come with monthly add-on rates.
• You may pay extra for processing fees and other penalties, e.g., for late payments.
• Your late payments or non-payments may damage your credit, and leave negative items for the next more or less seven years.
• You may struggle paying off the loan which normally comes with one to three-year repayment terms of fixed installments.
• You may accumulate a stockpile of bad debts over time, especially if getting loans becomes a cycle of financial patches.

What are the common requirements when applying for personal loans? Banks and lending institutions have varying loan application standards, requirements, and processes — others being lenient while others, stringent.

Some digital lenders, for example, simply require account creation on the app, valid IDs and existing bank accounts, while others still require most, if not all, of these:

• valid IDs (with photo and signature)
• proof of income for employed (e.g., pay slips, COE with income indicated, latest Income Tax Return (ITR), etc.)
• proof of income for self-employed (e.g., audited business financial statements, latest ITR, DTI/SEC Business Registration Certificates, etc.)
• active bank account or digital wallet (for loan amount disbursement)
• mobile or landline numbers,
• a collateral (for secured loans), and
• some loan application forms to accomplish

Top 10 Personal Loan Providers in the Philippines

[1] Family and Friends. Almost half of Filipino adults have outstanding personal loans from family and friends, hence the top loan providers, according to one of the recent BSP Financial Inclusion Surveys.

Pros and Cons. Borrowing money from family and friends can prove a viable and good option as common advantages may include flexibility, lower to 0% interest at all, and possibly longer repayment terms.

On the other hand, this also comes with disadvantages such as lack of clarity and formality, social awkwardness, and worst case, damaged relationships.

How to Get a Loan. It may be easy or hard depending on various factors such as your clear communication of the loan purpose, amount to borrow, and your relationship history.

These are the general tips when getting a loan from a family member or a friend:

• Consider and approach the right and best person in the family or circle of friends.
• Sit down and seriously discuss all the details of the loan being asked for.
• Negotiate on the loan repayment terms and other conditions.
• Try to offer a reasonable interest. Otherwise, think later about other ways to express your gratitude.
• Make sure to pay regularly and on time as per your agreement.
• Keep communication lines open and active throughout the days, months, or years while paying off the loan.

[2] Digital Wallets and Online Loan Apps. Online loans, as generally called, are quick, convenient, and unsecured personal loans available for grabs almost anytime because of the surprisingly instant approvals which may take only hours or days.

Pros and Cons. You can skip all the stringent application requirements and processes when you apply with banks by rather availing personal loans from these online lenders that mostly require just an account on the app which can be created in minutes, a valid ID, and a bank account or digital wallet for disbursement.

However, getting personal loans through these lending platforms also comes with disadvantages such as high interest rates, extremely short repayment terms, and sometimes, aggressive collection practices that even end up to harassments.

How to Get a Loan. While many are discouraged from getting these online personal loans due to the some bad reputations, i.e., illicit use of clients’ personal data and harassment, of these online lenders, you may still consider them, however with caution and responsible loan repayments.

Here are the usual steps in getting a personal loan through digital wallets and lending apps:

• Compare various online lending platforms in terms of loanable amounts, interest rates, repayment terms, requirements, and on top of all, customers’ reviews.
• Download the lending app and complete your account registration and creation.
• Specify your preferred loan conditions such as the amount based on your need and the repayment terms, for example three or six months.
• Upload the necessary documents such as — the accomplished and signed loan application form, valid IDs, selfies, and proof of income — which may vary depending on the online lender.
• Read and confirm the binding loan agreement. Make sure you understand all the terms and conditions indicated before accepting them.
• Wait for the approval. Once approved, use the loan money wisely according to its purpose.
• Set alarms or schedules and make regular and on-time repayments to avoid receiving calls from the collectors.

Top Picks. As much as I want to provide a comprehensive review of all the digital lenders with operations in the Philippines, it will take a rigorous research and extended time so here are just the top picks based on helpful reviews online:

• GCash GLoan. If you’ve been actively using your GCash wallet, you might have qualified already for its GLoan. GCash itself is a reputable provider of financial products and services, and there is not much to worry about getting harassed by collectors. You can get an instant cash up to PHP125,000 straight to your GCash wallet which is payable up to 24 months. While there are no hidden charges as it promises, loan amount is subject to 1.59% of interest per month.
• Home Credit Cash Loan. You can get up to PHP150,000 in extra budget for your short-term and long-term needs. The monthly interest for this cash loan starts at 1.83% add-on rate, depending on the loan amount and repayment term preferred.
• Tala Loan. Tala is a popular loan app that offers quick cash up to PHP25,000 that comes with an interest rate of 0.5% (daily flat rate) and a repayment term of up to 61 days. You can get approved with your application via the app in as fast as five minutes and receive the loan money within 24 hours.
• SB Finance Loan. It is offered through the Zuki mobile app by SB Finance, Inc., a joint venture of Security Bank and Krungsri. It offers a personal loan amount between PHP30,000 to PH2M with an interest rate of 1.2% to 3.5% payable in two to 48 months.

[3] Buy Now, Pay Later and Other Installment Loan Apps. If you’re trying to get a personal loan for a big purchase such as a gadget or a home appliance, you might want to consider these Buy Now, Pay Later programs which are also conveniently offered through digital platforms, mostly mobile apps.

Pros and Cons. If you don’t have any available cash or financial capacity yet to make a big online or offline purchase, you may avail a loan from any of these apps.

Other advantages include flexible installment plans, no collateral required, and seemingly low to even zero percent interest on some installments.

On the other hand, the disadvantages may include the risks of making impulse purchases, temptations to avail multiple Buy Now, Pay Later accounts, and others related to interest rates and late payment penalties.

How to Get a Loan. Just like with the most online lending apps, getting a loan from a Buy Now, Pay Later loan app is quick and easy, but you still need to make informed decisions, hence the guide below:

• Compare these loan apps in terms of various factors such as maximum loanable amount, partner e-commerce platforms, convenient loan payment channels, and even customers’ reviews.
• Download the app, create an account, and accomplish your loan application by filling out an online form and submitting all requirements, i.e., normally a valid ID, proof of income, and selfie, among others.
• In the case of Lazada, Shopee, and even Grab, simply check the app links for loan applications and follow the instructions as indicated.
• Once your application is approved, you will be given a certain credit limit which you can use for payments on the platform itself or at its partner merchants.
• Shop only what’s important to avoid high monthly installments.
• Enjoy an increase in your credit limit over time as you use it and pay installments responsibly.

Top Picks. Here are our top picked Buy Now, Pay Later loan apps and providers which you may also try and use at your own risks.

• Lazada’s LazPayLater. It is Lazada’s in-house Buy Now, Pay Later program for select app users. You can loan up to PHP15,000 for in-app purchases except for fine jewelries and digital goods. You may choose among available repayment terms — 45 days, three, six, nine, or 12 months. Its 45-day loan term, for example, comes with 0% interest rate. Other installment terms come with varying monthly interest rates.
• Grab PayLater. It allows you to consolidate all the costs of your availed Grab services at 0% interest payable the month after. Upon activation of this service on the app, you’re given a pre-approved credit line which you can use for GrabFood, GrabMart, GrabCar, and all other app services. With 0% interest and GrabRewards points to earn, processing and late payment fees however are charged as high as 3.99%.
• Shopee SPayLater. It comes as one of Shopee’s payment options, however available only for select Shopee users. The loan amount depends on the approved credit limit that is usually increased in just a matter of months. Its payment terms range up to 12 months with monthly interest rate of 1% to 5%, processing fees equivalent to 0% to 2% of the total amount, and possible late payment fees of 2.5% to 5% of the monthly billed amount.
• Home Credit. It works best for offline or mall purchases of gadgets and appliances given the presence of Home Credit agents in many mall stalls and stores. You may enjoy up to PHP60,000 loan credit with up to 24 months of repayment terms. While interest rates depend on the loan amount and your down payment, other fees include processing fees, collection charges, and late payment fees based on number of days from the due date.
• GCash GGives. Compared to GCredit, it offers higher loan amount of up to PHP50,000 and flexible payment terms from three to 12 months. Its interest rates range from 0% to 5.49% depending on the payment terms, while late payment fee of 1% of the loan amount is charged for every missed due date.
• TendoPay. It is a fintech brand that has partnered with top e-commerce platforms in the country such as Lazada, Zalora, 7-Eleven, Vision Express, and The Premium Playground Outlet, among others. Its initial credit limit offer ranges from PHP2,000 to PHP30,000 with repayment terms of one to 24 months. It comes with 0% interest rate on purchases at select merchant partners, while with others at still low interest rates depending on the loan amount and preferred repayment terms.

[4] Informal Microlending Schemes. Before the ubiquity of online lending apps, many Filipinos would rely on informal lending schemes such as the infamous 5-6 microlending usually offered by Indian nationals, and even other locals for short-term quick cash loans.

During the previous administration however, there was a nationwide crackdown on these as the Supreme Court even ruled that the imposition of usurious loan interest such as of the 5-6 microlending schemes is ‘illegal.’

It cannot be denied however that these microlending schemes still exist under the nose of the law as many borrowers, usually the cash-strapped members of the informal sectors, benefit from them.

Pros and Cons. While resorting to informal lending is a symptom of a larger problem on financial exclusion, many patronize it because of some advantages which may include access to quick cash without any collateral and paperwork, seemingly lighter payment terms, i.e., daily or weekly loan repayments, and lenient binding agreements.

While these microlenders are not accredited financial institutions, their operations are not regulated and loan interest rates are extremely high.

Sometimes, loan collectors even employ violent practices such as harassment, intimidation, and blackmail.

Given these, it is not recommended to get a personal loan from these 5-6 informal microlending schemes.

[5] Credit Cards. Aside from conveniently charging purchases to your credit cards, paying them later on, or even converting these payments to installments, you may also take advantage of cash advances and other personal loans made available with your cards.

Pros and Cons. Cash advances are money you may borrow anytime from your credit limit. Aside from having a quick cash, other advantages include easy withdrawals from ATMs, no credit check, no application needed, and low minimum payments.

Common disadvantages, on the other hand, include special cash advance fees, higher annual percentage rates (APRs), lower cash advance limits, and other fees attached.

How to Get a Loan. If you have a credit card, getting a cash advance is quick and easy, although this may create a little negative impression on your credit report.

Follow these steps on how to get a credit card cash advance:

• Check your cash advance limit on the app or on the paper that came with your physical card when delivered to you. This limit is always lower than your actual credit limit.
• Remember your cash advance PIN. If it’s not provided, call the card issuer and request for it as this will be used for your ATM withdrawal. You may also just check it on your app if available.
• Revisit the credit card’s terms and conditions and check the table of fees and charges before getting a cash advance.
• Go to the nearest ATM and withdraw cash using your PIN.
• Use your cash advance according to its purpose.
• Pay the minimum required on or before the due date. However, it is always better to pay your credit card outstanding balance in full and days before the actual due date.

[6] Pension and Provident Funds. There are three major pension and provident funds institutions managed by the government, also know as the government-owned and controlled corporations (GOCCs) that also offer personal loans to their active members — the Social Security System (SSS), the Home Development Mutual Fund (HDMF, also known as just Pag-IBIG), and the Government Service Insurance System (GSIS).

Pros and Cons. As an active member of these pension and provident funds, you can easily get personal and multipurpose loans when qualified.

Additionally, these loans come with lower interest rates (usually based on diminishing loan balance), longer repayment terms, and direct salary deductions by your employer.

On the other hand, there are strict requirements which may not get you qualified such as minimum number and active months of contributions.

Other disadvantages include limited loan amount based on contributions and less flexible cash disbursement channels.

How to Get a Loan. Here are some quick guides on how to get loans from the two pension and provident funds — SSS and Pag-IBIG (You may visit the GSIS website for the loans available for members).

• SSS Salary Loan. Check your online My.SSS account if you’re qualified for a salary loan based on your contributions. Enroll a bank account for loan disbursement. As soon as it gets approved, proceed to your loan application and wait for the approval and release of the loan money. As of this year, SSS salary loans still come with 10% interest rate per annum based on the diminishing principal balance.
• Pag-IBIG Fund Multipurpose Loan. It is a cash loan designed for the members’ immediate financial needs, allowing them to borrow at least 80% of their total Pag-IBIG Regular Savings. You have multiple options when applying for a multipurpose loan — either online via the virtual Pag-IBIG platform by simply uploading the scanned accomplished application form and other requirements, or offline via your company’s HR department with the same requirements in hard copies.

[7] Pawnshops. To get a loan or borrow money from a pawnshop, you need to produce a valued item as a collateral, e.g., jewelry, designer item, or even a gadget.

The money you can borrow depends on the appraised value of such a collateral. If you fail to pay, the pawnshop may consider your item for auction and resell it to recoup their losses.

Pros and Cons. Pawnshop loans can be your best option if you don’t and won’t qualify for other conventional loans.

Other advantages include access to quick cash based on the appraised value of the collateral, no credit check, and no tons of paperwork to do.

On the other hand, the biggest disadvantages of pawnshop loans are the extremely high annual percentage interest rate which may end you up with a difficulty redeeming your collateral and sometimes, very low appraisal rates.

Also, pawning and re-pawning may just become a cycle of unwise short-time financial patches.

How to Get a Loan. Pawnshops are almost everywhere in the Philippines, even in small towns. Below are the helpful tips when getting a pawnshop loan:

• Make sure there are no other ways of getting a personal loan other than pawning a high-value item for a collateral.
• If decided, prepare the item together with other important documents such as its warranty or certificate of authenticity. Don’t forget to bring valid IDs as well.
• Check and visit only the legitimate pawnshops. You may want to consider the biggest pawnshops in the country or the ones based on their specialty.
• Present the item for pawning and negotiate with the pawnbroker on the appraised value. You may also consider selling it instead of pawning.
• Get the loan money. Accomplish and sign some documents such as pawn tickets.
• Keep you pawn ticket in safe because you will need this for redeeming your pawned item. Normally, you are given 30 days to pay the loan and get the collateral back, but you may also renew the contract for up to 90 or 120 days, however with higher borrowing costs.

Top Picks. While all pawnshops in the Philippines have their plus and minus points, the selected four below are the most popular and possibly the biggest in terms of business operations.

• Cebuana Lhuillier. It is perhaps the biggest chain of pawnshops in the country with over 3,000 branches. Its pawning services come with 30% appraisal rate higher than those offered by other competitors. With loan terms up to four months, it offers 4% to 5% (with advance interest) of monthly interest rates and PHP5 service fees.
• MLhuillier. It also has over 3,000 branches nationwide and offers various financial services. Its loan term offers are up to three months that normally come with 3% (no advance) monthly interest rate and a service fee equivalent to 1% of the principal loan but not exceeding to PHP5 of service charges.
• Palawan Pawnshop. It is one of the fastest-growing pawnshops in the country. It has a variety of packages for its pawning business. It normally charges 1% (with 1% advance interest) to 3.5% (no advance) monthly interest rates and a service fee of 1% of the principal amount, but not exceeding to PHP5.
• PawnHero. It’s the first online pawnshop in the Philippines. It normally charges 3.5% monthly interest rate or PHP500 whichever is higher for gold and jewelry and 4.99% or PHP500 whichever is higher for designer bags, luxury watches, gadgets, and other items. Its service fee is also 1% of the principal loan but not exceeding to PHP5. Minimal documentary stamp taxes are also charged.

[8] Credit Cooperatives. Credit cooperatives may also be a good option when getting personal loans. Cooperatives, being financial institutions, exist for the benefits of their members being the owners themselves.

Pros and Cons. Taking out personal loans from cooperatives comes with competitive advantages which may include membership of the cooperative community, lower loan interest rates, good customer service, easy loan application, and more flexible payment terms.

Its disadvantages, on the other hand, may include membership fee payments and less accessibility, as there are very few credit cooperatives in the country compared to banks and other lenders, and most of them are industry-exclusive and in the rural areas.

How to Get a Loan. If you’re a member already of a cooperative, then all you have to do is inquire about its loan programs and make informed decisions about getting one. If not, these tips will be of great help:

• Research about the best cooperatives within your city or municipality to join. Other cooperatives also have their own websites for you to read all the details.
• Attend their pre-membership seminars and accomplish forms for your membership.
• Pay membership fees and wait for their decision on your application.
• Inquire about their loan programs, maybe through other coop members, its officers, or the website.
• Apply for a personal loan and process all documents required.

Top Picks. Credit cooperatives may not be popular and appealing to the younger generation, but their existence is deeply rooted in the Filipino concept of communal unity known as ‘bayanihan,’ and here are some of them:

• ACDI Multipurpose Cooperative. It is an institutional cooperative serving members from the entire Armed Forces of the Philippines (AFP) and other uniformed personnel. Its Consumption Loan, among other loan packages, offers any loanable amount within the borrower’s salary paying capacity and comes in 12 to 60 months of repayment terms. It also comes with loan insurance and debt benefits.
• Cebu CFI Community Cooperative. It has been operational since 1970 with over 150,000 members from the government and private sectors. Its Personal Advantage Loan, for instance, determines the term-based maximum loan from the appraised monthly installment capacity.

[9] Banks. Banks may be among the last options for many Filipinos when it comes to getting personal loans because of the stringent application requirements and processes, not to mention the long wait time for approvals.

Pros and Cons. While most personal loans offered by banks do not anymore require collaterals, you may also enjoy higher loan amounts, lower interest rates, and more flexible repayment terms.

Neobanks, being the new players in banking industry, offer even more convenient and competitive personal loans.

On the other hand, you may get hopeless and a bit disappointed by how these banks normally process your application.

Banks check your credit score, assess you income, expenses, and work history, and hence require more paperwork. You need a lot of convincing to do with your loan application.

How to Get a Loan. Applying for a personal loan from your own bank may be easier especially if you’ve been a long-time client, and you have a good savings with them, maybe a huge sum of money kept untouched for years now.

Whatever your case is, these are the usual steps in applying for personal loans from banks:

• Make informed decisions about the loan amount, repayment terms, and disbursement accounts.
• Read the full terms and conditions particularly the interest rates and other charges, and make comparisons across different banks.
• Accomplish the personal loan application form which may be done online or at the bank itself.
• Submit it together with other documents such as your proof of income and valid IDs.
• Most banks promise credit decisions within three to five business days from the submission of requirements, but may take longer especially if you’re required additional supporting documents for your proof of income.
• Wait for a call, SMS, or email notification about your personal loan application.
• Make sure you pay your loan regularly and on time to avoid negative items on your credit report.

Top Picks. All banks — thrift banks, rural banks, cooperative banks, commercial banks, and universal banks, among others — offer varying competitive consumer and personal loans and comparing all of them will take a lot of research and time, but here are the top picks you might want to consider:

• Citibank Personal Loan. It comes with one of the longest payment terms of up to five years and approval in as fast as 24 hours. You can loan up to PHP2M with 26.9% annual contractual late and monthly add-on interest rate of 1.29%. Other fees, e.g., disbursement, closure handling, and late payment, apply.
• HSBC Personal Loan. You can get a loan from PHP30,000 to PHP500,000 for six to 36 months of repayment terms and enjoy an effective interest for as low as 14.29% and monthly add-on rate of 0.65%. Processing may take up to five working days. Processing, late payment, and documentary stamp fees apply.
• BPI Personal Loan. It comes with an annual contract rate of 25.60% and a monthly add-on interest rate of 1.2% for a loan amount between PHP20,000 to PHP2M which can be repaid for 12 to 36 months. Loan approval takes five to seven days, and other fees such as for processing and documentary stamp tax apply.
• Metrobank Personal Loan. You can loan from PHP20,000 to PHP1M payable in 12 to 36 months with an annual contract rate of 25.976% to 31.763% and a monthly add-on interest rate of 1.25% to 1.50%. Processing of application usually takes up to seven working days. Other fees such as for disbursement, late payment, and pre-termination also apply.

[10] Peer-to-Peer (P2P) Lending Platforms. P2P lending platforms may be the least popular loan provider among Filipino borrowers, but they cut out the long process by directly connecting the borrowers to lenders, who are also individual investors.

Throughout the process, fintech intermediaries coordinate the loans, transfer the money to the borrowers, and repay the investors with the interest.

Pros and Cons. While P2P lending may sound relatively new, there are advantages to enjoy with it such as easier loan approval compared to loans from traditional banks, flexibility of loan terms and purposes, even for business purposes, and competitive interest rates.

On the other hand, some disadvantages may include longer time to get approved since it’s primarily based on the interest and willingness of the individual investors, possible submission of your account to debt collection agencies should you fail to pay off the loan, and still limited government regulatory policies.

How to Get a Loan. Just like getting a personal loan from a typical lending app, all transactions with P2P lending are done via the online platforms, and these are the usual steps:

• Research about the most reliable P2P lending platforms and choose one that comes with the best loan offers.
• Sign up and complete your application form by providing your personal information, income and employment status, and others as required. Sometimes a credit score is even asked.
• You may get an initial borrower rating based on your provided information, uploaded income documents, and even credit score. Check how much you qualify for a personal loan.
• Wait for individual investors to get interested in your loan application. You may then be asked further details about the purpose of your loan, your current financial status, and capacity to pay.
• If your loan application is successful, you will be required to sign a loan agreement. Wait for the loan money to get deposited to you declared bank account.
• Make regular and on-time payments based on the agreed terms to build your reputation as a borrower on the platform.

Top Picks. P2P lending operators usually conduct in-platform pre-qualification screening processes but not as strict as those by the banks.

Here are two of the most popular P2P online lending platforms in the country:

• Vidalia Lending Corp. This P2P online lending platform offers various types of loans from personal to small business loans. Its minimum personal loan amount is PHP5,000 payable in three to 12 months and with an interest rate of 4% to 6%. You can even decide for the repayment terms whether daily, weekly, semi-monthly, or monthly.
• Blend.PH. It is another popular P2P lending platform operated by Inclusive Financial Technologies. It offers a personal loan amount from PHP50,000 up to PHP2M with varying interest rates that range between 1.5% to 3% per month for up to 36 months.

10 Helpful Tips When Getting Personal Loans

As a financially literate borrower, you should know whether getting a personal loan is a good decision or not and so, whatever responsibilities await you, hence these tips (dos and don’ts) that will assist you further as you navigate through your borrowing.

[1] Apply personal loans only as necessary. Don’t get one just because there is a good offer, you’re sure you’re qualified, or you’re just done paying off the last one.

Here are six questions to ask yourself before applying for a personal loan. 

[2] Seek loans first from your family and friends if possible. You may enjoy interest-free loans and more flexible repayment terms, but do not to ever break their trust and your promise of repaying on time.

[3] Make sure you have the financial capacity to repay the loan. Don’t get a loan if you don’t have any source of income, or you can’t repay it based on the terms. You should know it by yourself in the first place.

[4] Do some research about the best personal loan providers. Don’t jump into the most convenient one right away.

Start with the options provided, check their websites for loan offers and terms, and make comparisons based on these parameters:

• minimum and maximum loanable amounts
• interest rates and annual percentage rates (APRs)
• additional and hidden charges
• eligibility criteria and requirements
• approval time and process
• collateral requirements (if any)
• flexibility on loan terms
• loan money disbursement
• loan repayment channels
• prepayments and foreclosures
• reputation of the loan provider
• customer experiences and reviews

[5] Stay away from loan sharks. Not only that you end up paying high interest rates, you and your family members might even get harassed or threatened should you fail to make on-time payments.

[6] Read the fine prints — the loan terms and conditions — before agreeing and signing. Don’t assume you know everything already by just reading the promotional flyers or the website’s landing page.

You should understand all the financial risks and the responsibilities that come with getting the loan.

[7] Compute for the actual interest rates and fees. Most personal loan offers sound really good only to find out the actual high interest rates and other hidden fees.

Read the fine prints, use your calculator app, and do the math. Personal loans normally come with most, if not all, of these fees:

• annual percentage rates (APRs)
• monthly add-on interest rates
• application fees
• origination and processing fees
• documentary stamp taxes
• disbursement fees
• notarial fees
• late payment fees
• early payment or prepayment fees
• returned check fees
• amendment fees
• payment processing fees

[8] Use the loan money according to its purpose. Don’t touch it or use it as convenient money or financial patch especially for shopping or paying your bills if it is not the purpose of the loan.

[9] Pay your loan regularly and days ahead of due dates. Don’t miss any single repayment as this may hurt your credit score and the trust built on it.

You should include the payments in your budget, and get yourself notified days before the due dates.

[10] Track your loan repayment progress. Don’t let your repayments get off the record. Save all repayment receipts, digital or physical.

If your lender has a mobile app for you to access your repayment records, download it and do the checking days every after your repayments.

In the end, borrowing money or getting a personal loan is not always bad.

In Filipino society, there is still a negative stigma surrounding it, but the fact that many rely on informal borrowing from family, friends, and loan sharks requires more serious attention and examination.

Tell us in the comments below if you have insights, additional tips, or even related questions.

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Read also:

6 Questions to Ask Yourself Before Applying for a Personal Loan Online. This short article emphasizes that getting a personal loan comes with such as big responsibility, and making an informed decision whether to get one or not is among the first steps.

Hi Friend, But Still I Won’t Lend You Money. This article reads like an open letter to friends and coworkers who are not responsible enough when it comes to getting and paying off loans.

Go Get Yourself Trapped in Debt [or read this]! This article examines the debt culture among Filipinos and provides some helpful tips on how to come up with a good debt payoff plan.