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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 purpose | For unexpected costs like medical emergencies or urgent car fixes. |
| Requirements | A steady income and good credit history can ease the approval process. |
| Loan amounts | They 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 term | Short, typically until your next payday or within 30 days. Some lending companies offer repayment terms from 1 to 12 months. |
| Monthly interest rates | Higher due to quick access, often around 1% to 1.5% per day. Some lenders offer 0% interest rate for the first loan. |
| APR | The 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 purpose | Great for big buys or consolidating high-interest debts. |
| Requirements | A steady income and good credit score are key for approval. |
| Loan amounts | They offer a wider range, from ₱10,000 to ₱300,000 or more. |
| Repayment term | Longer, often between 6 to 36 months or more. |
| Monthly interest rates | More manageable, usually from 1% to 4%. |
| APR | The 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 purpose | Good for any purpose but be cautious of high-interest rates. |
| Requirements | Having an existing credit card with a good payment history. |
| Loan amount | Depends on your credit limit. |
| Repayment term | Varies but monthly minimum payments are needed. |
| Monthly interest rates | High, often around 3.5%. |
| APR | Annual 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 purpose | Motorbike loans are designed for buying new or used motorbikes, motorcycles or three-wheeler motorcycle. |
| Requirements | A steady income, good credit history, and sometimes a down payment can speed up the approval process. |
| Loan amount | Loan amounts usually range from ₱30,000 up to ₱2 million, depending on the motorbike / motorcycle type, price and the bank or lending company. |
| Repayment term | Terms are flexible, often between 6 to 48 months. Depends on loan and motorbike or motorcycle type and loan amount. |
| Monthly interest rates | Generally affordable, usually around 1% to 4%. |
| Down payment | From 5-10%, based on selling price and lender. |
| APR | The 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 purpose | Car loans are for buying new or used cars, making it easier to own a vehicle. |
| Requirements | Steady income, good credit score, and sometimes a down payment are important for approval. |
| Loan amounts | Loan amounts vary widely from around ₱200,000 to ₱2,000,000 or more, depending on the car model and your finances. |
| Repayment term | Terms are flexible, often between 12 to 60 months or more. |
| Monthly interest rates | These change but are often competitive, usually between 1% to 4%. |
| Down payment | From 20-50%, depends on selling price and lender. |
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 purpose | Housing loans help with buying a new house, construction, renovation, or using home equity. |
| Requirements | Steady income, good credit score, and sometimes a collateral is needed for approval. |
| Loan amounts | Loan amounts vary widely, from around ₱500,000 to ₱10,000,000 or more, based on the property value and your finances. |
| Repayment term | Terms are flexible, often from 5 to 30 years. |
| Annual interest rates | Typically competitive, usually between 5% to 10%. |
| Down payment | From 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 purpose | Business loans help with starting a new business, buying equipment, expanding operations, or managing cash flow. |
| Requirements | A good business plan, steady income, good credit score, and sometimes collateral are key for approval. |
| Loan amounts | Loan amounts vary a lot, from ₱250,000 to ₱2 million, based on your business size and needs. |
| Repayment term | Loan amounts vary a lot, from ₱250,000 to ₱2 million, based on your business size and needs. |
| Monthly interest rates | Generally 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
| Purpose | Requirements | Amount | Term | Interest rates | |
|---|---|---|---|---|---|
| Quick loan | medical expenses, urgent car fixes, cash advance | Steady income, good credit history | ₱2,000 to ₱25,000 | 30 days to 12 months | High, 1-1.5% per day. 0% interest for first loan |
| Installment loan | Gadgets, home appliances, loan consolidation | Steady income, good credit history, good credit score | ₱10,000 to ₱300,000 | 6 to 36 months | 1% to 4% monthly interest rate |
| Credit card loan | For any purchase | Good payment history | Depends on credit limit | 30 days to several months | Around 3% to 4% monthly interest rate |
| Motorbike loan | Used or new motorbike, motorcycle or three-wheeler motorcycle | Steady income, good credit history, down payment 5-10% | ₱30,000 up to ₱2 million | 6 to 48 months | 1% to 4% monthly interest rate |
| Car loan | Used or new car | Steady income, good credit history, down payment 20-50% | ₱200,000 to ₱2,000,000 | 12 to 60 months | Usually between 1% to 4% monthly interest rate |
| Housing loan | Buying a new house, apartment, construction, renovation, as home equity | Steady income and income history, good credit score, collateral, mortgage | ₱500,000 to ₱10,000,000 | 5 to 30 years | Annual interest rate is between 5% to 10% |
| Business loan | Starting new business, buying equipment, expanding operations, managing cashflow | Good business plan, steady income, good credit score, sometimes collateral | ₱250,000 to ₱2 million | 3 months to 10 years | Monthly 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!
