Official / regulatory update · Philippines
How do you compare the real cost of a debt consolidation loan?
Use the effective interest rate, disclosed fees and repayment schedule—not only the advertised rate or monthly payment—to compare a debt consolidation loan with other offers and the debts it would replace.
A debt consolidation loan can look simpler because it combines obligations into one payment, but the lower-looking monthly amount does not by itself show whether the new loan costs less. The Bangko Sentral ng Pilipinas says the effective interest rate, or EIR, reflects the true cost of a loan.
Compare the same inputs
The BSP Loan Calculator asks for the loan amount, interest rate, term, balloon payment or grace period where applicable, and other charges. Those inputs should come from the prospective creditor or financial institution. Use the same complete set of disclosed figures when comparing offers.
For credit card debt or other balances that would be consolidated, compare the new loan's EIR and total repayment schedule with the cost and timing of the obligations it would replace. A longer term may reduce the regular payment while extending how long payments continue, so the monthly amount alone is not a complete comparison.
The calculator is a comparison aid, not an approval
BSP says its calculator results are illustrative and do not amount to a recommendation. The financial institution should provide the actual EIR during the loan application and disclose all fees and charges under the Truth in Lending Act.
The tool does not decide whether consolidation is suitable, guarantee approval or prove that a new offer will save money. The answer depends on the actual disclosed EIR, charges, term and repayment schedule for the offer being considered.