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Need Cash Assistance? Here are the Types of Bank Loans in the Philippines

3 March 2022
Need Cash Assistance Here are the Types of Bank Loans in the Philippines

Loans might be your greatest friend when you're short on cash owing to an unforeseen expenditure or if you simply need a little more money to buy something huge. As a matter of fact, depending on their intended usage, the Philippines offers a wide range of various kinds of loans, but bank loans continue to be a major source of finance for businesses.

 

The key benefit of bank loans is that they provide a variety of payment options and loan conditions that are more convenient and flexible. You're fine to go as long as your payments are made on time and have a good credit standing. Bank loans are more popular because of the lower interest rates they provide.

 

A bank loan approval will allow you to begin constructing your business credit history immediately after that approval. For business loans in the Philippines, banks typically provide payback periods of six to 48 months, depending on the size of the loan and your credit history. Some banks may provide a 60-month repayment option. Clearly, banks provide lengthier payback periods that are useful for large capital expenditures that also act as security for the loan. It is important for banks to see that your source of income or business is solid and that it is earning a sufficient amount of cash.

 

Types of Traditional Bank Loans

Loans vary widely in terms of their interest rates, payment schedules, and other terms and conditions. When you take out a loan, many of these aspects are determined by where you do so.

 

However, before you decide to start the application process for a bank loan, it is important to know what sort of loan you need and which banks provide the best deals. In this piece, we'll examine the many kinds of bank loans available in the Philippines so you may get the best one for your individual needs and circumstances.

 

1. Personal Loans

Personal loans, as opposed to company or commercial loans, are given to individuals for a variety of reasons, such as unexpected medical bills, school expenses, or home maintenance issues that need immediate attention. Banks will lend you the money to use for a variety of different purposes. Due to this, a personal loan might be the quickest and most convenient option to get the funds needed to fulfill your dreams of traveling the world or improving your house.

 

There are two types of personal loans, namely, secured and unsecured personal loans- both of which are accessible in the Philippines. See which of these two kinds is most suitable for your needs by taking a more in-depth glance at each of them.

 

Secured Personal Loan

Secured personal loans are an option for borrowers that need a lower monthly payment but also have some kind of collateral to back up their application. Because the borrower is prepared to utilize their assets as a guarantee, these loans may have the same conditions of payment as secured ones, but their interest rates can be cheaper. Cars and houses are two of the most prevalent forms of collateral for personal loans. In fact, those who apply for a secured personal loan have a better chance of being accepted.

 

Personal loans provide the benefit of lower interest rates and shorter approval times, but they also come with a significant disadvantage: you risk losing your collateral if you can't pay back your obligations in a timely manner, and your account goes into default. Take out secured loans only if you can afford to pay them back on a regular basis. Otherwise, apply for an unsecured loan.

 

In the Philippines, only BDO provides a secured personal loan option for borrowers looking for financial stability. The BDO Asenso Kabayan Personal Loan Secured is for foreign employees who are willing to accept a guarantee in return for improved conditions of payment. Here is some key information about BDO Asenso Kabayan Personal Loan Secured:

  • Theinterest rate is around 0.79 percent to 0.84 percent, depending on the tenure
  • The loan tenure term is six months to 36 months
  • The loanable amount is a minimum of P10,000 up to P3 million
  • The monthlyincome requirement is P20,000 gross monthly income

 

Unsecured Loans

It is common in the Philippines that personal loans be unsecured, meaning that there is no collateral required to get a loan from the bank or financial institution. As a caveat to this, it's important to note that unsecured loans come with higher interest rates and stricter credit requirements than secured ones.

This is everything you need to know about unsecured personal loans:

  • The interest rate ranges from 1.20 to 1.59 percent per month
  • The loan tenure is depending on the amount and terms is from 3 months to 36 months, 
  • The loanable amount is P20,000 up to P3 million
  • The monthly income requirement in some banks accept applicants with at least P14,000 gross income

 

In order to increase your chances of being accepted for a personal loan, make sure you have a strong credit history and no defaulted obligations on your record. Additionally, applicants with credit cards have a better chance of being accepted, particularly if they apply via their credit card issuers.

 

Some of the banks that provide personal loans in the Philippines with no collateral include the following:

  • BDO Asenso Kabayan Personal Loan Unsecured

  • BDO Personal Loan

  • BPI Personal Loan

  • Citi Personal Loan

  • Chinatrust Personal Loan

  • EastWest Bank Personal Loan

  • HSBC Personal Loan

  • Leverage Personal Loan

  • Maybank Personal Loan

  • PBCOM Personal Loan

  • RCBC Personal Loan

  • Security Bank Personal Loan

  • UCPB Personal Loan

  • Welcome Finance Personal Loan

 

2. Business Loans

If you want to grow your firm, you'll need to replenish your financial reserves. In this case, getting a company loan may be the greatest option to generate more funds for growth.

 

Small business loan program

This is the most basic kind of company financing, and it is open to all business owners as long as they meet these qualifications:

  • Will use it in order to pay for company expenses or to expand the business

  • Small-scale manufacturers, processors, and service providers, as well as retailers and wholesalers, are eligible to apply for a loan.

  • Good track record and credit status over the last three years

  • Minimum of ₱1.0 Million up to ₱10 Million loanable amount

  • Term Loans (TL) and Domestic Bills Purchase Line (DBPL)

  • The minimum tenure of one (1) year to a maximum of five (5) years

 

Short term commercial loan

Even while working capital lines of credit and short-term commercial loans are both used to fund operational expenses, they are not interchangeable. Typically, a defined quantity of money is borrowed for a given period of time, with interest charged on the lump sum, and is used to fund a specific expenditure (such as the purchase of equipment or the payment of a certain debt). Education loans, mortgage loans, etc., are quite similar in nature to commercial loans.

 

For the vast majority of small enterprises, a short-term commercial loan from a bank must reach the following qualifications:

  • Adequately collateralized

  • Backed up by a healthy cash flow and a track record of consistent sales

 

There may be a fixed interest rate offered due to the short term of the loan and the consequent danger of increasing rates. Despite the fact that some short-term loans have periods as short as 90-120 days, the loans may stretch from one to three years for certain objectives.

 

In terms of suitable security, receivables and inventories, as well as fixed assets, are often acceptable.

 

Long term commercial loan

Long-term commercial loans, as their name suggests, are those with repayment terms of one to three years or more. Long-term commercial loans are more difficult to secure for smaller firms since the bank taking the risk of you not repaying the loan increases with the length of time you have to repay it.

 

Although many small firms are viable for at least ten years, lenders may not be ready to accept that risk. As a result, banks will need collateral and restrict the loan terms to five to seven years. Loans secured by real estate, for example, may be eligible for a longer duration.

 

Longer-term commercial loans may be used for a wide range of things, from large-scale equipment acquisitions to the growth or acquisition of businesses. The asset being purchased serves as collateral for these loans. Loan covenants are another standard requirement.

 

Understanding business loans require you to know which one is most suited to your situation. In the event that you're considering applying for a business loan, you may need to choose the form that best meets your business requirements.

  • Conventional business loan: As with any other sort of loan, a typical business loan provides the borrower with a lump sum of money that may be used for whatever purpose they want.

  • Equipment loan: If you're an entrepreneur looking to make a large-ticket purchase for your firm, this is the right source of funding. The borrower may stretch out the cost of the equipment over a period of time rather than making a large upfront payment. In order to purchase new or upgraded gear, you'll need this sort of credit.

  • Line of credit: It doesn't matter why you need a credit line; it comes in handy when you need to make little, but frequent purchases and don't have the cash on hand. In this case, the bank will provide you with a fixed quantity of money that may be utilized at any time and from any location.

 

Entrepreneurs who are currently earning a profit are the only ones who may apply for a business loan, which has the following criteria as well. To be able to repay your debts, you'll need to show in your financial accounts that your company is profitable.

 

Before you apply for a business loan, you need to know what to anticipate so that you can better grasp how it works. It is possible to notice these aspects in the application process for a business loan:

  • Interest rate – 6.50 percent to 10.50 percent

  • Loan tenure – up to 15 years

  • Loanable amount – from P100,000 up to P20 million

  • Monthly income requirement – at least P40,000 gross monthly income

 

This is a list of commercial banks that lend money to small businesses in order to help you get started.

  • BDO Small Business Loan

  • BPI Family Ka-Negosyo Business Loan

  • CBTC Bank SME Business Loan

  • DBP Small Business Puhunan Loan Program

  • HSBC Business Loan

  • Landbank OFW Reintegration Program

  • Maybank Business Loan

  • Metrobank SME Term Loan

  • Plantersbank SME BizLoan

  • PNB Business Loan

  • PSBank SME Loans

  • Security Bank SME Business Express Loan

 

3. Car Loan

Is there a reason to acquire an auto loan when you buy a car? To begin with, you're attempting to lower your monthly payments by spreading the cost of the car over a longer period of time.

 

Auto loans are the best option for those who want to stop dreaming and get behind the wheel of their own vehicle. With an auto loan, you may borrow money from a bank to pay for a car, rather than paying the whole price upfront. Car loans in the Philippines may be used for a variety of purposes, including:

  • Use your current vehicle as security for a car loan.

  • Get a better deal on an existing car loan

  • Within a month after purchasing a new car, you can reimburse the whole purchase price.

 

Five years is the maximum loan term allowed for vehicle loans in an effort to make automobile ownership more accessible. It's considerably simpler for current automobile owners to purchase a new vehicle if they can use their present vehicle as collateral.

 

The following are some of the most typical characteristics of a car loan:

  • Interest rate – 4.63 percent 27.28 percent

  • Loan tenure – one year to five years

  • Loanable amount – up to 80 percent of the total vehicle value

  • Monthly income requirement – at least P50,000 gross monthly income for most banks

 

If you're ready to take on the responsibility of a vehicle loan, here are some of the banks in the Philippines that provide the service:

  • AUB Car Loan

  • BDO Car Loan

  • BPI Car Loan

  • PBCOM Car Loan

  • Planters Bank Car Loan

  • PSBank Car Loan

  • RCBC Car Loan

  • Security Bank Car Loan

  • UCPB Car Loan

  • Union Bank Car Loan

 

4. Bank Housing Loan

If you want to buy the property of your dreams but can't afford to pay in full, a home loan is a great option. Getting the house of your dreams might be a lot simpler with the help of a housing loan.

 

Purchasing a property may also be funded by taking out a loan. To put it another way, a house loan is an arrangement that allows buyers to spread out their payments over a period of time. Even though buying a property is the most typical reason for taking out a home loan, there are other motivations for doing so.

 

Some of the reasons to get a housing loan are to pay off an existing mortgage, build a new house, renovate an existing one, compensate the borrower for the purchase of a property, or buy a lot. The money you borrow may also be used for your own needs.

 

There are strict restrictions for house loans since they constitute a major financial commitment. Following are the requirements to be qualified for a house loan:

  • At least a monthly gross revenue of P40,000

  • At least two years of work experience or business ownership

  • Minimum age of 21 and no later than 65 years of age are required by the time the loan matures.

 

You must be familiar with the most typical aspects of a house loan before you even consider applying for one. Calculate the total repayments and choose a plan that works best for your situation:

  • Interest rate – 4.99 percent to 11.50 percent

  • Loan tenure – up to 30 years

  • Loanable amount – up to 80 percent of the total contract price

  • Monthly income requirement – at least P40,000 gross monthly income

 

With this information in mind, it's time to choose the ideal bank to help you get a mortgage. The following are the banks in the Philippines that currently provide house loans:

  • Bank of Commerce Housing Loan

  • BDO Housing Loan

  • BPI Housing Loan

  • CTBC Housing Loan

  • Metrobank Housing Loan

  • EastWest Bank Housing Loan

  • Equicom Housing Loan

  • HSBC Housing Loan

  • Maybank Housing Loan

  • PBCOM Housing Loan

  • RCBC Housing Loan

  • Security Bank Housing Loan

  • Union Bank Housing Loan

 

Those who are working abroad and want to finally buy the house of their dreams may acquire a home loan, provided that they submit extra papers such as proof of employment from their overseas employer, full information of the loan administrator, and other relevant documents.

 

One of the most trusted community developers in the country today that offers great OFW house for sale is Lumina Homes. You can avail a brand new house and lot package from Lumina through an ofw housing loan from bank financing.

 

So, don't let your hard-earned money from abroad go to waste and make a smart investment now by getting an ofw house for sale from Lumina Homes!

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