The Bangko Sentral ng Pilipinas (BSP) has issued a circular extending the maximum repayment period for salary-based consumption loans to seven years from the current three years.

Under Circular No. 1239, series of 2026, issued on June 18, the extension covers salary-based general-purpose consumption loans (SBGPCLs) or unsecured loans used for immediate to short-term needs like education, healthcare, emergencies, travel, household needs and other personal expenses.

These are typically repaid through salary, pension, or other forms of stable cash flow.

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

The BSP said that under the circular, the seven-year period is the maximum allowable tenor, not a fixed loan term.

Banks and other BSP-supervised financial institutions, however, must still determine the actual repayment terms based on the borrower’s capacity to pay.

The BSP said this includes sources of repayment, employment and credit history and the nature and purpose of the loan.

For financing longer-term or non-consumption needs, borrowers may consider other types of loans such as housing, motor vehicle, or credit card loans, the BSP said.

The central bank clarified that these loans are outside the scope of SBGPCLs and are not covered by the seven-year maximum limit even if repayments are made through salary deduction or similar arrangements.

Borrowers are also encouraged to explore refinancing options through facilities offered by financial institutions such as the Government Service Insurance System and the Social Security System.

“The longer repayment period makes payments more manageable. At the same time, the seven-year limit serves as a safeguard against excessive borrowing,” the BSP said in a statement Friday.

The BSP said it continues to work with the Department of Education and partner financial institutions to promote financial literacy and responsible borrowing. (PNA)