A vehicle is an essential attribute of modern life and the need to have your own vehicle is quite obvious. In addition, for many people, professional activities may not be possible without automobiles.
However, for such an expensive purchase often you do not have enough own savings. And then you have to consider lending options, both with the help of banks and other financial organizations.
Car loan meaning
When you buy a vehicle using a borrow, you immediately pawn your machine. It`s meaning, you get your borrow with collateral. This fact implies a number of additional costs. First of all, this is vehicle insurance in case of damage, one-time fee for credit service and often fee for appraisal of the machine.
Also note that no financial institution allocated 100% of the purchase price. This is because automobiles are accepted as collateral, taking into account the possibility of its quick sale (in case of default by the borrower). In other words, the value of the mortgaged property should be lower for the lend company than the market value.
The Car loan agreement sample differs greatly depending on the organization that provides the lend. First, the rates for Vehicle loans differ. For example, AUB has an Auto credit rate of 0.39% per month, and Gata Daku Multi-Purpose Cooperative (GDMPC) Car loan interest of 1,6% per month. Car loan agreement sample can be read on the websites.
Secondly, the minimum credit amounts differ. For Auto loans in Maybank, the minimum amount is 100,000 PHP and China Banking Corporation the minimum amount is 500,000 PHP.
Car loan interest rates
As a rule, Car loan rates are different not only depending on the organization issuing the lend, but also on the payment term, on the condition of the auto – new or used, and even on the year of production of the auto.
Up to months
AUB, EastWest, Security application and Metrobank have the lowest interest rates. However, despite the very low interest rate of these companies, not everyone will be able to take such an amount, since these loans are provided for the purchase of new cars. Of the leaders listed above, only EastWest and Security Bank offer loans for used automobiles, but with interest rate of 9.15% and 16% p.a., respectively.
Up to months
But keep in mind that banks have very strict requirements for borrowers. If, for example, you have recently changed your job, the bank will most likely refuse to grant you a lend. Banks are more strict about the year of vehicle production than other financial organizations. Therefore, it is worth considering companies such as Payday lenders.
|Payday lenders||IR, APR|
It is worth noting that IR change not only depending on which automobile you buy (used or new), the rates may vary from the amount of the initial payment, from the year of manufacture of the automobile, from the credit period.
Let’s look at the changes in IR using the Carloanphilipines example:
|Year of production of the auto (Down payment)||months||rates, APR|
|2011 – 2015 (30%)||12||13,02%|
|2007 – 2010 (40%)||12||14%|
|2004 – 2006 (40%)||12||15,5%|
In other words, the older the automobile, the higher the IR, and the initial payment should be higher.
Car loan requirements
As noted above, different financial organizations have different requirements. Some only lend to new automobiles, while others also lend to 15-year-old vehicles.
Let’s try to summarize the most common requirements:
- Documents confirming income and identification are the main requirements for obtaining an Auto credit
- Copy of Passport or any ID
- Working borrowers must submit documents: certificates from the place of work or COE, a copy of payslip for 2 months, income tax return.
- Self-employed must submit documents : a copy of the ITR, a copy of registration with the DTI or SEC, and a copy of financial statements for a period of at least 2 years.
- After buying a machine, you need to pay for insurance.
Before sending the application, please note that some banks require a borrower age and a minimum credit amount. Consider all the details when choosing a financing organization and pay attention to such significant restrictions.
Some examples of restrictions:
- Union- Bank minimum amount is 500,000 PHP;
- Robinsons-Bank and Maybank have restricted the age of the borrower from 25 years;
- China-Bank and Metrobank issue loans only for the purchase of new vehicles;
- Maybank limits the age of the automobile to 10 years.