Good loans vs. bad loans: the choice is yours

A loan is a powerful financial tool when used properly, as it can help you build your wealth or fund your life goals. However, not all loans are created equal. In countries like the Philippines, loans can be availed of from many sources, both from legitimate and not-so-legitimate ones. While everyone has their own reasons and considerations when borrowing money, one of the most important things to keep in mind is the type of loan you should avail of and its corresponding source and characteristics:

Approach “bad” loans with caution

Over 34 million Filipinos still remain unbanked in 2022, according to the Bangko Sentral ng Pilipinas, which is why many turn to informal loans that come with more flexible terms and practically no paperwork. Borrowing from loan sharks is common, however these usually come with exorbitant interest rates, as high as 20%. The source of funds is another big question altogether, as there is no way to check its legality.

Borrowing from friends and relatives is also a common practice, which requires a lot of trust between the two parties. These are often favored as repayment schedules tend to be more lenient but could strain relationships if not managed responsibly.

Other than the ones with not-so-ideal sources of funds, another bad type of loan is the one that you take out just to pay off another loan. This creates a cycle of debt that costs you even more money in the long run due to ballooning interest payments and can be difficult to escape from.

Always be careful when deciding to go for these types of loans, as these might end up making you worse off afterwards.

Go for the “good” kind of loan

When given the option, borrowing money from financial institutions has plenty of benefits that you can use to your advantage. You can apply to borrow larger amounts with longer repayment periods, which is helpful for bigger purchases. This also opens the door for more good types of debts, which are loans that can help make you more money or tick off certain items on your bucket list. A good example is a business loan, which you can use as capital to start your own venture or further invest in your current one.

Another bucket list item that can be easier to achieve through formal avenues is a home loan, as it gives you long-term payment schedules that can fit your family’s budget.

Aside from helping you reach your goals, these loans can also help build your credit score when you pay them off properly, which can be useful for loans you plan to apply for later in life to achieve even more goals. 

Borrowing made more accessible

When you finally decide that you’re ready for your first formal loan, the next step is to apply for one. Many find this step daunting and get discouraged with the number of requirements, but banks like CIMB Bank PH have loan products that are accessible and easy to apply for.

With only one valid ID and one payslip, you can easily apply for a Personal Loan of up to PHP 1 million in just 10 minutes through the CIMB Bank PH app. The digital-only commercial bank also offers REVI Credit, a first-of-its-kind all-in-one revolving credit line that provides easy access to a credit line of up to PHP 250,000. 

CIMB has also partnered with GCash for GCredit, which provides access to a credit line of up to PHP 50,000 with competitive monthly interest rates as low as 1%.

No matter what your life purpose is, CIMB Bank PH’s credit products are here to support you in reaching your goals and live a more empowered life. To learn more about CIMB’s credit products, visit