Were you charged more than the legal limit?
Checked against SEC Memorandum Circular No. 14, Series of 2025 · in force since 1 April 2026
Since 1 April 2026 a small online loan in the Philippines cannot cost more than 12% a month all in, counting interest and every fee together. The ceiling covers unsecured, general-purpose loans of ₱10,000 or less with a term of four months or less, from lending and financing companies supervised by the SEC.
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How the ceiling works
The SEC set three separate limits, and a lender has to stay inside all of them. The effective rate is the one that matters most, because it is the only figure that counts interest and fees together.
| Item | Ceiling |
|---|---|
| Effective interest rate, all in | 12% per month, about 0.40% per day |
| Nominal interest rate | 6% per month, about 0.20% per day |
| Late-payment penalty | 5% per month on the amount due |
| First violation | ₱50,000 fine |
| Second violation | ₱1,000,000 fine and a 60-day suspension |
What the ceiling does not cover
- Loans above ₱10,000, even by one peso.
- Terms longer than four months. Several apps only offer 180 days or more, which keeps them outside the cap entirely.
- Banks and digital banks. They answer to the Bangko Sentral ng Pilipinas, not the SEC.
- Secured loans, and loans tied to a specific purchase.
If your loan is over the limit
Ask the lender for your Disclosure Statement in writing. Every lender has to give you one before you sign, and it states the effective interest rate outright. If that figure is above 12% a month on a loan inside the cap, you can write to the SEC Financing and Lending Companies Division at flcd_queries@sec.gov.ph.
Before you borrow again, it is worth seeing what the licensed lenders actually charge at your amount and term. Our comparison uses each app’s own published maximum, and flags any row that would breach the ceiling.
Questions people ask
What is the maximum interest a loan app can charge in the Philippines?
On an unsecured, general-purpose loan of ₱10,000 or less over four months or less, the all-in effective rate cannot exceed 12% a month. That is roughly 0.40% a day. The nominal rate is separately capped at 6% a month, and a late-payment penalty at 5% a month on the amount due.
Does the cap apply to banks?
No. The circular binds lending and financing companies supervised by the SEC. Banks and digital banks are supervised by the Bangko Sentral ng Pilipinas, and a bank personal loan is usually far larger and longer than the cap’s scope anyway.
Is the effective rate the same as the advertised rate?
Usually not. The effective rate folds in every fee, which is why it is often much higher than the headline number. Our guide on add-on rates versus effective rates works through why the gap is so wide on bank loans.
Where can I read the rule itself?
It is SEC Memorandum Circular No. 14, Series of 2025, issued on 10 December 2025. We summarise what changed in the 2026 interest rate cap explained.
This tool is an arithmetic check against a published ceiling, not legal advice and not a determination that any lender broke the law. Whether the cap applies to a specific contract depends on the loan’s purpose, security and the lender’s licence. Always work from your own Disclosure Statement.