Filipino borrowers halve since 2021 as debt aversion grows

Formal credit overtakes informal lending as seven in 10 Filipinos call loans a bad idea.

The share of Filipino adults with outstanding loans fell to 25% in 2025 from 45% in 2021, with seven in 10 adults saying taking any type of loan was not a good idea, according to the Bangko Sentral ng Pilipinas' 2025 Consumer Finance and Inclusion Survey.

Despite the contraction in overall borrowing, formal lenders overtook informal sources for the first time, with 16% of adults borrowing from regulated institutions compared with 10% from informal sources.

Microfinance institutions and NGOs remained the main formal source of loans, used by 6% of adults. Government institutions, lending or financing firms, and banks each accounted for 3%.

For informal borrowing, 5% borrowed from friends, colleagues, or neighbours, 4% from family and relatives, 2% from informal money lenders, and 0.5% through salary advances from employers.

Borrowers said fast processing and loan approval were the top factors when choosing a loan, cited by 31%. 

This was followed by repayment period at 30%, interest rate at 26%, and ease of application at 24%.

Personal loans were the most common type of loan at 24%, followed by salary loans at 13%, and multipurpose and business loans at 12% each.

The most common use of loans was for food and other basic needs at 32%. 

Other uses included education at 15%, health expenses at 14%, agriculture at 10%, business start-up or expansion at 9%, household bills at 9%, and home renovation at 8%.

Most borrowers reported keeping up with payments. Some 58% said they paid on schedule, whilst 19% paid ahead of schedule. However, 8% said they were behind on payments.

The survey also found that over half (56%) of borrowers said they could easily pay off their loans, whilst 34% said they often had difficulty paying. 

Another 8% said they had to take out a new loan to pay an existing one.