SEC caps at 6% monthly interest rate on loans up to P10,000

MANILA, Philippines – The Securities and Exchange Commission (SEC) has issued an order capping at 6 percent per month or 0.2 percent day the nominal interest rate that financing and lending companies can charge on loans worth P10,000 and below.

This is to protect consumers and small entrepreneurs from usurious rates especially amid snowballing complaints against some online lenders. 

The “recalibrated” ceiling on interest rates is “necessary” to “uphold consumer protection while ensuring the continued viability and competitiveness” of legitimate financing and lending companies, the SEC said in memorandum circular 14 Series of 2025 issued on Dec. 10. 

READ: SEC acts vs ‘predatory’ lenders, eyes rate caps

Fees, charges, penalties capped too

Aside from imposing a ceiling on the nominal interest rate, the corporate regulator slapped an effective interest rate cap of 12 per month or 0.4 percent per day.

Effective interest rate refers to the total nominal interest paid plus other fees and charges, excluding penalty and late payment fees.

The SEC likewise capped penalties for late or non-payment at 5 percent per month on the outstanding scheduled amount due.

READ: Online lending menace

Further, the regulator imposed a total cost cap on the total amount borrowed — applying to all interest, other fees and charges, as well as penalties — regardless of the time the loan has been outstanding.

READ: DOF wants to weed out predatory lenders

These caps will apply on loans that do not exceed P10,000 with a tenor of up to four months contracted, restructured, or renewed starting April 1, 2026. /dda