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Best Personal Loans in the Philippines with Lowest Rates

Finances aren’t a permanently stable thing nowadays. Everyone should have a back-up plan in case there’s an immediate need for extra money. Gladly, there’s always a way out, and in this case, it’s personal loans. There are a lot of companies in the Philippines that are willing to give people quite a lot of money for reasonable rates.

Such loans are given by regular banks, credit unions, private companies, online lenders (same as private but without physical branches), and peer-to-peer (P2P) lenders. The better the credit score and history of the applier is, the more credit options they have.

One needs some knowledge about the opportunities available, and this article contains everything there is to learn. After reading this, the way out of financial scrutiny will show itself to whoever is in trouble.

What Is a Personal Loan?

A personal loan is an amount of money borrowed for personal needs from a credit union, a bank, a private company, or an online lender. The applicant doesn’t have to specify the reason why they need finances.

The money is paid back by the applicant in established installments (monthly payments) that include the interest fee of the lender. Such a loan may be needed for home redecoration, wedding costs, urgent investments, vacation expenses, etc.

There are two kinds of personal loans:

  • Secured.
    These are backed by collateral property. One gets lower rates, but in case of payment failure, the mentioned assets (apartment, vehicle, etc.) are taken away;
  • Unsecured.
    Not backed by collateral, usually with higher rates but safer for the payee’s assets.

Pros and Cons of Personal Loans

Like any kind of borrowing, personal loans have their advantages and disadvantages. They are still very popular among people that need quick finances for personal use.

Pros
  • Fixed rates.
    Personal loans usually have fixed interest rates, so the installments are the same every month;
  • No collateral in most cases.
    Especially when borrowing online, the applicant only needs to provide personal data and employment information;
  • Credit history improvement.
    The diversity of loans one has fully repaid without any issues helps build good credit history;
  • Quick approval.
    A lot of services approve applications and provide the money in as soon as 1 hour.
Cons
  • Different (often hidden) fees.
    There’s a lot written on those websites, and sometimes applicants don’t read all the information, thus applying for the fees they don’t even know about;
  • Scam danger.
    As with any kind of online services, there’s always a risk of being scammed. That’s why it’s recommended to make sure the company is reliable before borrowing from it;
  • Prepayment penalties.
    In case one can repay the loan faster, doing so with a bank credit (credit card) will save money on interest fees. Online lenders usually have a prepayment penalty for that.

How Does It Work in Philippines?

Personal loans are extremely popular in the Philippines, so the industry is quite developed. However, the basic approach is the same as everywhere:

  • One applies for a loan in a bank, credit union, or online service;
  • If approved, the payee must make monthly installments to cover the interest and the loan principal;
  • There are early and late payment fees (optional), service fee, etc.;
  • Good credit history is needed to apply for a loan (in a bank or a union);
  • The interest is the top priority of the payment, so one’s first several installments may not be repaying the loan principal.

The Philippines also has loaning called OFW (overseas Filipino workers). The difference between OFW and regular personal loans is the larger amount of the money available and the terms more suitable for overseas workers.

How Much to Borrow?

It’s better to base the size of the loan on the needs of the applicant +10%-20% in case of an emergency change in plans. In Philippines banks, one can borrow up to ₱2,000,000. Online lenders offer less but with lower requirements. There are loans as small as ₱2,000 and they go up to ₱20,000 and more.

Best Personal Loan Service

Atome is one of the best online personal loan services in the Philippines. The maximum loan is only up to ₱15,000 (although they state it’s ₱12,000), but the terms and conditions are very beneficial. One can get a loan with a repayment period of 91 to 180 days.

The daily interest rate is only 0.25%, which is quite reasonable for the local private lenders. There’s also a service fee of 0.8%-0.14%. The service promises there are no other extra charges (given the applicant repays on time).

For the pre-application, one needs to state the amount of the desired loan and their mobile number. Then, the service will offer to register an account for which one will need an ID, a picture of the owner with the ID, and other data specified in the form. The system will calculate the general repayment amount and installments. If approved, the money will be transferred to the bank account given by the applicant.

There are a lot of special features like Pay later, reminders, and loans for businesses. The website and the app are easy to use, and the second loan is even easier to get.

Personal Loan Terms

The most common personal loan terms to look for:

  • Loan tenure.
    This is the amount of time in which the applicant has to repay the loan;
  • Early repay fee.
    There’s a penalty for repaying the loan earlier to save on the interest rate;
  • Late repay fee.
    There’s also a penalty for late payments that is a certain percent of the loan principal;
  • Collateral agreement.
    Putting the applicant’s property as the loan security, so that if the person can’t repay it, the company can take their assets.
  • Guarantor.
    There should be a person that guarantees to repay the loan for the applicant in case they can’t (optional).

Personal Loan Requirements

It’s much easier to get a loan these days thanks to private lenders. It used to be troublesome to get a bank credit earlier due to the number of documents the applicant had to gather and strict requirements. Nowadays, before applying for a personal loan in the Philippines, one must check if:

  • They are a local resident;
  • They have a local billing address;
  • Their annual income fits the requirements of the company;
  • They are 21+ years old;
  • They have a TIN (tax identification number) and the UMID (unified multi-purpose ID);
  • They have a postpaid mobile (or landline) number to back up their account.

If everything’s fine, the applicant can get the borrowed money in as soon as an hour.

Banks vs. Personal Lenders

There must have been a reason for creating online lenders, so one can assume traditional bank loans don’t meet all people’s needs. Let’s see the difference between the two most popular types of lenders, their advantages, and disadvantages.

Banks

To get a loan from a bank, one needs almost perfect credit history, financial statements, and a precise plan for the money borrowed. Besides, people often end up signing a collateral agreement, which puts their property at risk. However, traditional banks have the lowest interest rates and fewer additional fees.

Pros Cons
All types of loans available; Requirements are difficult to fit;
Lower rates and fees; Slower application processing.
Lower risk of the scam;
Ability to repay earlier without additional charges.

Private Lenders

Any alternative loan option is good for the people who can’t meet the requirements of banks. Besides, as the application process is done online, it’s much faster. Processing also takes less time, so it’s a nice change for those who need money as soon as possible. However, one has to make sure they use a reliable lending service, as the risks of the scam are much higher online.

Pros Cons
Fewer requirements; Higher rates and fees;
Credit history doesn’t matter; Hidden charges;
Quick processing; Higher risk of the scam;
Convenient application process. No physical branches;

Loan Tips

With these useful tips and tricks, one will get the most profit out of the deal:

  • Compare lenders.
    Before choosing the lender, it’s useful to “shop around” and see the rates different companies provide. Check the APR (annual percentage rate), the frequency of payments, additional fees if any, etc.
  • Consider earlier repayment.
    There might be a possibility of early repayment of the loan to save money on the monthly interest rates. However, lenders are often ready for such occurrences so they apply a charge for early payments. Find out if there’s a policy regarding that before applying for the loan.
  • Check for the PPI.
    Payment protection insurance may have caused divided opinions but have still proved useful to a lot of people. This type of insurance protects your installments by covering them in case the payee is unable to. It’s better to buy the protection from independent companies, as the lender may make it cost a lot more.
  • Always read the small print.
    Before applying for a loan, one should always read all the parts of the contract. Even if the terms and conditions are all similar, there’s always a part in small print that may change the whole deal.

Disclaimers

The information given in this article is general, presented for familiarization only. All the terms, facts, and numbers were taken from the websites of the mentioned companies and publicly available sources. When considering a loan, up-to-date details, APR, conditions, and policies should be checked with the corresponding companies. The APR of every case is different due to the amount and term of the loan, as well as on the credit score and history of the applicant.

The article has been written for a moderate reward from the mentioned companies.

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