Understanding Car Loan
Considering the many struggles of commuting and increasing demand for easy and accessible transportation, it is truly a great idea to own a car nowadays.
Having to own a car doesn’t have to be difficult. Through car loan, financing your car is coursed through a lender, while you pay the lender the amount you borrowed.
If you want to own a car through car loan, we will help you understand important terms you will encounter and have to take note of when applying for a car loan in the Philippines.
Pre-Qualification
Being pre-qualified lets you know if you are eligible to borrow and the amount of loan that is allowed for you to borrow from the lender.
Loan Principal
Loan principal is the amount you originally agreed to pay back. It is the initial amount you borrowed to purchase the car. For example, if you borrowed Php 500,000 to pay for your car, then your loan principal is Php 500,000.
Interest
This is the cost that you have to pay to borrow the principal. Aside from paying the principal, you will also need to pay the interest of your loan.
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Loan Principal
Loan principal is the amount you originally agreed to pay back. It is the initial amount you borrowed to purchase the car. For example, if you borrowed Php 500,000 to pay for your car, then your loan principal is Php 500,000.
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Interest
This is the cost that you have to pay to borrow the principal. Aside from paying the principal, you will also need to pay the interest of your loan.
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Amortization
This is the total amount of principal and interest spread out over the period or term of the loan.
Co-Buyer
To meet the income requirement of your car loan, you can opt to have a co-buyer. You and your co-buyer will have equal rights to the car you’re planning to purchase.
Amortization
This is the total amount of principal and interest spread out over the period or term of the loan.
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Co-Buyer
To meet the income requirement of your car loan, you can opt to have a co-buyer. You and your co-buyer will have equal rights to the car you’re planning to purchase.
Bank Financing
In this type of loan, the bank will be the one financing for your car. You will then pay the bank the total amount plus interest. Having a good credit standing with the bank increases your chances of getting approved.
Dealer Financing
Financing of your car can be directly through the car dealers and their partner lenders. Dealer financing requires lower downpayment compared to bank financing, but has higher interest compared to bank car loans.
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Bank Financing
In this type of loan, the bank will be the one financing for your car. You will then pay the bank the total amount plus interest. Having a good credit standing with the bank increases your chances of getting approved.
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Dealer Financing
Financing of your car can be directly through the car dealers and their partner lenders. Dealer financing requires lower downpayment compared to bank financing, but has higher interest compared to bank car loans.
Still have questions on the terms indicated in your car loan application? Don’t hesitate to ask a bank officer or your lender. We are sure they will be happy to help you own your dream car.
