Tag: OFW Loan

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. 

Most people think that if someone in the family works abroad, life is easier and better. After all, someone is earning in dollars (and we know how much the exchange rate is now, which is currently at P50 mark as of this writing). When you earn in dollars, this could mean you and your family can easily afford anything you like, or at least according to their expectations.

On the other hand, lenders, both commercial banks and private financial institutions, realize that not all OFWs are living the good life. In fact, there are still many who are having a hard time, especially in the financial aspect. This is why they offer various products specifically for OFWs – with perks.

Here’s the challenge: finding the best deal on your loan, regardless of the kind of loan you are getting.

Here’s what you can do to make sure you get the best deal every time you apply for a loan – and make the loan work for you:

1) Always submit the requirements needed. 

You have the tendency to blame the lender for not immediately processing your loan. Aside from processing tons of loan applications in a day, one of the reasons why there is delay is because you did not submit all documents required.

If you want to speed up the processing of your loan application, then make sure you submit everything they ask for. The same goes for online application.

2) First, compare and then decide. 

It’s okay to ask recommendations from friends about the best lenders in town. Before you say yes to a specific lender, make sure you explore your options first.

Use the Internet and look for lenders that offer the loan facility you are looking for. Many lenders post their rates and charges, so make sure to take note of that. Don’t forget to check the “Review” section to see what other clients are saying.

Tip: Look for loan comparison charts or tools similar to this one. Through this, you can easily see how much every lender charges and help you decide which lender you can afford.

3) Know how much is your capacity to pay.

One of the common mistakes made by OFWs when applying for a loan is asking for too much. This means when you are earning P40,000 every month and owns a property worth P300,000, you will ask for a million-worth of loan. That is outright rejection since lenders will be concerned on how you can pay for the loan.

Before you apply for a loan, make sure you check on your finances and savings first to determine how much you are worth. Any existing debt, whether from credit card or other loans, must also be included since they could affect your cash flow and capacity to pay the new loan.

In other words, be realistic. Don’t ask for too much when you don’t have enough assets to back it up to avoid loan rejection.

4) Go for the right type of loan and according to your needs. 

The good news is loan comes in various types that will match your specific needs. Even if they have a common denominator, which is loan, loan products are designed in such a way that could work for you. The rates and charges vary too, so look into that as well.

Know what you need first then check if your lender offers a facility specifically for that need.

5) It’s okay to negotiate the rates and loan terms. 

Yes, you read that right. Lenders follow the rate prescribed by the Bangko Sentral ng Pilipinas (BSP) and adjust it to make sure they can earn. Nonetheless, try negotiating the rates and terms of the loan to make it favorable to you, without compromising the bank’s standing.

Still, this would depend. Improve your savings account, prove your ability to pay, and maintain a good credit score. This is no guarantee, but these three factors could help.