Sangla OR/CR vs. Regular Car Loans: What You Need to Know

Navigating car financing options can be confusing, especially when you’re deciding between a Sangla OR/CR loan and a regular car loan. Each comes with its own set of benefits and drawbacks, and understanding the key differences can help you make a smarter financial decision. This guide breaks down these two loan types, so you can decide which one fits your financial goals.

The term Sangla refers to the Filipino practice of pawning or using an asset as collateral for a loan. In the case of Sangla OR/CR loans, the collateral is your car’s Official Receipt (OR) and Certificate of Registration (CR)—key documents that prove your vehicle’s ownership. These types of loans allow you to get quick cash by offering your OR/CR as collateral, all while continuing to use your vehicle. This type of loan is particularly useful when you need funds fast but don’t want to sell your car.

Key Features of Sangla OR/CR Loans

• Collateral-Based: The OR/CR acts as collateral. You retain ownership of your car, but the lender holds the documents.
• Fast Approval: Since the loan is backed by collateral, the approval process is typically faster than traditional car loans.
• Keep Your Car: You can continue to drive your car while repaying the loan, which is a significant advantage for borrowers who rely on their vehicle.
• Loan Amount: Borrowers can typically access up to 70-80% of the vehicle’s current market value, making it a substantial option for those with high-value cars.

Eligibility Criteria for Sangla OR/CR Loans

To qualify for a Sangla OR/CR loan, you must meet the following conditions:

• Own a fully paid vehicle with a clear title (OR/CR) under your name.
• Present valid identification and proof of residency.
• Show proof of income to demonstrate that you can repay the loan

A regular car loan is the standard loan option when purchasing a car. You borrow a lump sum from a bank or financial institution, which you use to buy a new or used vehicle. The loan is repaid over time in monthly installments, and once it’s fully paid off, you own the car outright.

Key Features of Regular Car Loans

• Fixed or Variable Interest Rates: Depending on the loan terms, interest rates may stay the same or change over time.
• Longer Repayment Periods: Regular car loans usually offer repayment periods of up to seven years, providing ample time to pay off the loan.
• Full Ownership After Payment: Once the loan is repaid, you fully own the vehicle.

Eligibility Criteria for Regular Car Loans

To be approved for a regular car loan, you’ll typically need:

• A good credit score to secure better interest rates.
• Proof of steady income and employment history.
• A down payment, which varies by lender but generally helps lower the overall loan amount.

When deciding between a Sangla OR/CR loan and a regular car loan, consider these key factors:

Interest Rates

• Sangla OR/CR Loan: Typically offers lower interest rates starting around 1.25% per month, depending on the age of the vehicle and the lender.
• Regular Car Loan: Interest rates can vary widely but are generally higher than those for collateral loans. They can range from 6% to 15% annually, depending on the lender and borrower’s creditworthiness.

Collateral Requirements

• Sangla OR/CR Loan: Uses your car’s OR/CR as collateral, meaning you retain possession of the vehicle while the lender holds the documents. This allows for immediate cash access without losing your car.
• Regular Car Loan: Often requires the vehicle itself as collateral, meaning you may have to surrender the car until the loan is repaid. This can be less convenient if you need to use your vehicle daily.

Eligibility Requirements

• Sangla OR/CR Loan: Eligibility is often more lenient, focusing on having a steady income and being a Filipino citizen aged 21 to 65. No credit history check is usually required.
• Regular Car Loan: Usually requires a good credit score and may involve more stringent income verification processes. Applicants must also meet age and citizenship criteria.

Sangla OR/CR Loans

Benefits:

• Fast approval process.
• You can keep using your car while repaying the loan.
• Ideal for short-term cash needs.

Regular Car Loans

Benefits:

• Lower interest rates.
• Longer repayment terms, allowing for manageable monthly payments.
• Suitable for purchasing a new or used vehicle.

The decision between a Sangla OR/CR loan and a regular car loan depends on your specific financial needs.

Assess Your Financial Needs

If you’re in a cash crunch and need quick access to funds, but still want to keep your car, a Sangla OR/CR loan may be the ideal choice. It’s particularly useful if you need to meet urgent financial obligations, like paying for medical expenses or emergency repairs, without having to give up your vehicle.

Vehicle Considerations

If your goal is to purchase a new car or upgrade your current vehicle, a regular car loan may be more beneficial. It offers lower interest rates and longer repayment terms, making it a more affordable option in the long run.