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Types of Loans Philippines

Understanding Different Types of Loans in the Philippines

Get to know the range of lending options in the Philippines, their purposes, interest rates, and costs. Make smart choices and save money with savvy borrowing.

Navigating the various loan types in the Philippines can be quite a task, especially without a clear understanding of each. Whether it’s personal loans, motorbike loans, or housing loans, each type serves a unique need. 

The interest rates, the types of lending, and repayment terms are some factors that make one loan different from another. Also, the rise of online lending platforms has made it easier for Pinoys to get a loan online from home. However, this ease can lead to quick decisions without understanding the different loan types and their interest rates well.

This guide aims to simplify the different types of loans available, making it easier for every Juan to understand borrowing. We hope to make the journey of borrowing smoother and easier to grasp.

Secured Loan vs Unsecured Loan

Understanding loans in the Philippines starts with getting to know two main types: Secured and Unsecured loans. These types form the base for many loan options, affecting both lenders and borrowers.

Secured Loans are where you give something valuable like a house, car, or jewelry to the lender as collateral. It’s straightforward – if you can’t pay back the loan, the lender can take your collateral to get their money back. With the lender having something to fall back on, these loans usually have lower interest rates.

Unsecured Loans, on the other hand, don’t need collateral. They are given based on your credit score and income. Since the lender is taking a bigger risk, these loans have higher interest rates. Personal loans, credit card loans, and quick loans are usually unsecured.

Choosing between secured and unsecured lending depends on what you’re comfortable with. Knowing the difference is important as it affects the interest rates, how much you can borrow, and for how long.

Whether you’re new to borrowing or have done it before, understanding secured and unsecured loans helps you understand the many types of loans. Each type has its pros and cons, so knowing these basics helps you make smart financial choices that fit your or your business’ needs.

Personal Loan

A Personal Loan covers many loan types, each crafted for different financial needs. Whether it’s for an unexpected bill, a big buy, or debt consolidation, there’s a personal loan fit for your needs. Let’s explore the sub-categories to understand the options better.

Quick Loans

These are short-term loans also known as Instant Loans, Salary Loans, or Payday Loans, Quick Loans are your go-to when cash is tight. They’re known for fast approval and cash release, sometimes in just 5 minutes, a lifesaver in emergency situations.

Loan purposeFor unexpected costs like medical emergencies or urgent car fixes.
RequirementsA steady income and good credit history can ease the approval process.
Loan amountsThey vary but are usually small, often between ₱2,000 to ₱25,000.
Usually limit for the first loan can be up to ₱7,000 to ₱10,000.
Repayment termShort, typically until your next payday or within 30 days. Some lending companies offer repayment terms from 1 to 12 months.
Monthly interest ratesHigher due to quick access, often around 1% to 1.5% per day. Some lenders offer 0% interest rate for the first loan.
APRThe annual rate can be high because of the loan’s short-term nature.

Installment Loans

Installment loans are great for big expenses like buying gadgets or appliances, letting you spread the cost over time.

Loan purposeGreat for big buys or consolidating high-interest debts.
RequirementsA steady income and good credit score are key for approval.
Loan amountsThey offer a wider range, from ₱10,000 to ₱300,000 or more.
Repayment termLonger, often between 6 to 36 months or more.
Monthly interest ratesMore manageable, usually from 1% to 4%.
APRThe annual rate is lower compared to quick loans because of the longer repayment term.

Credit Card Loans

Credit card loans are an easy way to get funds, especially if you already have a credit card.

Loan purposeGood for any purpose but be cautious of high-interest rates.
RequirementsHaving an existing credit card with a good payment history.
Loan amountDepends on your credit limit.
Repayment termVaries but monthly minimum payments are needed.
Monthly interest ratesHigh, often around 3.5%.
APRAnnual rates are high, so it’s crucial to pay off the balance ASAP.

Whether you choose a quick loan, an installment loan, or use your credit card, understanding each type under personal loans can help you make a smart financial choice. The goal is to pick the loan that matches your financial need and repayment ability, keeping you financially stable in the long run.

Motorbike Loan

Motorbike loans are a great choice for those wanting to zoom through the busy streets on a new or used motorbike. Whether it’s a budget-friendly moto or a high-end model, a motorbike loan can get you on the road without emptying your wallet.

Loan purposeMotorbike loans are designed for buying new or used motorbikes, motorcycles or three-wheeler motorcycle.
RequirementsA steady income, good credit history, and sometimes a down payment can speed up the approval process.
Loan amountLoan amounts usually range from ₱30,000 up to ₱2 million, depending on the motorbike / motorcycle type, price and the bank or lending company.
Repayment termTerms are flexible, often between 6 to 48 months. Depends on loan and motorbike or motorcycle type and loan amount.
Monthly interest ratesGenerally affordable, usually around 1% to 4%.
Down paymentFrom 5-10%, based on selling price and lender.
APRThe annual percentage rate varies, but it’s good to check to ensure you get a fair deal.

Whether it’s to beat the traffic, save on fuel, or just the love for two-wheelers, motorbike loans provide a practical way to own a motorbike. Understanding the basics of motorbike finance not only brings you closer to owning a motorbike but also ensures your repayment plan is manageable.

Car Loan

Having a car in the Philippines isn’t just a status symbol, it’s a practical way to tackle daily travel challenges. Car loans make it easier to get a new or used car without a big upfront payment. They come in different types to match your financial situation and the car you want.

Loan purposeCar loans are for buying new or used cars, making it easier to own a vehicle.
RequirementsSteady income, good credit score, and sometimes a down payment are important for approval.
Loan amountsLoan amounts vary widely from around ₱200,000 to ₱2,000,000 or more, depending on the car model and your finances.
Repayment termTerms are flexible, often between 12 to 60 months or more.
Monthly interest ratesThese change but are often competitive, usually between 1% to 4%.
Down paymentFrom 20-50%, depends on selling price and lender.
Car Loan - Pesopal

Whether you want a small car for city drives or a big SUV for family trips, understanding the basics of car finance, loan rates, and payment terms helps you make a smart choice. Plus, looking around for the best auto loan with good interest rates and terms can save you a lot of money over the loan’s life.

Housing Loan

A home is more than just a place to live; it’s where dreams take shape. Housing loans help bridge the financial gap between you and your dream home. Whether you want to buy a comfy apartment, build your dream house, or fix up your place, there’s a housing loan for you.

Loan purposeHousing loans help with buying a new house, construction, renovation, or using home equity.
RequirementsSteady income, good credit score, and sometimes a collateral is needed for approval.
Loan amountsLoan amounts vary widely, from around ₱500,000 to ₱10,000,000 or more, based on the property value and your finances.
Repayment termTerms are flexible, often from 5 to 30 years.
Annual interest ratesTypically competitive, usually between 5% to 10%.
Down paymentFrom 20%, depends on selling price and lender.

Starting on the home ownership path is a big step. Understanding mortgage rates, down payment, loan rates, and other housing finance details is key to navigating this path well. Whether it’s a home for you or an apartment for rental income, a housing loan is a reliable partner in making these big life moves.

Business Loan

Starting a business or growing an existing one comes with both dreams and hurdles. In the Philippines, a business loan can give your business the push it needs. Whether it’s for more inventory, new equipment, or a new location, the right business loan can be your financial friend.

Loan purposeBusiness loans help with starting a new business, buying equipment, expanding operations, or managing cash flow.
RequirementsA good business plan, steady income, good credit score, and sometimes collateral are key for approval.
Loan amountsLoan amounts vary a lot, from ₱250,000 to ₱2 million, based on your business size and needs.
Repayment termLoan amounts vary a lot, from ₱250,000 to ₱2 million, based on your business size and needs.
Monthly interest ratesGenerally competitive, usually between 1% to 3%.

Whether you’re a new entrepreneur or an experienced business owner, understanding business finance, including the types of business loans and lines of credit, is key to making smart decisions. Picking the right business loan not only gives you the money to reach your business goals but also fits with your repayment ability, keeping your business financially steady in the long run.

Loan Comparison

PurposeRequirementsAmountTermInterest rates
Quick loanmedical expenses, urgent car fixes, cash advanceSteady income, good credit history₱2,000 to ₱25,00030 days to 12 monthsHigh, 1-1.5% per day. 0% interest for first loan
Installment loanGadgets, home appliances, loan consolidationSteady income, good credit history, good credit score₱10,000 to ₱300,0006 to 36 months1% to 4% monthly interest rate
Credit card loanFor any purchaseGood payment historyDepends on credit limit30 days to several monthsAround 3% to 4% monthly interest rate 
Motorbike loanUsed or new motorbike, motorcycle or three-wheeler motorcycleSteady income, good credit history, down payment 5-10%₱30,000 up to ₱2 million6 to 48 months1% to 4% monthly interest rate
Car loanUsed or new carSteady income, good credit history, down payment 20-50%₱200,000 to ₱2,000,00012 to 60 monthsUsually between 1% to 4% monthly interest rate
Housing loanBuying a new house, apartment, construction, renovation, as home equitySteady income and income history, good credit score, collateral, mortgage₱500,000 to ₱10,000,0005 to 30 yearsAnnual interest rate is between 5% to 10%
Business loanStarting new business, buying equipment, expanding operations, managing cashflowGood business plan, steady income, good credit score, sometimes collateral₱250,000 to ₱2 million3 months to 10 yearsMonthly interest rates are usually between 1% to 3%

Legit Online Lending

The Philippines has seen a rise in online lending websites and apps, making it important to tell the legit from the scammy. Before you apply for a loan, it’s smart to learn and read our guide about legit online lending. Making sure you’re dealing with legit lenders will protect you from possible financial fraud and sky-high interest rates that could lead to a debt trap.

Make sure to check the credibility of the lending institution, look for necessary SEC registrations, and read reviews from other borrowers. It’s always better to play it safe, especially with financial matters that can affect your life for a long time.

We hope this guide provides a clear insight into the different types of online loans available. Feel free to share this article with your friends and family. For the latest updates on financial advice and more, follow us on Facebook!

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