When you’re in need of quick cash, personal loans are often the go-to option. However, they aren’t the only choice available. In the Philippines, several alternatives provide flexible terms, especially for those who may not qualify for traditional personal loans. From utilizing your car’s OR/CR (Official Receipt and Certificate of Registration) to tapping into property equity, there are options that might suit your unique financial situation. In this post, we will explore three key alternatives: Sangla OR/CR, Vehicle Financing, and Sangla Titulo—with real-life examples and data to help guide your decision.
1. Sangla OR/CR: Unlocking the Value of Your Car
If you own a car but don’t want to sell it, Sangla OR/CR (or “pawning” your vehicle’s registration documents) can be a practical alternative. This method allows you to borrow money using your vehicle as collateral, without giving up possession of the car.
How does it work?
You temporarily surrender the OR/CR documents to a lender, who assesses the vehicle’s value and grants a loan based on that. You still get to use your car, but failure to repay the loan could result in forfeiting ownership. Loan amounts typically range from 70% to 80% of the vehicle’s appraised value.
Example: Juan, a small business owner, needed ₱100,000 for additional inventory but didn’t want to sell his car, which he relies on for deliveries. He took out a loan via Sangla OR/CR using his vehicle valued at ₱250,000 and received ₱150,000 from the lender—enough to cover his business needs.
Financial Risk: If you default on this loan, the lender can repossess your car, which could severely impact your daily mobility or business operations. Be sure to assess whether you can meet the monthly repayments.
Best for: Car owners who need fast cash but rely on their vehicles for daily use.
2. Vehicle Financing: Purchase a New or Used Car
If you’re in the market for a new or secondhand car but don’t want to spend your savings, Vehicle Financing offers a flexible solution. This option allows you to take out a loan specifically for buying a vehicle, whether brand-new or used.
How does it work?
Most banks and financing companies in the Philippines offer this type of loan. Typically, down payments range from 20% to 30%, with repayment terms between 12 to 60 months. Some lenders even provide special promos, such as waived processing fees or free insurance.
Example: Mario wanted a reliable vehicle for his family but didn’t have the full cash to buy one. He decided to secure a Vehicle Financing loan for a ₱600,000 car. He made a ₱100,000 down payment, which left him needing to finance ₱500,000. With an interest rate of 1.35%, Mario’s loan was structured over 5 years.
Best for: Individuals looking to purchase a vehicle without using their savings upfront.
3. Sangla Titulo: Tapping Into Property Equity
For those who own real estate, Sangla Titulo (mortgaging your land title) is an option that provides access to larger sums of money. In this setup, you use your property’s title as collateral for a loan. Given the higher value of real estate compared to cars, loan amounts offered are often significantly higher.
How does it work?
You surrender your property’s title to the lender until the loan is repaid. The process can take longer than other alternatives due to property appraisals, but it’s a viable option for larger financial needs, such as business expansion or home renovations.
Example: Maria needed ₱1 million to expand her small bakery. By mortgaging her family’s property, valued at ₱3 million, she was able to secure the necessary funds with a manageable repayment plan.
Financial Risk: Defaulting on a Sangla Titulo loan can lead to foreclosure, meaning you could lose your home or property. Ensure that this option aligns with your financial stability and repayment capacity.
Best for: Property owners who need substantial funds and are willing to use their property as collateral.
Conclusion: Choosing the Right Alternative
When exploring personal loan alternatives, always consider the trade-offs—whether it’s the risk of losing your car with Sangla OR/CR or the potential for foreclosure with Sangla Titulo. Make sure you fully understand the terms of the loan and evaluate your capacity to repay. Financial decisions should always align with both your current situation and future goals.
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