Car Loan: a beginner's guide

[acg03]

ako nag loan sa tatay ko pay when able pa :D

anyway mahirap talaga mag loan...ang dami mong iisipin..at mahirap pa nyan eh long term debt...ipon ipon yan ang best way to own a car...

[_Qwerty_]

a good read..

How to sell your car
By Honesto General
Philippine Daily Inquirer
04/10/2008

A long time ago, if you wanted to sell your car, you signed a deed of absolute sale. The wording was available at the neighborhood notary public. Then, you handed over the keys to the buyer in exchange for cash.

Today, things are a bit more complicated. After the deed is notarized, you have to bring it to the Land Transportation Office (LTO) so the Compulsory Third Party Liability (CTPL) insurance policy can be transferred to the buyer.

If the car is insured under a comprehensive policy, you must ask the insurance company either to transfer the name of the insured to the buyer, or cancel the policy outright, depending on the agreement with the buyer. The refund premiums corresponding to the unexpired portions of the policies can be incorporated in the selling price of the car.

It is absolutely essential that the registration certificate be transferred to the buyer. Your insurance agent or broker would be willing to do this for you.

In case the buyer rams the car into another vehicle, or runs over a pedestrian, you are still liable as long as the registration certificate remains in your name. This is a longstanding rule of the Supreme Court. I have always believed that whoever has effective control of the steering wheel should be held liable, but who am I to argue with the high and mighty Supreme Court?

In short, the damage to the car follows the insurance policy. The third party liability follows the registration certificate.

About 25 years ago, a car bomb exploded in the international airport. Luckily, nobody was hurt and damage to property was negligible. The police traced the engine number to my client whose name was still on the registration certificate. My client, a well-known citizen of impeccable character, who lived in the high-end Dasmariñas Village subdivision in Makati City, showed a deed of absolute sale. The police were convinced he was no terrorist.

If you bought your car under an installment plan, and there is still a balance to be paid when you sell your car, there are other complications.

If you are selling the car for cash, you may be able to clear the balance with the bank or finance company. The mortgage agreement is cancelled, and you can ask the LTO to erase the lien from the registration certificate. Then you go through the same trouble of transferring the certificate and the insurance policies to the buyer as above.

If the buyer is going to take over the payment of the remaining installments, then an agreement is drawn up among the bank, the buyer and you.

It is absolutely essential that the promissory note you signed with the bank is cancelled by a responsible official of the bank, preferably the same fellow you negotiated the loan with.

If you had lodged with the bank a bunch of post-dated checks to cover the installments, you must get back all the remaining checks.

It is always best to have your lawyer by your side in dealing with the bank or finance company. The fee is money well spent.

Cely, a friend of my daughter, sold her car that was mortgaged to a bank. The buyer was to take over the payment of the remaining installments. Soon after, the car was totally wrecked in an accident. The comprehensive policy was never transferred to the buyer, and the insurance company rightly refused to pay for the total loss. The claim payment could have wiped out the mortgage.

The bank insisted the promissory note Cely had signed was never cancelled because she dealt with an unauthorized bank official. The case went all the way to the Supreme Court which ruled recently against Cely. Now, poor Cely has to pay the balance of the promissory note.

[woohoo]

a good read..

Cely, a friend of my daughter, sold her car that was mortgaged to a bank. The buyer was to take over the payment of the remaining installments. Soon after, the car was totally wrecked in an accident. The comprehensive policy was never transferred to the buyer, and the insurance company rightly refused to pay for the total loss. The claim payment could have wiped out the mortgage.

The bank insisted the promissory note Cely had signed was never cancelled because she dealt with an unauthorized bank official. The case went all the way to the Supreme Court which ruled recently against Cely. Now, poor Cely has to pay the balance of the promissory note.

This is where we do to the law makers and the judiciary.

I am never letting any buyer take home my car before the CTPL and the CR have been transferred!

[MAXBUWAYA]

Always Compute yung total na babayaran mo plus interest.

Some Dealers today Adverstise

Free Insurance TPL 3 year LTO Chatel Mortgagete!

Only to put a high interest on your loan. (PAra Mabawi ang mga nasabing libre)

[march3]

Let me revive the thread here and add my thoughts....

For a brand new car I think you can go ahead and follow their suggestions. Pero for 2nd hand I would just skip getting an auto loan and instead get a personal loan so you skip all those appraisal ek ek the banks need to do. Then just pay youre personal loan accordingly. The best bit is in case di ka nakabayad ng personal loan you only ruin your credit worthiness but the car is still yours

Also as many already said try to maximize your DP and try to pay the balance at the shortest time possible. Not only will it save your in interest expenses but we never know the future. Who knows you can lose your job (there is no such thing as job security anymore) before your balance is done and that will mean a lot of trouble for you.

But of course as the others also suggest saving up for it is still the best. Sarap ng feeling of paying in cash and mas rewarding talaga....

sir parang ngang mas ok to ah.. kasi plan ko din po sana mag carloan sa banko ng bagong navara.. kaso ang taas nga po ng interest eh.. pano po ba kung cash na nga lang yung iloan ko? ano po kaya yung mga requirements? at ano po ba yung mga dapat gawin? (reason kung bat magloloan) alin po kaya yung mas ok? saka mahirap po ba maaprubahan pag cash na lang yung iloan? para po wala ka isipin na if ever na di ka makabayad e mawawala yung auto mo hehehe.. salamat po

[mazzipino]

How long are loan approvals valid for?

[heuer77]

How long are loan approvals valid for?

i think the LOAN APPROVAL is good for 30 days unless the price for the unit increases, bago na namang approval yan.

[mazzipino]

Found a useful article about Auto Financing.

[SIZE=4]Auto Financing 101: Getting the Best Deal Without the Surprises[/SIZE]
By Bertrand O. Pesayco

AFTER the dealer showroom shopping’s done and you’ve decided what dream car to drive off into the sunset, the next step is to take out an auto loan that would place the keys in your hands.

Getting an auto loan from a bank nowadays is the way to go for car buyers. It would be great if you had a sackful of cash to lug on your way to the car dealer to pay off the entire amount. But the reality is, most people either do not have the full amount or would not want to deplete their life’s savings to buy a new vehicle. Ergo buy the car through financing.

Borrowing from mom or dad is an option but not so for any self-respecting, independent professional. It simply dilutes the bragging rights that go with owning that new sedan.
At this point, you must have done your homework to arrive at the right vehicle at the right price. Once you know which car or SUV you want to get (after going through the manufacturer’s website, consulting friends, and viewing blogs and car reviews), you’re ready to see your trusted bank manager.

Shopping for a car is different from shopping for the money to buy the car. Long before you decided to get one, you must have already figured out how much you can afford to make each month. But a bank loan is just one of four things that stand between you and your car.

You see, aside from the monthly payment and insurance you will be making for the next three to five years, you also have to initially show them the money. Be prepared for the following:

Downpayment – typically at least 20% of the vehicle price tag or a minimum of P200,000 for a 1 million peso vehicle. The lower the downpayment, the higher the monthly shellout, and vice-versa. The downpayment is coursed through the bank which would pay the dealer the entire amount. The bank gets to keep the vehicle Certificate of Registration until the loan is paid up. You retain a photocopy for your glovebox.
For a two-year loan, banks will charge you an add-on rate of about 13%. Loans with a term of five years usually carry an interest of 35%. Dealer financing can be had for as much as 45% or even more for a five-year loan. Financing companies charge higher than banks because the latter’s cost of funds is lower.

Chattel mortgage fee – a one-time payment that goes to the government and is based on the promissory loan amount. You actually pay for documentary stamps and registration fees. Part of the fee goes to the Registry of Deeds for the registration of the loan. Even the Land Transportation Office (LTO) gets a share for “encumbrance” (tagging your car as on-loan with an institution). Some banks will charge you an additional “handling fee.”

LTO registration – aside from the hefty taxes the government collects on your purchase (which is tucked into the vehicle price), the LTO will ask you to pay three years’ worth of registration fees in lump sum. It’s not actually much, considering the amount you’ve already shelled out. Renewal fees re-appear on the fourth year onwards and become a yearly ritual. The initial 3-year LTO registration fee is paid to the dealer or it is sometimes shouldered by the dealer.

Comprehensive Insurance – a must for all financed vehicles. Motor car insurance is both a lifesaver and a backbreaker. The insurance company pays the bank the value of the vehicle if stolen or totaled, or of its parts damaged in an accident. In case of a total loss (God forbid!), the bank would either purchase a replacement car for you or reimburse you the remaining amount after applying part of the insurance proceeds to close your loan. Either way, you and your banker sleep better at night.

If the vehicle you’ve been paying for less than a year gets wrecked, it makes sense to have it replaced with a brand-new unit. On the other hand, a vehicle paid for more than two years will be assessed on market value. Chances are, the amount will not be enough to get a brand-new replacement.

Insurance companies compute the premium based on the percentage of the vehicle’s value, plus documentary stamp, notarial fees and value-added tax.

Insurance is normally part of the financing package for the first year. But for the annual renewal, shop around for the best deal. Ask friends or your motor shop which insurance company pays fast for repairs and attends to you in a jiffy. Your bank can recommend a reliable, accredited insurance company.

Meantime, the relationship with the bank happens to be a two-way thing. Before the bank gives you its nod for a loan, you have to be a worthy loan applicant. Flowers for the bank manager won’t help. You have to prove you’ve earned the right to own a car.
The bank will look for three things: your capability to pay, your employment/business and residence records, and your good credit standing.

As a rule of thumb, your monthly amortization should not be more than 30% of your gross family income. If you’ll be paying P10,000 monthly for a shiny new sedan, you must be making at least P30,000. It’s based on the assumption that the 20 grand is enough to cover your monthly living expenses.

Then you should be employed with the same company for at least two years. If you run your own business, it should be making profit for the same period, too. A permanent place of residence counts. If you’re renting, at least keep up with your landlord for two years.

Finally, you should be at least 21 years old to be able to borrow (but not older than 65 when the loan term ends). These give the bank some assurance that your word is as good as your wallet.

Forget about taking out a loan if you’ve had problems with money matters. Banks share a huge database of court cases and other records on loan default, estafa, bouncing checks, and credit card deliquency.

Once the loan is hurdled, you have earned the right to own a car. Just make sure matting, tint and seat covers are thrown in for free. The more popular cars, those that sell like hotcakes and to prove it have waiting lists, hardly have freebies. You’d be lucky to get a complimentary keychain. Rustproofing, if not thrown in, will set you back around P4,500.

If you’re a bargain hunter by nature, go for the “push products” or the slow-selling cars. It’s a sure way to get a load of freebies.

Good luck on your newly financed vehicle. Pay your monthly amortizations religiously, take good care of your unit, and drive defensively. Your exemplary performance on the loan and behind the wheel would qualify you for a second auto loan down the road.

[jojoR.]

tsk tsk tsk, thebluemystery seems like you'll have to wait for another year before going to the bank. looking for other options would be best.

[graphire]

Question: What if na approve ka sa bank loan na yung dealer ang nagasikaso. Can you still use the bank approval if you want to go somewhere else, halimbawa yung kabilang dealer e mas maganda yung package?