How to Get Collateral Loans in the Philippines

• Car mortgage
• Real estate mortgage
• Truck mortgage
• PUV/PUJ/Taxi loan
• Multicab loan
• Brand new & Pre-owned car financing
• Brand new & Pre-owned truck financing

• Application Form
• Official Receipt & Certificate of Registration (OR/CR)
• Latest Picture of Vehicle
• TIN / Tax Identification Number
• Franchise/Permit to Operate (PUV/PUJ/Taxi loan)
• Documented Source of Income (for multicab loans and financing loans)
• Offer to Sell / Purchase Agreement for Pre-Owned Car (for financing loans)
• Quotation for Brand New Car (for financing loans)

• Must be registered under borrower’s name or under business name if business is a sole proprietorship owned by the borrower
• Must be owned by borrower for at least 6 months at point of application
• Should not be encumbered
• Car type must either be passenger or pick-up car e.g. trucks not allowed
• Cannot be for commercial use (such as used for Grab/TNVS), and cannot be a public utility vehicle / yellow plate (such as taxi, jeepney, UV express, FX, etc.)
• Can be brand new or used
• Maximum age of 10 years at point of application

For employed:

• At least 21 years old but not more than 65 years old upon loan maturity
• 1 valid government-issued ID with photo
• Photocopy of OR/CR (must be under the borrower’s name, unencumbered and owned for at least 6 months)
• Screenshot from Google maps of home and company address
• Income Documents, any of the following:
• Certificate of Employment and Compensation (issued within the last two months)
  • Latest ITR / BIR Form 2316
  • Latest one (1) month payslip
• Regular and permanent with current employer and employed for at least one (1) year
• Minimum gross monthly income:
  • For Metro Manila: PHP 15,000
  • For outside Metro Manila: PHP 12,000

For self-employed:

• At least 21 years old but not more than 65 years old upon loan maturity
• 1 valid government-issued photo ID
• Latest one (1) year Audited Financial Statements (AFS) with at least the previous year’s comparative financials
• Latest three (3) months bank statements
• SEC/DTI Certificate of Registration
• Business permit/Mayor’s permit
• Latest GIS (if corporation)
• Photocopy of OR/CR (must be under the borrower’s name, unencumbered and owned for at least 6 months)
• Screenshot from Google maps of home and company address
• Must be the owner or a majority owner with at least 40% stake, and
• Business should have a positive net worth in the last two (2) years
• Minimum gross monthly income of PHP 100,000

• 21 to 65 years old upon loan maturity
• Earning minimum monthly income of P50,000
• Permanent employee or practicing professional
• For employed individuals, practicing professionals, and OFWs (or spouses of OFWs) only

• Accomplished application form
• See required documents here
• See Special Power of Attorney here

• Must be a Filipino citizen with documented source of income
• Must be between 21 – 65 years old

• Any 2 valid IDs (Government Issued)
• Copy of Latest OR/CR (Official Receipt and Certificate of Registration)
• Latest Electric and Water Bill
• TIN (Tax Identification Number)
• Proof of income
  • If employed – Latest 3 months payslips
  • If with business – Business permit
  • If Remittance – Latest 3 months Proof of remittance/receipt.

• No adverse records
• Business in operation for at least 3 years

• Accomplished application form
• 2 valid IDs (borrower and spouse / authorized signatory)
• Latest income tax return
• Compensation certificate, income indicated (if employed)
• Business Papers (SEC Registration, Articles of Incorporation & By-Laws if Partnership and Corporation; DTI Registration if Single Proprietorship)
• Latest 3 Months Bank Statements (if self-employed)
• Latest Audited Financial Statements (for Corporate Borrowers)
• Copy of LTO Registration, Original LTO Registration and LTO Official Receipt of the vehicle for unit inspection and car history verification

• Age plus the term of the loan should not be more than 65 years old once the loan matures.
• Gainfully employed in a reputable company for at least 2 years; or
• Own a business that has been registered and operational for at least 3 years and has been profitable in the last 2 years.

For overseas workers:

• Contract of employment for 2 years

For seafarers:

• At least in an officer-level position and should be working for at least 2 continuous years

*An attorney-in-fact is required for overseas workers or seafarer applicants

• Government Issued IDs
• Marriage Certificate (if married) and CENOMAR (if single)

If Employed:

• 3 months payslip
• Income Tax Return (latest year)
• Certificate of Employment for both spouses

Self-employed / Entrepreneurs:

• Business Registration/Permits
• Latest 2 years Audited Financial Statements
• Company profile/business background or List of Major Suppliers and Customers with contact details (at least 5)
• Income Tax Return (latest 2 years)
• Latest 6 months Bank Statements/Passbook

Overseas Workers:

• Contract of Employment / Employment Certificate
• History of Employment / Latest Crew Contact (if applicant is a Seafarer)
• Latest 6 months bank statements/proof of remittance
• Latest ITR (if applicable)

House and Lot:

• Copy of Tax Declaration (Lot and Improvement)
• Copy of Transfer Certificate of Title (TCT)

Condominium:

• Copy of Condominium Certificate of Title (CCT)
• · Copy of Master Deed of Declaration and Restriction Copy of Tax Declaration

Home Construction:

• Building Plan
• Bill of Materials/Construction Cost Estimates

Refinancing:

• Updated Statement of Account from originating institution
• History of payment from originating institution

Other requirements:

• Application Form
• Authority to Conduct C.I.
• Life Insurance Form
• SPA Forms

• 25-58 years old
• Must be a Filipino citizen
• Must be 1 year employed or 2-year business owner/self-employed

• Driver’s license
• Company ID
• 3 months’ worth of payslips
• Payroll bank statement
• Proof of billing
• Photocopy of ORCR
• Valid government-issued ID
• Business permit
• DTI permit
• Latest 2 months’ bank statement

• 3 Valid I.D`S
• Proof of Billing
• Birth Certificate (If Single)
• Marriage Certificate (If Married)

• Copy of Original Title
• Proof of Income
• Latest Tax Declaration
• Picture of Property Certificate True Copy of Transfer
• Updated Real Estate Tax Receipt
• Tax Clearance
• Vicinity Map

Do your background research on the lender you want to get a loan from.

Do they have a good reputation? How about the reviews?

You can contact some of the people who have successfully secured a loan from the lender and ask them how their experience was.

Information is power. Don’t be afraid to ask questions, and keep your loan officer informed about the progress of your loan.

If you find yourself in a situation where you’ve gotten yourself a secured loan but you’re not given what you were promised, report it immediately.

Before you sign any paperwork, make sure to understand the terms and conditions of the loan.

Remember, your signature is your agreement that you’ll fulfill your responsibilities as a borrower.

No matter what, document, document, document. Take notes of every interaction you have with your loan officer.

If you’re promised something but you don’t get it, it’s easier to point this out if you have proof.

Always compare different loans side by side. While some lenders may offer you lower interest rates, be sure to check the fine print.

This is the only way you can be sure that you will be in good hands.

Since you’re putting up a property as collateral, it must be well maintained and in good condition.

As soon as it starts to deteriorate, you run the risk of your collateral being compromised.

Banks are very conservative in valuing your asset’s worth. Do your research and come up with an estimate of your asset’s worth.

If you find out that your asset is worth less than what the lender gave you as collateral, you can fight for a lower interest rate.

While a collateral loan is a good way to get a loan, it’s important to be educated about all the potential risks involved.

If you’re not prepared, you might end up making decisions that will negatively affect you in the long run such as losing your property.

If you have to, negotiate payment terms or the interest rate.

Try to make arrangements that will help you pay off your debt in a way that will be more convenient for you.

The best way to get out of a secured loan is to pay it off quickly.

This way, you avoid the risk of having to pay late fees, penalties, and extra interest that is going to eat up your savings.

Common assets used as collateral include real estate properties, vehicles, jewelry, and investment accounts. The acceptability of an asset depends on the lender’s policies and the liquidity of the asset.

Here are some of the collateral that you can use when applying for a loan.

1. Property 

This is one of the most common types of collateral used by Filipinos.

The property can be the borrower’s house and lot, commercial property, residential lot, condominium unit, or vehicle, among many others.

If the borrower fails to pay back the loan, the lender will take ownership of the property and sell it for less than its market value.

2. Equipment

Equipment that is used in one’s business operation can also serve as collateral. These are usually heavy equipment such as a machine, training equipment, and office equipment.

3. Cash security

Borrowers can also use cash as collateral. To do this, they need to take out a loan from the bank where they have an active account.

By doing this, they are allowing the bank the right to the cash in their active account to recover the amount in their loan.

4. Inventory financing

This is when a borrower pledges his stock, raw materials, finished goods, or any inventory to secure a loan.

5. Invoice financing

Here, the lender will provide the borrower with a loan against the future invoice that the borrower will be receiving.

6. Blanket liens collateral

A blanket lien gives banks and lenders the right to seize all types of collateral owned by a debtor if payment is not made.

Theoretically, this gives lenders a legal interest in the assets that serve as collateral.

Here are some of the advantages and disadvantages of collateral loans.

Pros:

1. It makes it easier to get a loan for those with low credit score

Borrowers with low credit scores usually have a hard time getting approved for loans since banks are very strict in their approval process.

However, by using collateral, banks can become more flexible with the approval process as they can minimize their risk.

2. Borrowers can enjoy lower interest rates

With a collateral loan, the risk taken by lenders is lower. This means that they can discount the interest rates depending on the collateral’s value.

Borrowers can also take advantage of a higher negotiating power since the collateral gives them the ability to set their terms.

3. Borrowers can get more money

The value of the collateral determines how much a borrower can get.

This is why when it comes to collateral loans, the borrower can get larger amounts and take advantage of longer tenures depending on the collateral pledged.

4. It can build your credit score

A borrower’s credit score is upgraded when a loan is repaid on time. By doing this, it can help build a good credit standing.

This can be extremely beneficial in the future when the borrower wants to apply for another loan.

Cons:

1. The process is more complicated compared to unsecured loans

When it comes to collateral loans, the borrower needs to clearly state the value of the pledged collateral, and if it is subject to any other debt.

This can be a very tedious and time-consuming process for both the borrower and the lending institution.

2. Borrowers may lose their property 

If the borrower fails to pay, the lender can take ownership of the property and sell it. This is why borrowers must always put more than enough money aside in case they fail to pay their debt.

3. Borrowers are required to have a valuable asset

If the borrower has a low credit score, the only way for him to get approved for a loan is by having collateral.

However, if the borrower doesn’t have enough assets, they will have a hard time getting a loan.

When you are taking a loan, it is always best to know and understand the terms involved to avoid any confusion in the future.

Before making up your mind about taking a collateral loan, you first have to know the difference between secured and unsecured loans. This way, you can make a more informed decision.

As stated above, a secured loan is collateralized and the borrower must use his assets such as properties to secure the loan.

Meanwhile, an unsecured loan is a loan that doesn’t require the borrower to put up any collateral. This is because the lender trusts that the borrower can pay off the loan.

Despite not being required to pledge any asset to get approved for a loan, the amount will still be subject to the borrower’s credit.

This means that if the borrower has a good credit standing, he or she is more likely to get approved and enjoy a lower interest rate.

However, if the borrower has a low credit standing, the interest rate can be much higher.

To apply, you typically need to submit an application form along with supporting documents such as proof of income, government-issued IDs, and documents proving ownership of the collateral. The lender will also require an appraisal of the collateral.

Interest rates vary depending on the lender, type of loan, and the risk associated with the collateral. Generally, collateral loans have lower interest rates compared to unsecured loans due to the decreased risk for the lender.

The loan amount usually depends on the appraised value of the collateral. Lenders typically offer a percentage of the value (usually around 60% to 80%).

If you fail to repay the loan, the lender has the right to seize the collateral and sell it to recover the loan amount. This process is known as foreclosure or repossession.

The processing time can vary widely, but it generally takes from a few days to several weeks, depending primarily on the appraisal process and the completeness of the documentation provided.

Yes, it’s possible, but you need to have significant equity in the property, and the existing mortgage lender must agree to it. This is often arranged through a second mortgage.

The primary risk is losing the asset if you fail to make repayments. It’s crucial to assess your ability to repay the loan to avoid this outcome.

Many lenders allow you to prepay your loan without penalties, but this can vary. It’s important to check the specific terms with your lender before signing the loan agreement.

The value is determined through an appraisal conducted by a professional appraiser chosen by the lender. The appraisal considers the current market value, condition, and other factors relevant to the asset.