7 Popular Reasons Why Filipinos Take Out Bank Loans

Despite how well you manage your finances, various circumstances such as emergencies or unexpected expenses can end up derailing your plans and budget. In such cases, you may need additional funds to cover those expenses promptly to avoid negatively impacting your long-term financial health. One quick and easy way for Filipinos to obtain those much-needed funds is through bank loans. 

There are numerous advantages to taking out a bank loan for your financial needs. For one, you can likely get a higher amount from loans compared to if you simply borrowed from family and friends. Loan approvals have also gotten much faster over the years, allowing you to receive the loan money quickly. Moreover, banks often set manageable repayment terms that make it easy to pay off your loan without draining your budget. All these benefits have made bank loans an attractive option for those in need of funds to achieve their personal, professional, or financial goals. 

To get a better understanding of how useful loans can be, here are particular scenarios that typically prompt Filipinos to take out bank loans.

1. Starting or Expanding a Business

One of the most popular reasons why Filipinos take out loans is to fund entrepreneurial ventures. Loans can provide the capital needed to purchase supplies and equipment, hire manpower, and rent out a stall or commercial space. Those who already own a business may also take out a loan to scale their operations. For instance, a business owner of a sari-sari store hoping to expand their business into a larger general merchandise store can take out a loan to rent a larger space and add more products to their existing offerings.

If you’re planning to start a small business, then EastWest’s Personal loan offer can give you the capital you need. Our personal loan doesn't require collateral, making it a more accessible option for first-time loan applicants. By taking out a loan, you won’t have to exhaust your savings just to start or expand your business.

2. Purchasing a Home

With real estate prices on the rise, Filipinos often rely on home loans to afford their dream home. These loans typically come with manageable repayment terms, allowing families to invest in a long-term asset without upfront cash payment. They can also be used for different stages of homeownership, whether you’re only buying a residential lot or funding the construction of your house. 

Given how repayment terms for home loans can often last up to decades, getting a home loan with a fixed term rate can help protect you from rate fluctuations as years go by. EastWest’s home loan offer allows applicants to choose their own fixed-term rates, helping them tailor their home loan to their financial means.

3. Funding Education

Filipinos highly value education, with many families seeing it as a means to set their children up for success. Bank loans help parents, guardians, or students themselves to cover tuition fees, books, allowances, and other school-related expenses. This is especially common for those funding higher education as costs can be substantial. For professionals, loans can also be used to enroll in a graduate program, take up courses such as learning a new language, or get certifications to help them upskill.

4. Vehicle Acquisition

Owning a car can prove to be a valuable asset, either for personal use or to create earning opportunities such as using the vehicle for rideshare or delivery services. That being said, paying for a car upfront is often out of the question for many Filipinos. Thus, banks offer auto loans to spread out the cost of the vehicle into more manageable installment payments. 

It’s important to note that auto loans aren’t just for new vehicles only. EastWest’s auto loan, for instance, can be used to fund the purchase of either brand-new or second-hand vehicles. This gives you more options on what car to purchase with your loan money depending on your financial situation.

5. Emergency Expenses

Life is unpredictable, and emergencies such as sudden illnesses, accidents, or natural disasters can strain one’s finances. Bank loans can provide you with the funds needed for these time-sensitive emergencies, especially when your health insurance or savings fall short. Many banks also offer loans with quick disbursement, allowing you to manage the crisis without the additional burden of seeking informal lenders with high interest rates.

6. Home Improvement or Renovation

For many Filipinos, home improvement is a priority to ensure their living spaces are comfortable and functional. Whether you’re looking to fix structural issues in your home, add new flooring solutions, or upgrade your home’s interior, taking out a home loan allows you to tackle those projects without depleting your savings. These upgrades can also increase your home’s value, thus making them a worthwhile investment.

7. Celebrating Life Milestones

Filipinos place high importance on celebrating milestones and creating meaningful experiences.

However, milestones such as weddings, baptisms, family reunions, and other significant events can be costly, especially if they require large venues, catering, and other special arrangements. A personal loan helps fund these special occasions without compromising your family’s financial stability, allowing you to celebrate while spreading the repayment over time.

Bank loans serve as essential financial tools to help Filipinos navigate life’s challenges and achieve their goals. That being said, it’s also important to be discerning on what loan to apply for to ensure that it truly fits your needs and financial situation. Be sure to read the terms carefully to ensure that your repayment process will be a smooth one. If you’re not quite sure what loan will work best for your situation, you can always consult your bank to help you make an informed decision.