What is the legal interest-rate cap on online loans in the Philippines?
Last updated: 2026-07-11 · Educational content; not legal advice.
Short answer
For a covered small consumer loan — an unsecured, general-purpose loan of ₱10,000 or less with a term of up to 4 months from a lending or financing company or its online lending platform — SEC Memorandum Circular No. 3, Series of 2022 (which implements BSP Circular No. 1133, s. 2021) caps the charges at: a nominal interest rate of 6% per month (about 0.2% per day); an effective interest rate (EIR) of 15% per month (about 0.5% per day), which folds in all fees and charges but excludes late-payment penalties; a late-payment/non-payment penalty of 5% per month on the outstanding scheduled amount due; and a total cost cap of 100% of the total amount borrowed, covering all interest, fees, charges, AND penalties no matter how long the loan stays unpaid. Loans above ₱10,000 or longer than 4 months fall outside this specific ceiling and are governed instead by disclosure rules and the courts' power to void unconscionable rates.
The ceilings come from BSP Circular 1133 (Monetary Board Resolution 1717, 16 December 2021), issued under Section 7 of RA 9474 and Section 5 of RA 8556; the SEC put them into force for the lenders it supervises through MC 3, s. 2022, effective 3 March 2022. Because the total-cost cap is 100% of the principal, a ₱10,000 covered loan can never legally cost you more than ₱10,000 in combined interest, fees, and penalties on top of repaying the ₱10,000 principal — regardless of how long it is outstanding. The 15% EIR ceiling is what stops lenders from hiding cost in 'processing' or 'service' fees, since those fees are counted inside the EIR.
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Frequently asked
What exactly is the total-cost cap?
Under SEC MC 3 (2022) / BSP Circular 1133, all interest, other fees and charges, AND penalties combined cannot exceed 100% of the total amount borrowed, regardless of how long the loan has been outstanding. On a covered ₱10,000 loan, the most you can be charged on top of the principal is ₱10,000.
Does the 6% / 15% cap apply to every online loan?
No. It applies to covered loans only: unsecured, general-purpose, ₱10,000 or less, tenor up to 4 months. Loans outside that scope have no fixed monthly ceiling; instead disclosure rules (RA 3765) apply and courts can strike unconscionable rates — see /answer/what-is-the-maximum-legal-interest-rate-in-the-philippines.
The lender says its rate is only 6% but I'm paying way more — how?
Compare the effective interest rate (EIR), not the headline 'nominal' rate. The 15% per month EIR ceiling includes processing, service, notarial, handling, and verification fees, so a lender cannot legally push those into fees to dodge the cap. If the all-in EIR exceeds 15% per month on a covered loan, that is a documentable violation.
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