Every year, the total amount of remittances sent by OFWs is worth billions of dollars. This created a positive impact in the Philippine economy, which is why OFWs like you are regarded as modern heroes or “bagong bayani.”
Here’s the thing: despite earning in dollars, there are still instances when you need to borrow money to finance big purchases such as purchase of a car or your dream home. Before you apply, we list down the common questions asked by many OFWs when it comes to applying for an OFW loan:
1) What is an OFW Loan?
An OFW Loan is a type of loan facility specifically designed to meet the financial needs of OFWs. It can range from business to personal loans, but the common denominator is that it is intended for the benefit of OFWs.
2) Who is qualified to apply for OFW Loan?
Since it is specifically geared for OFWs, the individuals qualified to apply for this type of loan are the following:
- First-time OFWs
- OFWs with existing contract abroad but are only here in the Philippines for vacation
- Returning overseas workers or Balik Manggagawa
Take note that some lenders require minimum monthly salary, so make sure you inquire about it first before submitting your loan application.
3) What are the requirements I need to submit when applying for an OFW Loan?
Every lender has their own set of requirements. Nonetheless, make sure you prepare these documents to facilitate faster approval of your loan application:
- Philippine passport or Seaman’s Book for seafarers
- Employment contract validated by the POEA
- Working visa
- Overseas employment certificate (OEC)
- At least one government-issued ID (in lieu of the upcoming OFW ID)
- Ticket or flight details
4) How much can I borrow?
The loan amount depends on the lender. Many lenders set a minimum amount of P1,000 and a maximum amount of as much as one million. Nonetheless, this doesn’t mean you can get a maximum amount every time you apply for a loan. Lenders still look at your credit history and capacity to pay, which they will use as a basis for your credit amount.
5) How long can I pay for the loan?
That will also depend on your agreement with the lender. You can borrow money and pay it after 30 days. On the other hand, you are allowed to pay the loan for up to 12 months.
6) I’m about to leave the country. Can I still apply for an OFW Loan?
Of course! In fact, lenders prefer that since you are still here in the Philippines and capable of physically signing the loan documents. A small request, though. If you can, please apply at least 15 days before your scheduled departure to make sure that the application process will proceed smoothly and you can get your money before you leave.
7) Can I apply for a loan while I’m working overseas?
This will depend on the lender. Here in Balikbayad, we require you to be physically present to be able to sign the documents. Other lenders accept Special Power of Attorney where you will assign any of your family member as your attorney-in-fact. If possible, you can execute the document before you leave and have it notarized, otherwise, the SPA must be consularized.
Read more about Special Power of Attorney here.
8) How long is the application process?
Lenders understand the urgency of your cash needs. That is why many lenders like us are committed to processing your loan application within one banking day. On the other hand, some lenders, especially commercial banks, look into your credit history first before they can extend credit. This will take days to a week or two, depending on the lender.
9) What if I don’t have a property under my name. Can I still apply for a loan?
The answer is yes. There is a facility called non-collateral loan, which allows you to borrow money even without property under your name. This could mean higher interest rate as a form of guarantee.
Another option would be applying with a co-borrower. A co-borrower is someone who will guarantee your loan and will be contacted by the bank in case you are unable to pay your loan.
10) What should I do to guarantee loan approval?
- The information you provided in your loan application must be complete and correct.
- No history of past due debts, negative findings, and other money-related court cases.
- Borrow money that is within your salary or capacity to pay.
- You must provide all documents needed to prove your capacity to pay the loan.
- Establish your beneficiaries of the loan.
11) What are the modes of payment?
You can pay your loan via post-dated check or direct deposit to account. If you will apply in banks, most of them will recommend (if not impose) automatic debit arrangement since it is easier and more convenient. No reminders will be sent since the system automatically deducts the amount from your account (so make sure you have sufficient funds every month).
12) Where can I use the proceeds of my OFW Loan?
Ideally, it will depend on you and your needs. You can use the proceeds of your loan to start a small business, finance immediate and emergency needs, renovate your home, or even use it as a downpayment for a major purchase. Nonetheless, you have to be clear on your purpose. Some lenders don’t allow the funds to be used to pay for placement fee and other fees related to applying for a job abroad. Ask your lender first to be sure.
Got more questions? Let us know by leaving a comment below.