BSP extends maximum repayment period for salary-based loans to seven years

The Bangko Sentral ng Pilipinas (BSP) has raised the maximum repayment period for salary-based consumption loans to seven years. This applies to all borrowers, including teachers and other employees. The longer period makes loans easier to repay while still encouraging responsible borrowing. 

The policy covers salary-based general-purpose consumption loans (SBGPCLs). These are unsecured loans used for immediate to short-term needs like education, healthcare, emergencies, travel, household needs, and other personal expenses. They are typically repaid through salary, pension, or other forms of stable cash flow. 

A longer repayment period makes payments more manageable. At the same time, the seven-year limit serves as a safeguard against excessive borrowing. 

Previously, SBGPCLs were generally limited to three years. They could be extended to five years only in meritorious cases. 

Under the circular, the seven-year period represents the maximum allowable tenor, not a fixed loan term.  Banks and other BSP-supervised financial institutions must still determine the actual repayment terms based on the borrower’s capacity to pay. This includes sources of repayment, employment and credit history, and the nature and purpose of the loan. This reinforces responsible lending practices and supports the BSP’s mandate to promote financial stability.   

For financing longer-term or non-consumption needs, borrowers may consider other types of loans such as housing, motor vehicle, or credit card loans. These loans are outside the scope of SBGPCLs. They are not covered by the seven-year maximum limit even if repayments are made through salary deduction or similar arrangements.

The BSP continues to work with the Department of Education and partner financial institutions to promote financial literacy and responsible borrowing. Part of this effort is ensuring borrowers retain enough take-home pay after loan repayments.  Financial education materials are available to the public and may be accessed here: BSP Learning Resources​ platform.  
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​The BSP also notes that borrowers may explore refinancing options through facilities offered by financial institutions such as the Government Service Insurance System (GSIS) and the Social Security System (SSS).