How to Get the Best Interest Rates on Your Loan in the Philippines

Consumers naturally want to get the best deal out of everything, whether it’s meal discounts, shopping sales, travel packages, and even loans.

Loans are part of most people’s financial strategies. Many banks and financial institutions offer loans for various things: cars, homes, gadgets, and personal (miscellaneous). The rising popularity of online loans in the Philippines also contributes to your pool of options when it comes to borrowing money. While interest rates for each product differ, you want to avail the lowest rate possible whichever loan you apply for. This will allow you to have affordable monthly fees and quick repayment timeline.

 

Common Interest Rates per Loan

  • Car – The range for an auto loan is around 4% to 30%. This involves both brand new and second-hand vehicles. Auto loans are usually availed either from car dealers or banks. Most major banks in the Philippines have online loan calculators on their website.
  • Home – The range for a home loan is around 5% to 12%. Commonly offered by banks, this loan type is affected by the loan term and amount you’re applying for.
  • Personal – The range for a personal loan is around 4% to 25%. Personal loans are one of the most flexible loan types. You can apply for one through banks, online lenders, government institutions, and private organizations. Cashalo cash loans are among the lowest, starting at 3.95%.
  • Gadget – Gadget loans may sometimes fall under personal loans, but it usually involves smaller amounts of money. Online lenders mostly dominate this area. Cashacart by Cashalo offers 0% interest rate for a 24-month loan term.

 

Tips to Get the Best Loan Interest Rate in the Philippines

1. Shop around and compare

Create a comparison list and see which one can give you the best value. You can either get recommendations from friends or personally inquire about a bank or loan institution’s interest rates and repayment schemes. Make sure that both the interest rate and timeline work well for you. Of course, you want to be able to realistically pay off the loan in a flexible amount of time so that you won’t get into further debt or trouble along the way. Select wisely and narrow down your choices until you find “the one”.

2. Apply for the amount you need

When getting a loan, especially a personal one, it’s a little bit tempting to go overboard. Some lenders, for instance, offer personal loan amounts as high as P1 million. While getting your hands on that kind of money can be exciting, remember your purpose for borrowing money. Are you paying off other existing debts or are you using it for a personal emergency? Don’t lose sight of the reason and the goal. You might end up in debt once you realize you borrowed too much.

3. Maintain a healthy credit score

If you have a credit card or existing loans, make sure that you’re paying off your debts on time. This is crucial since banks and lenders perform a thorough credit investigation for each borrower. Paying your credit cards and loan balances on time signal that you’re a responsible payer and they can trust you to handle your money well. Your credit score can impact the amount you can loan, or the interest rate offered to you.

4. Pay your debts

Lenders consider your debt-to-income ratio (DTI) and average daily expenses. At the end of the month, how much is left in your account? People can have many sources of debt—not just from credit cards. As part of your credit investigation, banks also estimate your daily expenses and determine if you can pay off the loan amount you’re applying for.

5. Get pre-approved

Pre-approval is a smart way to learn what your loan will look like without any obligation of borrowing. You go through the whole process of applying, and you’ll be able to find out your loan amount, interest rate, and terms. By doing this, you’ll know beforehand if you’re eligible for the loan you want to avail.

If you don’t like the terms you see, then there’s still time to influence other factors such as your credit score. There’s no limit as to how many places you can get pre-approved. Once you’re ready to push through with the loan, the application process will be faster.

 

The Takeaway

You’ll save a lot of money throughout your loan if you find lenders that are willing to give you low interest rates. But as you’ve learned by now, preparing to get a loan happens months in advance. Paying off your debts regularly and being responsible with your money not only gives you better chances at lower interest rates—but it also signals that you’re financially mature and ready to take on a loan.

With plenty of financing options that you can look through, you’re sure to be approved for a loan no matter what your budget is. If you want to start the hunt for lenders, begin with Cashalo. Take advantage of the low interest rates starting at 3.95%.