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Filipinos prefer installment payments to cash transactions
MANILA, Philippines — Filipino borrowers prefer installment payment plans for their transactions with corresponding interest rates instead of cash payments, according to data from the Credit Information Corp. (CIC).
CIC president and chief executive officer Jaime Casto Jose Garchitorena said installment transactions remain significant as it accounted for 65.2 percent or 36.83 million of the available 56.48 million contract data in the country’s sole public credit registry.
“Until now, most transactions captured by other credit bureaus were credit card transactions which may not necessarily reflect an accurate picture of the broader type of lending that is happening in the Philippines,” he said.
Garchitorena said credit card transactions cornered 33.3 percent with 18.82 million, followed by non-installment contracts with a share of 1.5 percent or 633,192 transactions.
Installment transactions cover everything from microfinance institution (MFI) loans to vehicle and housing loans.
Being the Philippines’ foremost repository of credit information, the CIC prides itself with having the largest credit database with the most diverse set of contributors.
As of Dec. 16, the CIC database captured 9.02 million unique data subjects and 81,364 companies.
While access to this database is not a requirement under the law, the CIC chief underscored how going beyond compliance is a valuable tool for financial institutions to become more competitive in the market.
“In the case of the CIC database, salary loans, housing loans, car loans, and other more typical credit type transactions offer CIC data users a better view of true credit behaviors versus a predominantly credit cards-based database. In the case of the CIC, the ratio is nearly double in favor of non-card data,” Garchitorena said.
“Statistically, if a lender wants to get a relevant view of credit and lending in the Philippines, the sampling has to be broader — not just credit cards,“ he said.
Source: https://www.philstar.com/business/2019/12/25/1979545/filipinos-prefer-installment-payments-cash-transactions