In the Philippines, a personal loan is a loan offered by many lenders to individuals for any personal needs. It’s a one-time cash out, which can be used to consolidate debt, upgrade a home, pay for education, medical bills, travel or any other unexpected expenses. One of the best feature of personal loan is its flexibility, borrowers can use the funds as they see fit.

Personal loans in the Philippines are available in two types: secured and unsecured. Secured personal loans requires collateral like a car or a savings account to mitigate the risk of the lender and may have lower interest rates. Unsecured personal loans doesn’t require collateral but has higher interest rates as it’s based on the borrower’s credit scores and credit history. The choice between a secured and unsecured loan depends on several factors like the borrower’s ability to provide collateral, creditworthiness and the loan amount. When applying for a personal loan, borrowers must consider fees and charges, add-on rate, payment terms and interest rate. The loan application process involves submitting an application form and required documents like valid government issued ID, credit card statements, certificate of employment for employed and proof of income for self-employed. The loan terms and conditions including the minimum loan amount, monthly payment and other details are governed by the lending institution and varies depending on the borrower’s eligibility and type of loan chosen.

Features

• Loan Amount. 50,000 to 2,000,000 pesos in the Philippines, flexible enough for borrowers.

• Credit Score Consideration. Interest rate and terms are based on credit history, so borrowers should improve their credit scores for better loan terms.

• Online Application. Online loan application is available, making it more convenient and paperless.

• No Collateral Required. Most personal loans are unsecured, no collateral needed and more accessible to many.

• Quick Approval Process. Many personal loans have fast approval, so borrowers can get the funds they need fast.

• Monthly Installments. Loan is payable in monthly basis to help borrowers manage their finances.

• Purpose Flexibility. Loan can be used for any personal needs, from consolidating debt to paying urgent expenses or investing in oneself.

• Self-Employed Options. Loans are not only for employed but also for self-employed, so it covers many financial needs and situations.

Pros and Cons

Pros

• Flexibility. Personal loans is very versatile, can be used for consolidating debt, managing emergencies or personal projects.

• Quick Approval. One of the advantage of personal loan is the fast and easy approval process of many lenders, so borrowers can get the funds they need fast.

• No Collateral Required. Since most personal loans are unsecured, no collateral is needed and more accessible to many especially those with no assets.

Cons

• Credit Score Impact. Repayment is key as any late payment can harm credit scores and may limit future loan options.

• Risk of Overborrowing. Personal loans are too easy to get for some, which can lead to overborrowing and financial stress.

• Fees and Charges. Borrowers must be aware of additional fees and charges that may be included in the loan, although these are usually disclosed by the lender.

Requirements and Conditions

Requirements

• Valid ID. Applicants must present a valid government-issued ID, passport, driver’s license or national ID for identification.

• Proof of Income. Evidential documents like payslips, income tax return forms or for self-employed, business registration papers to prove income.

• Proof of Employment. Employed applicants must submit a certificate of employment which details job position and duration of employment.

• Proof of Address. Lenders may request documents like utility bills or lease contracts to validate residence.

• Credit History. A good credit history can increase loan approval chances and may result to better loan terms.

• Completed Application Form. A detailed loan application form must be filled up, which includes personal, employment, income details and loan purpose.

• Bank Statements. Recent bank statements may be required to evaluate the applicant’s financial health and transaction history.

• Other Specific Documentation. Lenders may require additional documents depending on the loan type and their policies. It’s best to verify with the lender.

Conditions

• Loan Amount. Loan amounts vary, lenders usually offer from 50,000 to 2,000,000 pesos or more depending on the lender.

• Interest Rates. Effective Interest Rate (EIR) includes monthly interest fees which range from 1.2% to 2% until the loan is fully paid.

• Repayment Terms. Flexible repayment options are available, usually in monthly installments, tailored to the borrower’s financial capacity.

• Online Application. Most lenders offer online loan application, making it easier for applicants.

• Quick Approval Process. Some lenders have a fast approval process, so applicants can get quick response and faster access to funds.

• No Collateral Required. Generally, personal loans in the Philippines do not require collateral, more accessible to many.

• For Self-Employed. Personal loans are available for employed and self-employed borrowers, for various financial needs and situations.

How to Get the Money

• Direct Bank Transfer. The most common way to receive loan funds is through direct deposit to the borrower’s bank account. After loan approval, the amount will be electronically deposited to the account provided by the borrower.

• Electronic Wallets. In response to the rise of digital financial solutions, some lenders may offer the option to deposit the loan amount to electronic wallets or mobile banking apps.

• Online Payment Platforms. Some lenders offer to disburse loan amount through online payment platforms so borrowers can access their funds digitally.

How to get a loan? Step-by-Step

• What’s Your Loan For

  Firstly, specify what you want to use the loan for, whether it’s to buy property, start a business or to cover personal financial needs. Knowing the purpose is important as different loans are designed for different purposes and will guide you to the right funding option.

• Loan Terms

  Read the loan agreement carefully, including interest rates, repayment schedule, fees and early payment penalties. Being aware of these terms will help you understand your financial commitment.

  Apply

• Documents

  Lenders will require certain documents from you, which may include income proof, employment confirmation, credit history and purpose of loan. Having these documents ready beforehand will make the application process smoother.

• Apply

  Fill out the loan application form for your chosen lender. While many lenders allow online applications, some may require a personal visit. Make sure to fill in all information accurately.

• Approval

  After submission, your application will be reviewed by the lender who will assess your creditworthiness, income and loan purpose. The timeframe for this process varies by lender, some will give you a preliminary approval.

• Get Loan

  Once all requirements are done, the lender will release the loan. The loan will be deposited into your bank account or given as a check depending on the arrangement.