MANILA — 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 previous three-year limit.

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

These loans are typically repaid through salary, pension, or other stable income sources.

Before the new issuance, SBGPCLs were generally capped at three years, with extensions of up to five years allowed only under meritorious circumstances.

The BSP clarified that the seven-year period represents the maximum allowable tenor and not a fixed repayment term.

Banks and BSP-supervised financial institutions will still determine actual loan terms based on a borrower’s repayment capacity, including factors such as income source, employment record, credit history, and loan purpose.

For longer-term or non-consumption financing needs, the BSP said borrowers may opt for other loan products such as housing, motor vehicle, or credit card loans. These are not covered by the seven-year limit, even if repayment is done through salary deduction or similar arrangements.

The central bank also encouraged borrowers to consider refinancing options offered by institutions such as the Government Service Insurance System (Government Service Insurance System) and the Social Security System (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 on Friday.

The BSP added that it continues to coordinate with the Department of Education and partner financial institutions to promote financial literacy and responsible borrowing.