Fifty-seven percent of Filipinos rely on informal lenders for their loan needs. Borrowing from an informal lender may lead to fast applications and easier access to the cash you need, but their rates and terms can be unfavorable to borrowers. This can lock borrowers in cycles of debt that can be difficult to break free from.

There are many measures you can take to help boost your chances of a successful loan application.

Before applying for a loan, it's essential to ensure that you are borrowing an amount within your realistic repayment capacity. One effective method to achieve this is by calculating your debt-to-income ratio, which helps you understand the portion of your monthly income dedicated to debt payments.

If you find yourself unsure about how to calculate your debt-to-income ratio, the most effective approach is to divide your total monthly debt payments by your monthly gross income and then multiply the result by 100. For example, if your monthly gross income is P20,000, and your monthly debt is P4,000, your debt-to-income ratio is 20 percent. That means 20 percent of your monthly salary goes to debt payments.

Maintaining a low debt-to-income ratio is advisable as lenders may decline your application if the ratio is too high.

According to a financial inclusion survey by Bangko Sentral, the top considerations Filipinos have in applying for loans are the interest rates, loan amount, the period to pay, ease of application and flexibility of terms.