A practitioner-style guide for borrowers of financing companies, lending companies, and online lenders (non-bank), including your rights before you borrow, while the loan is active, when you prepay or default, during collection, and in disputes. Also useful for HR/payroll admins handling salary-deducted loans, and for dealerships that “paper” retail installment sales.

1) Who this covers (and who it doesn’t)

Covered:
- Financing Companies (vehicle/appliance financing, dealer financing, in-house “0%” promos with fees).
- Lending Companies (cash loans, salary loans, online lending apps/platforms).
- Loan brokers/aggregators arranging credit with the above.
Not covered by this article: Banks, cooperatives, and pawnshops (they have separate sectoral rules).

Key regulators & laws:

SEC (corporate license, conduct standards for financing/lending companies).
Financial Consumer Protection Act (FCPA) – baseline rights & remedies for users of financial products.
Truth in Lending – disclosure of true cost of credit (APR/effective interest, fees, penalties).
Data Privacy Act – limits on data collection/processing and anti-doxxing rules.
Civil Code – contracts, penalties, unconscionable interest, Recto Law (installment sales).
Chattel Mortgage Law – repossession/foreclosure on secured movable property.
Special directives – unfair collection practices, online lender conduct, e-commerce/e-signatures.

2) Before you borrow: your information & disclosure rights

You are entitled to clear, written, and conspicuous disclosure before you sign:

Total cost of credit in pesos and effective interest rate/APR.
Itemized charges/fees (processing, documentary, notarial, brokerage, disbursement, insurance add-ons).
Repayment schedule (dates/amounts), grace periods, and allocation of payments (interest vs. principal vs. fees).
Default triggers and exact penalties (late charges, penalty interest, acceleration).
Prepayment terms (right to prepay, any pretermination fee, method for computing rebate on unearned interest).
Security (collateral, chattel mortgage, any post-dated checks or automatic payroll deduction authority).
Cooling-off/withdrawal policy if offered, and complaints channel with response timelines.

Contract copies (paper or e-copy) must be given to you; electronic signatures are valid if done in compliance with e-commerce rules. Any tie-in (e.g., compulsory insurance) must be disclosed; if optional, it must be truly optional.

3) Pricing, interest, and fees: what’s lawful vs. challengeable

No fixed usury ceiling, but courts can strike down or reduce unconscionable interest or penalties. As a rule of thumb, stacked penalty interest + late fees + add-on charges that cause explosive effective rates may be reduced by courts.
Advance interest/discounting must be fully disclosed and reflected in the APR; hidden net-proceeds tricks are unlawful under disclosure rules.
Prepayment/rebate: If you prepay, you’re entitled to a fair reduction for unearned interest (e.g., pro-rata/actuarial). A “no-rebate even if prepaid” clause is suspect and challengeable.
“0% interest” promos cannot hide cost in balloon fees; the true finance charge must be disclosed.

4) During the life of the loan: day-to-day rights

Statements & receipts: You have a right to receipts for every payment, and to periodic statements showing running balance and how payments were applied.
Application of payments: If the contract is silent or ambiguous, you can designate how a payment is applied; otherwise, the law applies default rules (e.g., interest before principal). Lenders cannot retro-apply to maximize penalties without basis.
Errors & disputes: You can contest errors (misposting, double penalty, misapplied payment) and expect a timely written resolution from the lender’s complaints unit.
Data privacy: Lenders may collect/use data only for legitimate, disclosed purposes; phonebook scraping, posting debts in social media, or contacting your contacts/employer without lawful basis/consent is unlawful.
Hardship cases: You may request restructuring (longer term, reduced rate, payment holiday). Not a right to approval, but lenders must receive and evaluate requests in good faith, especially after calamities.

5) Collections: what they can’t do (and what they can)

Prohibited collection conduct (common pitfalls):

Threats of jail for nonpayment (debt ≠ crime); only separate crimes (e.g., deceit, bad checks with proper notice) carry penal risk.
Harassment: obscene language, repeated late-night calls, intimidation, or physical threats.
Public shaming: group chats, social posts, signage on your home/office, or mass texts to contacts.
Contacting third parties (family, employer, co-workers) to disclose your debt without legal basis/consent.
Seizing property without due process (no court order/without following extrajudicial foreclosure steps).
Withholding IDs/ATM cards or demanding blank checks as coercion.

Allowed: Truthful reminders, reasonable call times, sending lawful demand letters, offering workout options, and filing proper civil actions. Many regulators require lenders to keep recorded logs of collection interactions and to train agents on conduct standards.

6) Secured loans & repossession (vehicles/appliances)

If your loan is secured by a chattel mortgage (typical for vehicles/appliances):

On default, the creditor may foreclose extrajudicially by notice and public auction (not “snatch-and-grab”). Breach of peace is prohibited.
You must receive proper notices (demand, sale notice). After auction, you have the right to an accounting of the bid price, costs, and any surplus.
Deficiency claims: In installment sales of personal property (e.g., dealer-financed appliance/vehicle), the Recto Law restricts the seller/assignee’s remedies. If they cancel the sale or foreclose the chattel mortgage, they generally cannot still sue for deficiency on the same transaction—this prevents double recovery. (Different rules apply to pure cash loans secured by a chattel mortgage.)
Voluntary surrender does not waive your rights to proper sale and accounting, nor does it automatically create a deficiency—computation depends on the governing regime.

7) Salary deduction loans & assignments

Payroll-deducted loans must have clear, revocable authorization. Your employer cannot deduct beyond what is authorized by law/you.
If you resign/are terminated, blanket clauses that demand full acceleration plus all future interest may be reducible as penal and unconscionable; you’re liable for actual principal/earned interest and reasonable charges.

8) Default & remedies: what really happens if you miss payments

Demand & cure period – you should receive a written demand before acceleration or filing.
Acceleration – entire loan may become due if contractually allowed and properly invoked.
Civil suit – lender may file small claims (streamlined, documentary) or an ordinary collection case. Courts can award principal, reasonable interest, reasonable penalties, and costs—not abusive add-ons.
Execution – after judgment, garnishment or levy on non-exempt property may follow. SSS/GSIS benefits and certain assets enjoy special protections.
No jail for debt – inability to pay a loan is not a crime. (Separate bad-check or fraud cases depend on different elements.)

9) Early settlement, prepayment, and refunds

You can prepay; the lender must disclose any pretermination fee and compute a rebate of unearned interest fairly.
For add-on insurance (e.g., credit life), ask for pro-rated refunds of unexpired coverage on pretermination where policy terms allow.
Get a release of chattel mortgage and clearance within a reasonable time after full payment; vehicle encumbrances should be canceled and LTO records updated.

10) Online lending apps (OLAs): special cautions & rights

Use only licensed platforms. Unlicensed OLAs often engage in privacy violations (contact scraping, public shaming).
You can withdraw data consents not essential to perform the contract and complain to authorities for misuse.
Over-collection of permissions (contacts, gallery, location) without a clear need is challengeable; lenders must use least intrusive data practices.

11) How to complain—and get results

Step 1: Write the lender’s complaints unit.

Attach contract, payment proofs, and a clear ask (correction, reversal of fee, computed payoff, release of mortgage). Request a written response within a stated period.

Step 2: Escalate to regulators/authorities when needed.

SEC – for unlicensed operators, overcharging, unfair collection, and lending/financing company misconduct; seek administrative action (suspension, fines, license revocation).
Data Privacy – for doxxing, contact-spamming, and unauthorized disclosure.
Local law enforcement – if there are criminal threats, extortion, or physical harassment.

Step 3: Civil remedies.

Small Claims (fast, lawyer-optional at hearing) for refund/overcharge/penalty reduction/release of encumbrance.
Injunction/Replevin – to contest illegal repossession or to recover seized property pending case.
Damages – for abusive collection, privacy breaches, or wrongful foreclosure.

Prescriptive periods: money claims generally 10 years for written contracts; 4 years for quasi-delict; shorter for certain regulatory complaints—file promptly.

12) Practical templates (short, adaptable)

A) Error/Overcharge Dispute

Subject: Billing Error – Loan #[____] Please correct the following: [misapplied payment/duplicate fee/penalty error]. Attached are proofs. Kindly issue a revised statement within 7 days and confirm the corrected APR and payoff.

B) Pretermination Request

Subject: Prepayment & Rebate – Loan #[____] I intend to prepay in full on [date]. Please provide the payoff amount, showing principal, accrued interest to date, rebate for unearned interest, and any lawful pretermination fee, together with steps to release the chattel mortgage.

C) Cease & Desist for Abusive Collection

Your agent(s) have engaged in harassing collection and unauthorized disclosures. Cease immediately. Direct all communications to [my email]. Continued violations will be reported to authorities and pursued as damages.

13) Borrower checklists

Before signing

APR and total peso cost disclosed
All fees itemized; no hidden “handling”
Prepayment terms & rebate method clarified
Security/repo terms (notice, foreclosure) understood
Data consents limited to what’s necessary
Copy of contract received

During loan

Keep receipts/statements
Log calls/messages from collectors
Verify interest/penalties math; contest errors promptly

If struggling

Ask for restructure early
Avoid issuing bad checks; propose dated post-payments only if funds are assured
Never surrender property to unidentified repo agents; ask for ID, authority, and papers

When finishing

Get payoff in writing with rebate
Obtain Release of Chattel Mortgage/Cancellation of Encumbrance
Secure No-Outstanding-Balance/Closure letter

14) Lender compliance snapshot (for financing/lending companies)

Transparent pre-contract disclosures (APR, fees, penalties).
Fair collection policies & agent training; recorded call logs.
Complaint-handling unit with clear SLAs.
Privacy-by-design data practices; no mass contact scraping.
Proper repossession (no breach of peace; notices; auction).
Accurate payoff & rebate computations and prompt lien release.

15) Bottom line

With non-bank loans, your strongest protections are clear disclosures, fair-collection rules, due-process in repossession, privacy rights, and access to quick civil remedies (small claims), backed by regulatory escalation when conduct crosses the line. Keep everything in writing, demand itemized math, assert your prepayment/rebate rights, and do not tolerate harassment or shadow fees—the law is on your side.