Loan True Cost Checker: What That Loan Really Costs
Online lending apps, 5-6 and cash loans often quote a cost that sounds small — “0.5% a day,” a fee taken out first, or a short due date. Enter the offer and see the real cost in pesos, the true rate per month, and whether it breaks the legal limits for small loans.
Ceilings from BSP Circular 1133 (2021) as implemented by SEC Memorandum Circular 3, series of 2022. Educational only — the lender's disclosure statement is the official computation.
You get ₱4,000 and pay back ₱5,000 over 7 days. That's ₱250 for every ₱1,000 you actually received — about 107.1% a month (3.6% a day, 1,285.7% a year).
- ✕Effective rate incl. fees (max 15%/month)107.1%
- ✓Total cost (max 100% of the loan)20%
What common loan offers really cost
Computed with the same checker, using the cash you actually receive:
| Offer | True cost | Per month | BSP ceilings |
|---|---|---|---|
| ₱5,000 app loan, ₱1,000 fee deducted, due in 7 days | ₱1,00025% of the cash received | 107.1% | Above the limit |
| ₱3,000 app loan, 15% fee deducted, due in 14 days | ₱45017.7% of the cash received | 37.8% | Above the limit |
| ₱5,000 at 0.5% a day for 30 days | ₱75015% of the cash received | 15% | Above the limit |
| 5-6: ₱5,000, pay ₱6,000 in 4 weekly hulog | ₱1,00020% of the cash received | 30.9% | Above the limit |
| ₱10,000 cash loan, 4%/month flat, 3 months | ₱1,70017.9% of the cash received | 8.7% | Within |
The legal limits, in plain words
For unsecured loans of up to ₱10,000 payable within 4 months from lending companies, financing companies and their online lending apps, the BSP set these ceilings:
- Interest: at most 6% a month (about 0.2% a day).
- Effective rate, including fees: at most 15% a month (about 0.5% a day).
- Total cost: interest, fees and penalties together can never exceed 100% of what you borrowed.
Late-payment penalties are capped too. Banks are not covered by these ceilings, and credit cards have their own cap of 3% a month. A loan outside the ₱10,000 / 4-month range isn't covered, but the true monthly rate still tells you if it's a bad deal.
Three ways a cheap-sounding loan gets expensive
- Fees taken out first. Borrow ₱5,000, receive ₱4,000, owe ₱5,000 — you pay for ₱1,000 you never got.
- Short terms. 10% for 7 days sounds small, but it's more than 40% a month.
- Flat rates with hulog. Interest is charged on the full amount even while you pay it down, so the true rate is higher than quoted.
Cheaper places to borrow
If you must borrow, compare first: an SSS salary loan or Pag-IBIG multi-purpose loan if you have enough contributions, a cooperative loan, or a credit card used carefully. Then build an emergency fund so the next surprise doesn't need a loan at all. Already have several loans? Use the Utang Payoff Planner and the snowball vs avalanche guide.
Frequently asked questions
What is the legal interest limit for online lending apps in the Philippines?
Under BSP Circular 1133 (2021), implemented by the SEC through Memorandum Circular 3, series of 2022, lending and financing companies and their online lending apps are capped on unsecured loans of up to ₱10,000 payable in up to 4 months: interest of at most 6% a month (about 0.2% a day), an effective rate including fees of at most 15% a month (about 0.5% a day), and a total cost of at most 100% of the amount borrowed. Late-payment penalties are capped too. Banks are not covered by these ceilings.
Why is the real rate higher than the rate the lender told me?
Three common reasons. Fees are taken out before you get the money, so you pay interest on cash you never received. The rate is "flat" or add-on — charged on the full amount for the whole term even as you pay it down. And short terms hide it: 10% for 7 days sounds small but is over 40% a month. The checker uses the cash you actually received and when you pay it back.
How does 5-6 compare?
In a classic 5-6 you borrow ₱5,000 and pay back ₱6,000, usually in daily or weekly installments over about a month — 20% for one month. Because you start repaying right away, the true rate is even higher than 20% a month. A credit card at the 3%-a-month cap, an SSS salary loan, or a cooperative loan is usually far cheaper.
How do I check if a lending app is legal?
Lending and financing companies need an SEC Certificate of Authority, and their apps must be registered with the SEC. Check the company and app name against the SEC's published lists of lending and financing companies and of registered online lending platforms before you borrow. Be wary of apps that demand access to your contacts and photos.
Can a lending app shame me or message my contacts?
No. SEC rules prohibit unfair debt collection practices, including threats, insults, contacting people in your phone book who are not your guarantors, and posting about your debt. Keep screenshots and report the company to the SEC; for data misuse you can also complain to the National Privacy Commission.
I already have several app loans. What should I do first?
Stop borrowing from one app to pay another — it compounds the fees. List every loan with its true monthly rate (this checker gives it), pay the minimums, and put any extra on the most expensive one first. The free Utang Payoff Planner builds the schedule. If a lender charges above the legal caps, you can report it to the SEC.
Educational estimate only — not legal or financial advice. The checker measures cost against the cash you receive and when you repay; regulators and lenders may compute rates differently. Confirm a lender's registration and file complaints with the Securities and Exchange Commission.
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