Thursday, August 6, 2015

Dealers Know: Car Loans Take Priority

There’s a very basic difference on loans in the Philippines which are obtained from dealers and those obtained from banks. In dealership financing, you obtain the credit directly from the dealer who is selling off his or her car to you. On the contrary, with bank financing, the bank provides you with a sum of money at a certain rate of interest which you must pay back within the stipulated time.

Car Loans Made Easy
The method of obtaining credit through dealership financing is a highly profitable method wherein the dealer doesn’t turn out to a fraud in disguise. Most dealers while giving loans in the Philippines charge a much lower rate of interest as compared to bank. In such cases, negotiations over the rate of interest can save you lump sums of money. Also, while opting for dealership financing, see that you have carefully checked the market for other interest rates on a loan. When the dealer compiles a list of special financing interest rates, always check the length of the loan and the automobile type they are providing the loan for.

Car loans or automobile loans generally take a priority for dealership financing methods to obtain loans in the Philippines. Here’s why:
  • Dealers offer convenience to their customers. More often than not, their interest rates are negotiable and also take place within fixed locations. Dealers work for extended hours much beyond the fixed bank hours and thus provide the convenience of place and time too.
  • A person obtains car loans from dealers to save up a lot of money. Since interest rates are lower, customers make huge amounts of down payments and hence get the load of repaying the loans off their backs. Sometimes the time periods of repayment are also negotiable and the customer saves up a lot. 
  • Dealers often come up with special programs. These are manufacturer-sponsored and low rate but often limited to certain kinds of vehicles. These are some of the reasons why dealers prioritize car loans over any other kind.
The documents required to be produced while considering a car loan are as follows: 

The requirements for car loans vary from bank to bank, but the most important ones that are required by most banks include:
  • Valid Identity Proofs – often two copies are required. 
  • The proof of the last billing statements (that is bills like the electricity bill) 
  • Valid bank statements and filled application form 
  • Income Tax returns 
  • A certificate of employment with a proof of the salary, position and other terms of service. 
  • If you are a practicing physician, then often addresses of one’s clinics are required. 
  • Down payments which is the percentage of the car’s price that the consumer is willing to pay. It is somewhere between 10% and 20% of the total amount. 
  • Post-dated checks that correspond to the number of months that the payment term will take to terminate.
A Few Things That the Dealers Don’t Tell You

  • That the car has been in an accident. Although that has been mended, the fact that it has been damaged once cannot be changed by the history. 
  • The Special programs aren’t often very special. Hidden under them are things that prove beneficial for the dealer. 
  • Often, credit scores that the dealer records are lower than the ones projected by you. This is especially true for customers who are busy with their lives and don’t keep track of it. They are the ones who are the most easily duped by such tactics.
This is a very helpful guide by Loan Solutions PH on dealership financing and car loans in the Philippines.

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