Category: loans in philippines

Tips to Get a Quick Cash Loan in the Philippines

Consumer loan outstanding’s in the Philippines exceeded 55,000 million pesos as on July 2016 as per statistics published by the Bangko Sentral Ng Pilipinas. Personal loans form an important component of such consumer loans. Personal loans are non-collateralized, unsecured cash loans that will help you finance your personal needs. Here are a few tips that will help you get a personal cash loan easily and quickly:

Check your eligibility requirements

Even before you start your loan application, check out whether you meet your selected bank’s personal loan eligibility requirements. In general, you must be between 21 to 60 years old and hHave a minimum annual income of about 100,000 to 250,000 pesos.These requirements may vary widely between banks.

Check your loan affordability

Use the 40% rule of thumb to check whether you can truly afford that loan. The 40% rule states that no more than 40% of your income should go towards servicing debt obligations. As long as you stay within the limit you should be pretty safe (this could, however, change depending upon your personal financial situation). This takes us to our next step – how do you determine your monthly payout for a loan?

Use online calculators

A number of banks provide online calculators through which you can calculate your monthly repayment installment. All you need to provide is the loan amount and the tenure of your loan (in months or years).

Compare Personal Loans

There are a number of third-party websites that enable you to compare personal loans from different banks by interest rate. You can use these to short-list a few personal loan products which suits your needs.

Keep your documents ready

Every personal loan application needs to be accompanied by a set of required documents including identification documents and proof of income documents. These could include a government issued photo-ID with address and the latest ITR or BIR 2316 or 3 to 6 months pay slips. Keep it ready anytime, which helps you to complete your application quickly.
Choose a bank

Choose a bank that provides you with the fastest turnaround time. Citibank, for instance, provides you with personal loan approvals in as fast as 24 hours. Try and reach out to a bank that provides you with such fast loan approval turnaround times.

Guidelines in Applying for a Personal Loan Online

Loans are a great way to turn your dreams and aspirations into reality. And, personal loans are one of the most flexible loan products available out there. This is because they are non-collateralized and hence can be put to any use that you, the borrower, may deem fit. This could be financing your European holiday, tuition fees for your child, home renovation, getting the latest gadget etc.

And, with the Internet making things so much faster, applying for a personal loan need not be the long, laborious process it used to be earlier. Here, we will take a look at how you can go about applying for a personal loan online:

To apply for a personal loan from a particular bank visit the bank’s website. Usually a bank’s website will have different products / services grouped under broad categories. For instance, auto loans, car loans, home loans, personal loans, overdraft etc may be grouped under a broad “Loans” heading. These categories can be easily accessed from a menu on the bank’s website. Locate the category to which the product that you wish to apply for is listed and navigate (click on) to it.

Check out the product pages

Clicking on the product category page will take you to a page / section devoted to the various products available under that category. Go and check out the specific product that you are looking for.

Use Online Calculators

Many banks provide users loan calculators on their websites with which to better understand how personal loans work. You can enter the loan amount you are looking for and the tenor of the loan and the Calculator will help you determine the probable monthly repayment installment amount.

Some Calculators will require you enter your income details and these Calculators will also help you understand your loan amount eligibility. However, remember that such loan calculators will not take into account any fees that may be deducted from your loan proceeds like processing and disbursement fees, documentary stamp tax, insurance etc.

Third-party websites

There are a number of third-party service providers who will help you compare personal loan products from different banks; you can even order your search results through filtering criteria like interest rate, monthly installment amount etc.

A few examples

▪ Citibank provides you with a short form where you will be requested to leave a few personal/contact details and you will be contacted within 3 hours by someone from the bank who will help you with your application.

▪ Maybank provides you with a more detailed form and also requires you to scan and submit a required set of documents.

▪ BDO Unibank provides you with an application form online that you will need to download, fill and submit to a branch.

▪ You can even visit a third-party service provider like imoney.ph. You can use their comparison table, find the loan that best suits you and click “Apply”. You will then receive a call from one of their persona loan consultants who will submit your application to the bank. The bank will then confirm your application and disburse funds within 5/7 business days.

Ready Credit Line and its Benefits

At times, you may be faced with an unexpected emergency, you may have to welcome a new member to your family or deal with a mini-crisis. If you are a businessman you may need flexibility to access funds to purchase inventory, meet your receivables payments or pay for equipment. Or, you may be presented with a very small time window to utilize an emerging opportunity.

It is at such times that you will appreciate having ready cash to help you meet such contingencies. A ready credit line or line of credit or overdraft, as it may be called, is a product designed to help you at exactly such times. Lets take a look at the main characteristics of a Ready Credit Line and also take a look at a popular credit line product:

What is a Credit Line?

A credit line is a credit facility that allows an account holder of a bank to draw more than what is in their account, up to the credit limit allowed by the bank.

General Characteristics of a Credit Line

The following are a few main general characteristics of a credit line (there may be variations from bank to bank, so check with your bank for exact details) :

▪ A credit line can be availed up to the limit set. Once the availed credit is paid off, the credit limit can be availed over again. It thus becomes a revolving credit facility given to the customer.

▪ Credit lines are generally flexible lines of credit. You may repay as per your convenience (of course, interest will be charged) and as long as you are within the set limits, you may draw multiple times from the line.

▪ Credit lines are available in both secured (against collateral) and unsecured forms. Secured credit lines allow for favorable interest rates for borrowers. You may, usually, avail secured credit against the following assets :

* Fixed Deposits, with the added advantage that you can access cash without breaking the FD, which continues to earn interest
* Pledge of Shares
* Charge on Property

Citi Ready Credit Line

Citibank’s Ready Credit Line is a standby line of credit. It is a pay-as-you-use product, meaning you do not pay for any interest charges and fees unless you use your credit line.

You may use up to 96% (amount used includes both the credit amount and interest/fees charged) of your full credit line that has been approved. Every time you repay in part or in full the amount you have used, your credit line gets automatically restored by that amount. This means that you can draw from your line repeatedly, up to a maximum of 4 installment loans at a time.

To be eligible for the Citi Ready Credit Line, you must be between 25-65 years of age, should be a Filipino resident or local resident foreigner with a valid Philippine billing address, have a minimum annual income of P360,000 and/or must have a credit card (may be from other banks). You would also have to submit a signed application form, two valid photo IDs, ITR / BIR / latest 3 months payslips and a photocopy of the front side of any active credit card (must be active for at least 6 months for a Citi Card and for at least 1 year for cards from other banks).

Types of Loan Products in Philippines

A growing economy and a robust retail lending environment mean that there are many banks in Philippines offering a variety of loan products for retail customers. Here, we will take a brief look at some of the main categories of Loan Products Comparison available in Philippines:

Housing Loans

A Home Loan is a loan product secured by a real estate where funds can be used for any of the following purposes: purchase of vacant lot, purchase of house and lot, purchase of townhouse unit, purchase of condominium, house construction, refinancing/take out, house renovation / home improvement and reimbursement of acquisition cost.

There are a variety of home loan products from different banks to choose from. If you are interested in an affordable home loan then you need to look at the Pag-IBIG government-mandated housing loan program (offered by the Home Development Mutual Fund (HDMF) also know as Pag-IBIG Fund) that offers affordable home loans to Filipinos who are members of the Pag-IBIG Fund.

Personal Loans

These are non-collateralized, unsecured cash loans to finance your personal/aspirational needs. You can use it for a variety of purposes including home improvements, medical emergencies, travel, tuition, debt consolidation etc. There are a wide variety of personal loans available ranging in tenors from six months to 5 years with effective interest rates varying from about 20% to around 40%.

Auto Loans

Auto loans are used to finance the purchase of brand-new or second-hand cars. Loan tenors vary from 12 months to 5 years for brand new cars while tenors for second-hand vehicles will vary with the age of the vehicle, older vehicles having lesser tenors. Margin of financing can go up to 80% in case of new cars and up to 70% for used cars. Some banks even offer pre-qualified car loans depending upon your income status.

Business Loans

These loans help businesses obtain financing for a variety of business needs including short term operational costs, to help meet cash flow requirements, to expand and improve, for emergency repairs and maintenance, to increase working capital and to purchase supplies, inventory and equipment.

These include working capital loans, factoring loans, short-term loans, Peso/FX credit facilities, overdraft, hire purchase loans, trade financing credit services and agri-processing loan programs (for instance, the Sugar Loans Program of the Philippine National Bank offers a range of credit facilities that facilitate sugar production and processing) and MSME financing programs like the Business Development Loan Facility under the SSS (Social Security System).

Student Loans

These help students pursue higher courses of education. One of the most notable student loan programs in the Philippines is the HELPS – or the Higher Education Loan Program for Students – a loan facility provided by the state-owned Development Bank of the Philippines (DBP).

DBP will provide some P2 billion in loans to qualified schools and other educational institutions for re-lending to poor but deserving students. Schools with transparency and good governance practices, proven level of excellence, track record of performance, and tie-ups with employers or manning companies are eligible to borrow under the DBP-HELPS.

5 Things You Need to Know about Personal Loans

1. No Collateral – Personal loans are for the most part non-collateralized that is they do not require any collateral, security, deposit or guarantor. Personal loans are given based on the identity and income documentary proof submitted by applicants and in tune with the issuing bank’s loan policies and guidelines.

2. Multi-Purpose – Home loans and auto loans are specific purpose loans; they are issued and taken for meeting a specific purpose – buying or renovating a home or for buying a car. They cannot be used for any other purpose.

Personal Loans on the other hand, are multi-purpose. You can use them for the purpose of your choice, be it taking a vacation, buying the latest gadget or appliance on the market, for dealing with an emergency, to cover a cashflow shortfall, for paying your kids’ tuition fees, for consolidating other debts, whatever it is that you want.

3. Higher Interest Rate and Lower Tenors – If you are buying a home or a car with a loan, the loan-issuing bank will either own the asset or have a right to repossess the asset in case you default on loan repayments.

With personal loans, however, banks do not have any possession / repossession rights as there is no security or collateral pledged with the bank. Hence, the default risk is higher and to compensate for that, banks generally charge a higher interest rate on such loans. Effective interest rates on personal loans can actually range from about 23% to even 37%.

This is yet another reason why personal loans do not have exceptionally high tenors like home loans; tenors on personal loans are capped at between 1 – 5 years. Standard Chartered Bank’s EZ Loan, for instance, has a highest tenor of 48 months, while Citibank’s Citi Personal Loan has a maximum tenor of 5 years.

4. Personal Loan Calculators – Many banks offer personal loan calculators on their websites. There are generally two types of calculators out there: eligibility calculators will show the quantum of loan you are eligible for given your income and debt status while repayment calculators will tell you what your monthly installments will be given the loan amount and loan tenor you want.

However, remember that such loan calculators will not take into account any fees that may be deducted from your loan proceeds like processing and disbursement fees, documentary stamp tax, insurance, etc.

5. Eligibility Requirements – Although the exact eligibility requirements for personal loans vary from bank to bank you can use the below as a guideline:

Age – Should generally be in the range of 21 to 65 years.

Residential Status – A Filipino or a foreigner with valid residential status.

Employment Status – Employed or self-employed.

Minimum Gross Annual Income – Php 200,000.

Other Possible Requirements –

An existing credit card issued by another bank in the Philippines.

A landline at home or an active mobile phone and landline at business address.

Must have favorable credit ratings.

How to Apply for a Loan Online

With nearly 40 million Internet users and the fastest growing Internet population in the world in the last 5 years, Internet usage has seen significant growth here in the Philippines. And, commercial players, like banks have not been slow to adapt to the changed environment; they have extended their product and service reach to the Internet. One such example that we are going to examine today is online loan application and how you can go about applying for a loan online:

Apply for a loan Online

Visit the Bank’s Website

Go to the bank’s website; the site would have a page or a section, devoted completely to loans. You can easily find this link in the “home” or the “top” menu of the bank’s website. Once you’ve located the link to the loans section, click and navigate to it.

Check out the Loans Section / Pages

The Loans section of a bank’s website would most probably be categorized according to loan type. So, you will find pages devoted to personal loans, home loans, auto loans etc. You can move on to the type of loan that you require. The individual loan product pages will provide you will a detailed listing of the features and benefits associated with the loan, the terms and conditions related to its usage and the eligibility requirements for that loan.

Make Use of Online Calculators

Another set of great tools provided by banks on their websites are the loan calculators. A loan, especially one like a home loan, involves a considerable commitment on your part. So, it is essential that you understand exactly what you are commiting to and these calculators will help you do so.

Open the calculator, enter your current income details and your loan requirements including the amount that you are looking for, the tenor of your loan, fixed or floating rate of interest etc; the loan calculators will help you understand the quatum of loan that you are eligible for and will help you determine the monthly repayments that you can afford given your financial commitments.

Apply Online

Finally its time for you to Apply for a Loan Online! You will be required to enter some personal information including your gender, date of birth, address etc. This may be followed by your income details and the details of the loan. You may also be required to submit your documents online. So, keep the latest copies of your IDs and other documents ready.

Post your application, your bank will process your application and get back to you from within a few hours to a couple of days. Also, while applying online take your time, ensure that you do not miss out on any details and do not fudge/misrepresent any details. You will most likely get caught out and not only will your loan application be rejected, your standing with that particular bank may be damaged. If you have any doubts regarding filling out a particular field, check with the banking staff who will only be glad to help you.

Online Loan Management

Online banking also makes it easy for you to manage and administer various aspects of your loan. You can generate statements, make repayments, set up Standing Instructions (SI) for paying your loan installments and more – all online.

Another big advantage of going online for a loan is that since all banks have posted details about their product offerings on their websites, it makes it easy for you to shop around and look at similar loan products from different banks. You can also use loan comparison sites to decide which is the best loan available for your requirements and then you can go for it – online, of course!

Business Loans in Philippines

A Business Loan is a source of financing for businesses and companies to expand and improve, purchase real estate, supplies, inventory and equipment, to increase working capital, for short term operational costs, for emergency repairs and maintenance, to help meet cash flow requirements or for any business reason.

Debt Financing

Banks and financial institutions offer businesses in the Philippines various types of business loans. These include:

* Working Capital Loans – Short-Term Loans meant to finance the day-to-day operations of the company.

* Factoring Loans – Advances on account receivables or billed invoices. Customers will directly settle with the loan providing bank.

* Short-Term Loans – Loans for periods of up to a year given for paying bills, settling payrolls, buying inventory etc.

* Peso/FX Credit – Exclusive to foreign exchange earners such as exporters or producers, this is used to finance short-term requirements and provide the option to withdraw in Pesos or in a foreign currency depending upon the requirements of the borrower.

* Overdraft – A credit facility that allows the account holder of a current account to draw more than what is in the account up to the credit limit allowed by the financial institution.

* Hire Purchase Loans – Financing the purchase of a large asset in installments. The bank/finance company will retain the legal title/ownership of the asset till all dues are paid in full.

* A wide range of trade financing credit services and agri-processing loan programs (for instance, the Sugar Loans Program of the Philippine National Bank offers a range of credit facilities that facilitate sugar production and processing) are also available.

* Larger companies with established track records can go in for long-term loans or they can even raise funds through the open market through the issuance of debt instruments or bonds.

Equity Financing

Another way for a business to raise finance is to divest part of it’s ownership (or equity) to private investors like Angel Investors, Venture Capitalists and Private Funds. In addition to investing in the business, these investors can also provide the founders with management and technical know-how.

Loans Against Collateral

It is sometimes difficult for companies to access unsecured loans. They can then raise loans against a collateral like real estate, especially commercial real estate and trade / manufacturing inventory (for short-term loans). Because these loans are secured by collateral, interest rates will be typically lower than rates for secured loans.

Start-Up Businesses

Start-ups are companies that have just started their business journey. With minimal assets, an unproven business model and barely a track record – not to mention the lack of a credit history – business owners may need to provide, in addition to their own cash, their own personal credit rating to avail financing. Mainstream financing is also available against collateral.

Microfinance

Lending to micro, small and medium enterprises (MSME) has picked up and there are a number of financing programs, supported by the government and banks, available. One such program is the Business Development Loan Facility under the SSS (Social Security System) which was started in 2012 and which released P189million worth of business loans in its first year. SSS member-employers may avail of the loan facility through the SSS accredited participating financial institutions (PFIs) which will on-lend the fund to eligible borrowers for financing.

The Bureau of Micro, Small and Medium Enterprise Development (BMSMED) has provided a freely downloadable handbook on the website of the Department of Trade and Industry, “Financing Programs for MSMEs”, a compendium on the sources of funding available from government and private sector institutions for MSME businesses based on the capabilities of the borrowing enterprise.

5 Ways to Get Personal Loans in Philippines

The Philippines has experienced its strongest two years of growth since the 1950s. Data published by the Philippine Statistics Authority showed that the GDP grew 6.8 percent in 2012 and 7.2 percent in 2013, exceeding the government’s expectations of 6% to 7% growth, the fastest two year pace since 1954-55. This despite a string of disasters like the Super Typhoon Yolanda, the Zamboanga siege and the Bohol earthquake that claimed thousands of lives and destroyed billions of pesos worth of infrastructure.

This growth can be attributed to a steady inflow of remittances from overseas Filipino workers, upbeat consumer and business sentiment, the strong performances of the manufacturing and construction sectors, and continuous government and consumer spending.

Filipinos, across the spectrum, felt optimistic enough to take out loans to assist them with their lifestyle and aspirational needs. As a result, retail lending experienced a robust performance in 2013.

Borrower profiles improved and competition amongst the financial service providers to broaden their customer base resulted in a slight easing in lending standards, a decline in interest rates and lowered minimum salary requirements. Though borrowing money became easier, banks closely monitored repayments to minimise bad debts. Traditional banks like Bank of the Philippine Islands, Citibank, Banco de Oro, Landbank and Metrobank dominated the market as Filipinos preferred them due to their broad selection of products, the attractive interest rates and the benefits and promotions.

So, if you have a dream the time to borrow is now! Here, we will present a few ways in which you can get personal loans:

1. Through a Branch

Simply download and fill a loan application form, attach all the required documents and walk into your bank branch. You can also find someone who will understand your requirements, clarify your doubts, suggest a suitable loan product and take you through the loan’s terms and conditions.

2. Via Phone Banking

Most banks also allow you to make loan applications via phone and many of them have toll-free numbers through which you can contact them. You may be informed that you would get a call back or you would be advised on the process to follow – whether you need to send in documents or visit a branch; if you have an existing relationship with that bank you can expect faster turnarounds.

3. Online Applications

One of the easiest and fastest ways to apply for a loan is online, via the bank’s secure website. You may be given the list of relevant documents that can be submitted online or someone from the bank will later get in touch with you to take you through the loan application process.

4. Fax / SMS

You can also fax your filled-in loan application form or any supporting documents for processing. Alternatively, you can also SMS the bank indicating your interest in a loan; A bank representative will get in touch with you later to take you through the loan process.

5. Email

You can also email your bank’s customer service channel and they will take you through the products available and the process required to apply for a loan.

An Overview About Home Loans

Even before you think about going in for a home loan try and answer the following questions:

– How much do I need to earn to afford my desired loan amount?
– How much can I borrow based on the value of the property?
– How much can I borrow based on my monthly income?

Use Online Home Loan Calculators

Almost all banks have various Home Loan calculators on their websites; using these you can not only get answers to the above questions but also get a good idea about the quantum of loan amount that you are eligible for and the monthly amortization payments that you can afford to pay. Based on your eligibility and affordability you can plan to search for an appropriate property.

Margin of Financing

Banks will finance only a certain percentage of the appraised value of the property. This could range from 70% to 80%. The rest of the cost, known as the Margin of Financing, will have to be borne by you.

Tenor

Tenor or duration of the Home Loan is usually for a period of up to 20 years but some banks offer tenors of up to 30 years. More the tenor, more the interest that you will pay; the advantage is the monthly amortization amount is lesser if the tenor is longer. Conversely, if you want to pay up your loan faster and are able to pay a higher monthly amount go for a shorter tenor.

Interest Rates

Interest rates on Home Loans vary depending upon whether a fixing period has been chosen or not. Depending upon the bank, a fixing period ranging from 1 year to 20 years can be chosen. Because the monthly amortization is fixed you will have the comfort of planning your finances based on this payment. Once the fixing period is over, market based re-pricing will apply. Both re-pricing and variable interest rates are based on the Base Lending Rate set by the BSP (Bangko Sentral ng Pilipinas) which is currently at 6%. Interest rates are usually calculated on a monthly basis; some banks, however, do calculate interest rates on a daily basis.

Monthly Amortization

Philippine banks generally do not permit loans that result in a monthly amortization of more than 30 to 40 percent of your monthly gross income. Amortization is usually paid monthly via post-dated checks or by automatic debit arrangement (ADA) against your current or savings account.

Some banks will also give you the flexibility to choose between straight-line repayment, which will help you easily forecast your amortization costs or reducing balance repayment which will help you save on interest payments.

Loan-Related Expenses

It is important that you factor in the below expenses before you compute the cost of your new home: Handling Fees, Appraisal Fees, Documentary Stamps on Tax, Mortgage Redemption Insurance (MRI) premium, Fire Insurance (FI) premium and Notarial fees. Some banks also offer additional loan to cover most or all of these expenses.

Pag-IBIG Home Loans

The Home Development Mutual Fund (HDMF), also known as the Pag-IBIG Fund, is a government-mandated housing loan program that offers affordable home loans to Filipinos who are members of the Pag-IBIG Fund.

To avail of a Pag-IBIG housing loan, you must be an active Pag-IBIG member, one who has made regular monthly contributions for at least 24 months (two full years), has paid at least 5 contributions in the last six months, has a stable source of income/capacity to pay upon applying, and does not have any outstanding loans or foreclosed properties. Loans can cover up to P6 million in home financing, with interest rates varying depending on whether one applies for the Regular (8% to 12.25%) or Affordable (4.5% to 6.5%) housing loan program.

Other Points

Read the terms and conditions to check if there is a penalty charge if you repay the loan before the maturity date.

If you are using a Home Loan for construction or major home improvements banks may release the loan amount on a staggered basis based on the completion percentage.