THE Bangko Sentral ng Pilipinas (BSP) has extended the maximum repayment period for salary-based general-purpose consumption loans (SBGPCLs) to seven years in a bid to lessen the burden on borrowers.
SBGPCLs, which are unsecured, are for immediate to short-term needs such as education, healthcare, emergencies, household needs, travel and other personal expenses. They are usually repaid using salaries, pensions, or other stable cash flow sources.
The standard maximum repayment period was previously three years, extendable to five in some cases. The BSP said the extended repayment period would make loans easier to repay and also encourage responsible borrowing.
“A longer repayment period makes payments more manageable. At the same time, the seven-year limit serves as a safeguard against excessive borrowing,” it said in a statement.
The BSP clarified that the seven-year repayment period was the maximum allowable and not a fixed loan term. Specific repayment terms must still be decided by banks and financial institutions based on the borrower’s ability to pay. This includes the nature and purpose of the loan, employment and credit history and sources of repayment.
“This reinforces responsible lending practices and supports the BSP’s mandate to promote financial stability,” the BSP said.
As for longer-term and non-consumption needs, the BSP said borrowers may consider other options for housing, motor vehicle, or credit card loans. These loans are outside the scope of SBGPCLs and are not subject to the seven-year maximum limit even if repayments are made through salary deductions or similar arrangements.
Additionally, borrowers can also look into refinancing options through financial institutions such as the Social Security System and the Government Service Insurance System.
The BSP said it was continuing to work with the Department of Education and financial institutions to promote financial literacy and responsible borrowing.
It noted that ensuring borrowers retain enough take-home earnings after loan repayments was part of this effort.
