cancellation of mortgageCar Collateral and Lending in the Philippines

The lending industry in the Philippines with respect to collateral loan and using car as collateral has increased in the past years. Although there is no data showing that this increase is quite alarming in a sense that many car owners are securing documents for removal of encumbrancy requests due to purpose of using the newly paid auto as collateral for loan, many car manufacturing companies, banks and financing companies also offer lower initial downpayment for buying a new car.

reasons for cancellation of mortgage applicationReasons for Applying Cancellation of Mortgage

These instances are reason enough for the increase in Pinoy owning a new car, therefore, as soon as they have fully paid the mortgage or financing of their installment payments with financing companies and banks, these owners also opt in to apply for car cancellation of mortgage. But for what purposes could this process or document be?

car loan without taking carThe first and primary reason for mortgage cancellation in the OR CR is that the car owner wanted to sell his car later. The second reason is that the owner wanted to use his or her vehicle for car loan. Many lending companies today, including banks offer auto loan without taking car so they need the certificate of registration clean without the encumbrancy notation.

Because of this, LTO has recently been adding up applications for removal due to loan purposes of vehicle owners. In a short interview, 2 of the most active private lending companies offering this type of collateral loan in the Philippines are Global Dominion and Asialink Finance. Apart from banks, these lending companies offer taking only the original copy of the OR CR and not the material vehicle in applying and using it to file or apply for a loan to get fast cash. If you want to know more about loans and how to apply for car loan, please visit here.

how to apply for cancellation of mortgageHow to Apply for Cancellation of Mortgage in LTO

So how do you really apply for cancellation of mortgage in Land Transportation Office? First off, you have to produce certain requirements as listed below.

requirements for cancellation of mortgageRequirements

  • Original copy of the Certificate of Registration with Encumbrance (please bring also the OR)
  • Latest Official Receipt of payment of MVUC (motor vehicle user’s charge) and other fees
  • Confirmation of CR/OR when the registering district office is different from the district office that issued the CR/OR
  • Release of Chattel Mortgage duly annotated by the Registry of Deeds that recorded the chattel mortgage contract
  • Official Receipt of payment of recording fee with the Registry of Deeds
  • Taxpayer’s Identification Number (TIN)

Procedures in Application for Removal of Encumbrancy in LTO

1. Proceed to the transaction counters and submit all the required documents to the Evaluator for evaluation and computation of fees.
2. Actual inspection of motor vehicles with duly accomplished MVIR. (This form is available for download here. You can accomplish this form prior to transacting your business at the LTO.)
3. Proceed to the Cashier when your name is called for the necessary fees and obtain an Official Receipt (OR).
4. Proceed to the Releasing Counter when your name is called to obtain the Certificate of Registration (CR), plates, stickers, and other requested documents.

Venue

District Office that issued the Certificate of Registration – Encumbered (CRE)

Annotation of Mortgage, Attachment and other Encumbrances or Cancellation Fees

Php 100.00



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