Personal loans in the Philippines help in covering a person’s short-term financial needs, such as buying a new gadget, paying for matriculation fees, covering a mortgage or rental dues, or even financing a micro-business venture. To avail of this, some proceed directly to banks and talk to a personal loan manager while other Filipinos enroll for an online personal loan for a hassle-free application. If you ever plan to enroll for a personal loan here in the Philippines, some of the factors that you should look into are the lender’s transparency on fees, payment terms, discounts, and interest rate.
Why are Personal Loans Popular?
Borrowing money or lending in the Philippines is very popular and is mostly done between two parties with deep personal connections. For instance, friends borrowing from friends or a person borrowing money from a relative. This form of the personal loan is unsecured, and the majority does not even have terms and conditions for the loan, making the lender left with the short end of the stick when things turn for the worse.
Today, personal loans via banking institutions are gaining nationwide popularity. Not only do banks provide a secured way of loaning, but they also offer flexible payment terms and even competitive interest rates.
Here are two major reasons why you should opt for a personal loan offered by banks:
Personal loans are an excellent alternative to credit cards
Previously, Filipinos tend to go after credit companies to help them with their financing matter, investments, or for their daily purchasing needs. The only problem with credit cards is that they painfully higher interest rates. As is the usual case, those who can’t sustain paying regularly will just forego their cards and leave the bank with a significant debt under their name. This makes it problematic for credit companies to conduct a debt collection.
Personal loans serve quick solutions during tight financial situations
Unlike some other forms of borrowing money, personal loan application in the Philippines is laidback. Meaning, you do not need to gather and submit tons of documents just for the application to proceed. In addition, some personal loan lenders have minimal requirements to approve your application, which could include a request letter and a promissory note.
Who are the People Applying for a Personal Loan in the Philippines?
People who usually apply for personal loans are those who are:
· Paying off Credit Cards;
Personal Loans are often availed by people who intend to pay off their credit card expenses. Since this particular loan usually has flexible terms and lower rates, keeping up with the payment is easy. This is an excellent option to cover immediate financial obligations.
· Those Who Have Plans for Home Improvement/Renovation;
You may opt to apply for a personal loan if you are planning to have a home makeover, improvement, or renovation. A lot of banks in the Philippines approve personal loans as long as they can guarantee that you have the capability to pay the terms.
· Buying a Car or Gadgets;
Personal Loans are brilliant options if you mean to purchase a new car. Car Finance experts highly recommend personal loans as they are a better option compared to car loans. Besides buying a vehicle, this specific type of loan is also suitable if you are planning to purchase gadgets, electronics, or expensive appliances.
· Paying Medical Bills;
Paying for medical or hospital expenses is also another reason to avail of a personal loan in the Philippines. Most of the time, hospital bills could balloon to excessive amounts, which is just impossible to pay without the help of third-party financing.
· Traveling to their Dream Destination;
If you are planning to travel the world and does not have enough budget to cover for the necessary expenses, you might want to consider applying for a personal loan. With this, you can borrow amounts above Php 100,000, which would be more than enough for a travel budget around Asia.
How to Apply for a Personal Loan in the Philippines
When applying for a personal loan, there are basic requirements that lenders look into to assess the capability of the borrower to pay. These are the following:
Lenders are very strict on this requirement. They see to it that they only approve only those who have a source of income. Whether you are a self-employed individual, part-time or full-time employee, as long as you have a job, then you can apply.
- A clean credit history;
It is essential to be sure that all your previous liabilities are cleared and free from any complications. Lenders tend to reject applicants who have a record of failing to meet their payment dues.
- Records of one’s assets, expenditures, and former balance dues;
Some lenders require these documents, especially from candidates who are availing of substantial loan amounts. Using these documents, they can further assess your capability to pay the load.
The Step-by-Step Guide to Applying
First, you must pin down and settle on the financial institution that you will tap for a personal loan. Then fill up all the mandatory details on the application form that they will give you. These details involve:
- Personal Statistics;
- Financial Status;
- Information about the Loan Request.
After you submit the form, the bank will soon contact you and tell you if your application has been granted, if they need additional requirements, or if you’re rejected from availing the personal loan.
How to Avail of a Large Loan Amount?
Most banks or lenders will not hesitate to give out huge loan amount if they can rest assured that an applicant will not have difficulty in paying off the loan. Amounts above Php 500,000 is already considered a hefty sum for a loan
If you are planning to avail of this, you just have to prove to them that you are:
- In good standing in terms of credit score record;
- Able to resolve your bills at the right time;
- Meet the expense of your previous debt;
- Have a salary that is enough to cover the loan payment after deducting your living expenses and other financial liabilities.
Security of Your Data
Banks in the Philippines guarantee that the information given by their clients remain safe and confidential. This is in line with the Data Privacy Act of the Philippines. The Data Privacy Act is generally appropriate to any Filipino individual or legal entity that process private data, so you need not worry about your private information being passed on to other institutions or organizations.
The Best Personal Loan Providers in the Philippines
Below is a list of the most reputable banks offering personal loans here in the Philippines:
The good thing about SB is that they have a low monthly interest rate, which is about 1.39%. They do not require collaterals and credit cards for someone to be able to apply. SB is also an excellent option for those who are seeking a huge amount of loan – their maximum amount is up to two million pesos.
This bank is strict on each applicant’s qualifications compared to most banks. Nevertheless, securing a personal loan from Chinatrust is a pretty easy process. The bank has a 1.39% interest rate per month and needs no collateral or guarantor. For you to pass the application process, you must have at least fifteen thousand pesos of monthly revenue. The offer loans amounting from Php 20,000 to Php 1,000,000.
Citi probably has the fastest application out of all the banks in this list. Their approval process is quick; you can immediately get feedback from them within 24 hours after you submitted all the requirements. Their interest rate is also one of the lowest out there, averaging only at 1.26% per month. They have a flexible loan tenure as well, ranging from twelve to sixty months. Just like the first two lenders, Citi does not require a collateral as well.
RCBC (the Rizal Commercial Banking Corporation)
Many Filipinos are familiar with this bank, and it’s no surprise that a well-known bank like them provide loan services. You must have a salary of at least twenty thousand pesos to avail of the personal loan. Their monthly interest rate is 1.30%, and the loan has a tenure that lasts up to thirty-six months. The amount they offer range from fifty thousand to one million Philippine Peso.
HSBC (Hong Kong and Shanghai Banking Corporation)
Another alternative for Filipinos who wants fast service is HSBC. This bank has an approval turnaround of five working days. Their loan interest is as low as 1.21% per month and only requires a fourteen thousand pesos of monthly income to pass. Also, HSBC does not require collaterals from its applicants.