Low Interest Personal Loans in the Philippines

There are low interest personal loans in the Philippines.  I decided to write something about loans after discovering that there are a lot of people looking for this type of loan on Google.  I’m gonna mention first those low interest loans that I’ve used in the past, and later on, those that I’ve only heard or read about.

Warning/Advice:  Get loans only for valid reasons, such as tuition fees (but first try a promissory note to the school — this is free interest).  A loan to buy a flat TV to replace your fat TV is not valid, I believe.

Loans That I’ve Used and Repaid:

1. 1% to 2%  Jewelry Loan from Citystate Savings Bank

This loan doesn’t deduct the interest in advance.  If after appraisal of your jewelry, you’re informed that you can borrow 10,000 pesos, you get the 10,000 pesos. You’ll just pay a few pesos for the documentary stamps.

The rate is 2 percent a month. For a loan of 10,000 pesos, the monthly interest is 200 pesos. You pay 600 pesos after three months, on the maturity date.  The lower 1% interest rate is offered to borrowers with at least 100,000 pesos in their Citystate accounts.

Minimum loan is 300 pesos.  It’s available at the head office along Shaw Boulevard and branches along Chino Roces corner Delarosa in Makati, and in Baclaran, Pasay, Mabini and Baliuag.

Warning:  Pay the interest and renew every maturity date to avoid penalty of additional percent.  A More Important Warning:  Your jewelry will be sold immediately if you don’t renew on time and if you don’t heed the notices of sale.

Update Oct 2015:

The online pawnshop PawnHero was introduced to me through email by one of their officers. Here’s a list of items they accept as collateral for a loan.  I have not used their service, so I can’t give a feedback. I included their link here in case you’re looking for an online pawnshop. If you have used their service, please comment here about their service. We will be grateful.

2. ZERO % or 0.6 % or 0.7% Loan through Credit Card Balance Transfer

This refers to a balance transfer that pays out cash to you, the cardholder. This DOES NOT apply to balance transfers that pay directly to the other credit card — you can’t use this for other purposes.

For balance transfers that pay out the cash to you, in effect, you’re telling the bank you’re gonna borrow money to pay another bank’s credit card loan, but you’re not going to do it — you’re going to use the money for another purpose.
A balance-transfer loan is one of the cheapest loans available (sometimes banks offer zero-interest), but also among the most dangerous.  Why? The loan is a bait. I once took advantage of a Zero-Percent Balance Transfer, thinking that I could pay the loan within the 12-month period, thinking I could outsmart the bank, and borrow money for free.

Was I so wrong, and the bank so right. Twelve months passed, and I wasn’t even able to reduce the principal by a peso, as I was paying only the minimum-due for my original balance — the balance before the new balance-transfer loan was added.  It would be years of tears, sleepless nights, and tense-filled work days before I was able to get out of this loan.

However, if you’re the Really Determined Money-Savvy type of person, this can be a cheap or zero-cost way for you to borrow money.  Pay the balance-transfer amount within the payment period, and then cut/cancel the card immediately after.

If you feel guilty a bit about using the bank, just think that the bank knows this risk , and it is more than willing to lend money to you and a few others for free… in order to capture the many others who surely won’t be able to pay their loans on time.

3. Credit-to-Cash Offer from BPI Credit Classic Card

Borrow using the Special Installment Plan or SIP portion of your BPI Classic credit card. The fastest way to avail of this offer is to go to a BPI Express Center, usually in malls or near malls and fill out a short form. You’ll get your money about 4 to 6 pm of the next day if you have a BPI or BPI Family bank account where the money can be deposited quickly. Check pickup is the alternative if you don’t have a BPI account.

The interest rates range from 0.80 to 1.5 percent, depending on the amount and term (number of months to pay), and even lower if there’s a promo.

I’ve used this recently and even earned from it. I borrowed money and lent it for a slightly higher rate.  The borrower, who was referred by a relative, presented me with a real estate title to secure the money and a loan contract. She even thanked me because my interest rate was much lower than her usual lending firm that also requires paid paperwork.  This isn’t my business though — this was only a favor to my relative.

4. EasyPAY Cash from BDO

This loan is similar to the BPI Credit-to-Cash, but this BDO offer requires official receipts, such as tuition payment receipts, tuition assessment statements, hospital receipts, cash purchases of appliances, and car repair payments. Total amount of receipts must be more than 5,000 pesos and each receipt must be more than 500 pesos. You should also have adequate credit limit.

The one advantage of this BDO EasyPAY over the BPI offer is you can get this BDO cash immediately if you apply at a BDO branch.

5. Zero-Interest Loan using Paluwagan

This is only viable if these three factors are present:

  • you have a good reputation with your officemates, friends and neighbors
  • all members have a weekly or monthly source of income
  • all members have a reputation of fulfilling their financial commitment

Suggest to them that you launch a Paluwagan, that you’ll be the one collecting, and that you’ll be the first to get the first sahod.  You can also tell them your need, and if you’re someone known as a good payor, someone might even offer to lend you money for free. My two close friends and I did two paluwagans at our former corporate workplace about two years ago.

6. Zero-Cash Interest using the Traditional Sanla ng Lupa sa Probinsiya

This is very different from the sanla ng lupa sa banko.  This traditional loan has no cash interest. The only benefit that goes to the lender is any benefit he can get from the pawned land while the loan is unpaid.  He tills the land and gets all the harvests.

This is also a contract between two people who know and trust each other and who are known in the village as people of integrity. This is essentially a character loan. The title of the land is never given to the lender. The only paper that is signed is an affidavit, handwritten or typewritten, that states the names of the lender and the borrower, the amount and the seven-year clause.

In our province, there’s this typical agreement that the lender gets the land if the borrower is unable to pay the loan after seven years and unable to forge a new agreement with the lender.

The timing of the lending and the paying is also unique with this kind of loan, as it’s usually made after harvest and before the next planting season.  This gives the lender time to decide what to plant on the pawned land.

I used this remedy about three years ago, when I was financially down, and thank God, I was able to pay it in March 2010. This also highlights the blessings received by farmers who have OFW children with well-paying jobs. This farmer was able to lend me money because she has a daughter who’s been working in London for years.  This irony does not escape me hahaha:  Yong anak niya hindi nakapag-college, kasi walang pang-tuition, kaya pumunta sa London at nagkapera. Ako, nag-college sa isang unibersidad sa Manila, di tuloy ako nakapunta ng London para magkapera. Hahaha

7. Rural Bank Loan

8. SSS Salary Loan

9. Pag-ibig Salary Loan

10. Loan from a Life or Educational Insurance Policy

11.  Personal Loans Offered by Banks

Ask for the hidden charges, such as processing fees, etc.  Mababa nga yong naka-advertise na interest rate, pero malaki pala ang babayaran na processing fee o X fee o Y fee o Z fee. The contract must contain the exact monthly payment amount and the number of months.

Loans That My Neighbors Have Used:

1. Loan from Cooperatives

2. Loan from Microfinance Organizations

Loans Na Mag-isip-isip Muna Nang Maraming Beses

1. Car Loans
During the deepest part of our abyss about 4 years ago, when my father and mother were getting confined at the hospital one after the other,  I called a company with ads that said CAR LOANS.  I thought they were offering loans secured by a car. We ended up laughing because the car loans were for the purchase of a new car or a slightly used car.  Hahahaha.

But there are car loan lenders that take possession of your car as a collateral for the money you borrow from them. Pero paano pag di mo mabayaran? Maliit na loan, tapos ang mahal ng sasakyan!

2.  Memorial Loans

During that same dark period in my life, I called an ad that said Memorial Loans.  Alas, even if my memorial plan is sikat in my part of Metro Manila, it didn’t qualify because they were only accepting mausoleum plans.

2. Pawnshops with Super-High Interest Rates

3. Five-Six Loans from Our Friendly Indianos

4. Real Estate Loans or Sanla ng Lupa

This blogpost is getting longer, so I pause.  I’ll make links to expand on the other loans in the coming days.

You might like these articles:

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