Personal Loans with Low Interest Rates

If you’ve been living from paycheck to paycheck for a while now due to your debts, monthly mortgages, credit card, and payday loans, it might be time to consider applying for personal loans with low-interest rates. While some say it isn’t wise to pay off debts by incurring another debt, restructuring your finances by getting a personal loan is kind of a different story.



Purposes of personal loan with low interest rates

Personal loans are among the convenient services offered by most banks in the Philippines to help ease up your financial burdens or to finance your emergency or personal needs.  Almost all multinational and rural banks in the country offer low interest rates personal loans to Filipinos with stable source of income. You can use the money to pay off your consolidated debts, so instead of having various deductibles on your monthly budget, you only have to think about settling one loan with a fixed low interest rate, fixed monthly amortization, and closed-end term. Besides debt consolidation, personal loans with low interest rates can also be used for tuition fees, home renovations, wedding expenses, business start-up capital, family vacation, vehicle upgrade, as well as for medical emergencies.


Understanding fixed interest rate and add-on interest rate

Personal loans are usually offered on either a fixed rate interest or add-on rate interest. Though in the Philippines, most personal loans with low interest rates are on fixed rate basis, it still pays to know how these two vary.

Effective interest rate

Loans with low interest rates can be borrowed on a “fixed interest rate.” This is an interest rate on a loan or mortgage that stays the same either for the loan’s entire term or for a part of the loan’s term. This is ideal for borrowers who don’t want to be confused by the fluctuations of the interest rates over the term of their loans, particularly when the interest rates increase, which will make their monthly amortization go up as well.

Add-on interest:

Loans with low interest rates can be borrowed on an “add-on interest rate” or “flat rate.” Here, the interest payable is set at the beginning of the loan and the amount determined is added onto the principal loan. The sum of the interest plus the principal loan will be the amount repayable.

Sample Personal Loan Computation

To help you make an informed decision when figuring out where to apply for personal loans with low interest rates, here’s a table that shows your possible monthly dues per bank for a personal loan worth ₱100,000 that’s payable for 24 months, assuming that your monthly income is ₱30,000: