What is a car collateral loan? #
Also called the OR/CR ‘sangla’ or car title loan, this is a type of secured loan that requires you to put something as collateral before borrowing cash from the lender; in this case, your car’s OR/CR or the Official Receipt and Certificate of Registration from the Land Transportation Office.
On the other hand, there are car title loans that are unsecured. Instead of using your OR/CR as collateral, you simply submit these documents to the lending company for safekeeping. In this case, the lender will not encumber your car title.
Car title loan: how does it work? #
Just like getting quick cash, where you simply go to the nearest pawnshop and pawn your gadgets or jewelry, a car collateral loan works the same way. When applying for this type of loan, the lending company will check your car’s original OR/CR. The car you use as collateral must be registered under your name. If the car is financed by a bank, check that the loan is fully paid before applying for a car collateral loan.
In cases where the car collateral is still under a bank’s financing, the lending provider can offer to buy your vehicle instead. If you are using a second-hand vehicle, prepare the absolute deed of sale as some lenders may ask for it. Keep in mind that when the loan defaults, this will result in the loss of your car. The lender can seize your car and become the new owner.
The Pros of a Car Collateral Loan #
In the Philippines, a car collateral loan offers so many benefits for car owners who have a dire need for cash. What are the pros?
You can get cash instantly. When you are desperately in need of larger amounts of cash, a car collateral loan is the most convenient cash solution. Contact your car loan company, e.g. M Lhuillier Financial Services, secure the requirements, and get your money fast.
The application process is relatively fast. Most of the car collateral loan providers in the country need the same basic requirements: valid IDs, the original copy of your car’s OR/CR, payslips, and some corporate documents (for those running a business). Because there are only a few requirements, the loan processing is faster.
No need for credit history. Applying for a loan in a bank where your credit history is thoroughly checked may not be applicable for everybody, especially if you have a bad credit score. Chances are that your application will be rejected. Car collateral loans are different. Your credit history is no longer relevant since you have your car’s title as collateral.
You don’t have to surrender your car. Traditional car collateral loan companies require car owners to surrender their cars upon application. However, there are also lenders that allow borrowers to keep their cars and instead ask only for the original copy of the OR/CR. But this will mean that you can keep your car under specific conditions, and this may require additional paperwork.
There are companies that accept different types of vehicles. You don’t have a car to pawn? That’s okay. There are lenders that accept different types of vehicles, like public utility jeepneys (PUJs), public utility vehicles (PUVs), motorcycles, tricycles, and even multicabs.
The Cons of a Car Collateral Loan #
Car collateral loans have their own share of disadvantages that you must be aware of before proceeding with your application.
You might give up your car. Since there are some car title lending companies that prefer to take your vehicle and keep it in their storage, this can be a disadvantage on your end, especially if you’re using your car for livelihood (ride-sharing, rental services, or food delivery).
Interest rates are high. Meaning, you might end up shelling out more money to pay your loan and get your car. Many loan companies offer around 3% to 4% of interest, but others can charge as high as 10% per month.
Aside from the interest rates, you also need to cover other possible costs, like processing fees and penalties.
The risk of low appraisals. If the loan company has no updated method of appraising a car value, you might get less than the actual value of your car. That’s why it’s important to choose a lender that has a great reputation for giving high appraisals.
Where can you get a car collateral loan? #
There are so many car collateral loan companies today. With so many options, the choices can be overwhelming. But the best and safest thing to do is to go with reputable companies like M Lhuillier Financial Services.
What You Need to Know About M Lhuillier Quick Car Loan #
Guidelines and Parameters: #
Qualified - Locally employed, OFW, self-employed, pensioners
Acceptable Units – Second-hand units except for Korean, China, and Indian brands (Honda, Toyota, Mitsubishi, Isuzu, Ford, Suzuki, and Nissan)
Year Model - 2012 and up, provided not to exceed 10 years upon maturity of the loan
Loan Amount: Up to 70% of the appraised value of the inventory to be financed
Term of Loan - Maximum of 36 months
Manner of Payment - ML Wallet - free of charge
Other Charges/Deduction upon Release
Chattel Fee based on actual computation set by ROD and LTO
Comprehensive Insurance with AOG based on Insurable Value
Mode of Disbursement - Disburse thru our M Lhuillier branch
Collateral - Original OR/CR
Re-availment/Reloan - In case the outstanding balance is below six months, he/she can avail provided the unit will be re-appraised
How To Avail: #
Submit your application form and a photocopy of your OR/CR to the FLA.
Wait for the approval.
Once approved, get your cash.
A car collateral loan may be a good source of quick cash. However, you might want to reserve this option for situations that will require a large amount of cash, like emergencies.
M Lhuillier, the Philippines’ largest and most respected non-bank financial institution, continues to uphold its promise of being the Tulay ng PaMLyang Pilipino, with more than 3,000 serviceable locations nationwide. It continuously seeks better and innovative ways to serve its community by providing fast, easy, and reliable financial services such as Kwarta Padala, Quick Cash Loan, Bills Payment, Insurance Plan, Money Exchange, Jewelry, ML Wallet, ML Express, ML Moves, and Telco and online TV Loading.
Follow M Lhuillier Financial Services, Inc. on Facebook, or visit mlhuillier.com for more information. For inquiries, contact Customer Care through its mobile number +63-947-999-0337, +63-947-999-2721, +63-917-871-2973, +63-947-999-0522, +63-947-999-2472 or email customercare@mlhuillier.com.
