In the Philippines, there isn’t a single, absolute maximum interest rate set by law. However, there are regulations in place to prevent excessively high-interest rates and protect borrowers.
Here’s a breakdown of the regulations impacting interest rates:
Usury Law (Act No. 2655)
- Base Rule: This law sets a ceiling of 6% per annum for loans where no specific interest rate is agreed upon in writing.
- Exceptions: The law allows higher interest rates IF stipulated in a written agreement and under certain conditions.
Bangko Sentral ng Pilipinas (BSP) Circulars
The BSP issues circulars periodically that regulate interest rates and ceilings for different lending institutions and loan types. These circulars frequently change, so it’s crucial to check the latest ones.
Specific Types of Loans
- Bank Loans: BSP circulars set interest rate ceilings for banks depending on the type of loan (secured vs. unsecured), presence of collateral, and other factors.
- Microfinance Loans: Microfinance NGOs have specific interest rate regulations with caps.
- Pawnshops: Interest rate limits and calculations are regulated for pawnshop loans.
- Online Lending Apps: Interest rate limits on these are a currently discussed topic. Laws might become stricter.
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