The Newbie’s Guide to Car Collateral Loan in the Philippines
Getting a personal loan is a good way to unstuck yourself off a bad financial situation. Still, bear in mind that aside from the fact that obtaining a cash loan in the Philippines is hard, you also need to make sure you’re capable of returning the money you borrowed. Luckily, there are banks and lending firms that offer car collateral loan in the Philippines. In case you don’t have a clue as to what those are, read on below and enlighten yourself.
What’s a Car Collateral Loan?
A car collateral loan is a type of credit that will require you to pledge a vehicle as a payment security to the money lender. Basically, you’re giving the lender the right to seize your car and consider it as payment to the loan in case you fail to do so.
Pros and Cons of Car Collateral Loans
Securing a collateral loan comes with both benefits and risks, some of which are laid out down here.
Pros
- Easy to Get
One of the best things about car collateral loans is that they’re relatively easy to obtain. Even borrowers with low credit scores can get their applications approved quickly, since they’re putting up their vehicles to secure the loan from the onset.
- Lower Interest Rates
Most car collateral loan programs also come with low interest rates. Lenders deem these programs less risky than traditional loans, so they’re more willing to set a lower APR for them.
- Higher Loan Amount
Another thing, car collateral loans allow you to borrow more money than typical bank loans. By pledging your vehicle as security payment, you give lenders an opportunity to financially recoup in case you default. Thus, they’re more amenable to giving out more money through collateral loans.
- Credit Score Builder
And getting and settling car collateral loans enable you to build up your credit score. So if your credit profile is non-existent or poor and you want to improve it, getting a car collateral loan is a great place to start. Just make sure to pay your dues on time, so your profile will look good on paper.
Cons
- Complicated Application Process
Applying for car collateral loans tends to be more complicated than for their traditional counterparts. The lenders need to assess the vehicle you pledge first to accurately determine its value and the money they’ll give out. Thus, you need to provide more information to smoothen the entire process.
- Risk of Vehicle Forfeiture
As explained above, failure to settle the loan would give the lenders the right to repossess your car. If you want to prevent such a scenario from happening, you need to avoid defaulting on the loan and make sure you make timely payments.
- Annoying Upfront Costs
Many car collateral loans also come with certain additional fees (e.g., valuation costs, arrangement costs, etc.) that will increase your overall expenditure and diminish your enjoyment of the loan. So better pick the program that offers as few of these unexpected expenses as possible.
- Human Factors
Of course, the worst risks in getting a car collateral loan come from the borrowers themselves. Only use the money you obtained for important things. In other words, if you want to use the cash to buy that new Smart TV, don’t!
Available Car Collateral Loans in the Philippines
While there are countless banks and lending firms in the Philippines that offer secured and unsecured loans, they’re not all created equal. To help you pick the best program possible, as well as steer you away from questionable institutions, below is a list of car collateral loan programs to consider.
JCT EZ Car Loan
Established in 2012, JCT EZ Loan aims to provide honest and alternative financial assistance to their clients. Among their main objectives is seeking to provide services free from the hidden fees and high rates that plagued Pinoy borrowers for so long. Thus, their car collateral loan program comes with reasonable and transparent rates. The only downside is that their services are available only for Metro Manila, Rizal, and Bulacan residents. Learn more about their car collateral loan program here.
GDFI Car Collateral Loan
Fast, easy, accessible, and affordable, GDFI aims to provide innovative loan facilities to meet the ever-changing financial needs of Filipinos at home and abroad. With over 60 branches nationwide, their car collateral program is easily available for every Pinoy. Their application process is also among the speediest, only taking 24 to 72 hours to process, and you can fill out the application online. Learn more about their car collateral loan program here.
Asialink Collateral Loan
As one of the leading finance companies in the Philippines, Asialink has various loan instruments for their Filipino clientele. Among these is their collateral loan programs, which aims to provide customers financial assistance in exchange for their vehicles or land titles. In particular, their car collateral loan programs come with low interest rates and light requirements, and applications can be completed online. Learn more about their car collateral loan program here.
Maybank Auto Loan
With over 2,400 branches, Maybank is fast becoming one of the premier financial brands in Southeast Asia. as suck, they aim to help their clients maximize their vehicles’ utility through their auto loan program. People who need to raise funds for business or personal purposes need only have their existing vehicles pledged to Maybank, and the institution will provide a maximum loan of up to 60% on the vehicle’s appraised value. Learn more about their car collateral loan program here.
Conclusion
Should you find yourself in dire financial constraints, or in case you need funding for your business plans, relying on car collateral loans isn’t a bad idea. However, you still need to make smart and well-informed decisions before filing an application to convert your ORCR to cash. Doing so would not only help prevent your vehicle from being repossessed by the money lender, but it would also allow you to maximize the loan you acquired. By reading and taking to heart what you learned above, you can do that and more.
