Your top 5 questions about loan interest answered

There are a lot of misconceptions when it comes to getting a loan. On top of that list is understanding loan interest and this dilemma might be the one that’s stopping you from taking a step to reaching your life’s goals. So we answered the top five questions about loan interest to help you understand it better. 

1. What is interest in loans?

Interest in loans is the price you pay lenders for borrowing their money. Much like any other, product or services banks must charge consumers in return for their products and services such as loans. Interest is essentially what you’re paying the bank to let you use their money.

2. Where does my interest go?

Banks borrow money from depositors to lend to borrowing customers. The borrowing customers pay the bank with interest from their loans which they use to fund their services and pay their depositors for keeping their money in the bank.

3. How do banks determine their interest rate?

Interest rate depends on many factors. Ultimately, banks determine your loan interest based on your risk factor. The more it seems like there is a bigger risk in lending someone their money, the higher the interest will be. On the other hand, borrowers with higher credit scores tend to get lower interest on their loans.

4. What is APR? Is it the same with interest?

No, APR or Annual Percentage Rate is the total cost of your loan. This includes interest and other fees that come with borrowing money like disbursement fees, etc. Both interest and APR can give you an idea of how much your loan would cost. Interest will tell you how much you pay each month while the APR tells you the total cost of the loan throughout the tenure.

5. Can I compare loans from different banks through their interest rates?

Yes, but that won't let you see the bigger picture. A more efficient way to compare loan offers is through APR. This way, you can factor in the other costs that come with your loan and see which lender offers the loan at a lower cost.


With CIMB Bank’s Personal Loan, you don’t have to worry about towering interest and fees. Apply straight from your mobile phone using only 1 ID and 1 payslip to borrow as high as PHP 1 Million. You can enjoy ZERO disbursement fees when you opt to have your loan deposited to your CIMB Bank account for an easy and hassle-free disbursement.


PLUS, you can get up to 30% interest rebates on your Personal Loan just by paying your dues consistently and on time. Through the Loan Loyalty program, you can enjoy yearly increasing interest rebates starting from 10% on your first year and to 30% on your fifth year. All you need to do is pay your monthly loan payments completely and on time! If you’re a CIMB Bank deposit account holder, just apply and get approved for a Personal Loan on or before March 31, 2022 to become eligible. Take a step towards your goals!


Learn how you can apply for a Personal Loan using the CIMB Bank PH App:

Visit the link below to know more about our Loan Loyalty Program: