Types of Personal LoansGoBear Guides help Filipinos become money smart through informed financial decisions
What are the different types of personal loans?
Unsecured loans and secured loans are the two major types of personal loans in the Philippines. Most loans offered by major banks are unsecured loans, which simply means, you don’t need a collateral to apply for it. Secured loans, on the other hand, requires you to place a collateral or open a savings account as a collateral.
What companies offer these types of personal loans?
When it comes to unsecured loans, banks such as BPI, EastWest, Security Bank, Citibank and Metrobank are some of the major players. In the other type of personal loan, the secured loan, only BDO requires a collateral as of today.
Which is better: Secured Loans or Unsecured Loans?
When looking at these two types of personal loans, there are benefits and disadvantages for both lender (bank or lending company) and borrower (that’s you!).
Since unsecured loans do not require a collateral, banks rely on your creditworthiness or your ability to pay back the loan before they approve your application. This type of loan usually have higher interest rates than secured loans because there is a heavier risk of lending you the money.
Secured loans has a lower interest rate but it requires a collateral to be approved. In the case of BDO, you need to open a savings account with them and you can only borrow 90% of that amount you placed in the account. If you default on the loan or you can no longer pay for it, the bank takes the money in the savings account.