Guide to Personal Loan for Debt ConsolidationGoBear Guides | Helping Filipinos become money smart with unbiased reviews and comparisons
Why get a personal loan for debt consolidation?
Personal loan for debt consolidation is a service from banks that allows you to place all your debt from different banks into one bank with fixed terms.
This is achieved by getting a debt consolidation loan for an amount that is equal to all your outstanding debt, then paying off all those debt using the money you borrowed. A lot of financial advisers recommend the use of personal loans for debt management, as a uniform interest rate for one debt is preferable to multiple obligations that have the potential for exponentially rising interest payments, as in the case of credit card dues.
Depending on the bank, the usual maximum amount that lenders are willing to grant on personal loans for bad credit or any other purpose can reach up to ₱2,000,000. Assuming that personal debt can usually amount to hundreds of thousands of pesos, this maximum amount can be more than enough. However, take note that the actual maximum amount a bank can grant will definitely depend on a borrower’s monthly income and the duration of the loan being requested.
What banks offer personal loan for debt consolidation?
Banks normally have no limitations as to where you can use the loan you borrow from them, except maybe for Security Bank who only offer their loans as advertised. As for using a personal loan for debt consolidation, most banks don’t explicitly offer loan products for that specific purpose, although most loans list consolidation as one of the valid purposes for getting a personal loan.
Citibank Debt Consolidation Loan
Citibank’s personal loan offering can grant borrowers up to ₱2,000,000, to be repaid between one and five years, with no collateral needed. For example, borrowing ₱500,000 for debt consolidation purposes and agreeing to pay the balance over three years will lead to a monthly amortization of ₱21,472, inclusive of a ₱1,500 fee and ₱273,000 in interest payments, which is 35.25% of the principal borrowed. The Citibank personal loan is available to people of ages 25-65, with minimum monthly income of ₱25,000 and an active Citibank card for 6 months or card from other banks for 1 year.
What are the requirements of this kind of loan?
Most banks offering personal loans, including bad credit loans, will only take about a week or less to have your application approved. It’s always best to be prepared ahead of time and prepare the right documents needed. Some of these documentary requirements are:
- Photocopy of one or two IDs, preferably government-issued
- Proof of billing with your address
- Certificate of employment and latest payslips, preferably three months’ worth (for employed applicants)
- DTI or SEC registration documents (for self-employed applicants)
- Latest BIR Income Tax Return filings
Streamlining all your debt from many places into one big obligation can make it easier for you to answer the question “how to get out of debt” once and for all. In addition, you get to take advantage of a constant interest rates and uniform payment through a fixed amount of time, in contrast to the varying interest rates and payments from multiple obligations (particularly credit card dues).
However, since personal loans are usually unsecured, these loans carry high interest rates. If your debt only consists of multiple credit card balances, a balance transfer to a card with the lowest monthly rates can sometimes offer lower interest payments than the usual personal loan. Nevertheless, using a personal loan for debt consolidation is often a financially sound move.
If you have bad credit and big debt, it's time to get a personal loan for debt consolidation? Compare personal loans with GoBear to find the best rates available.