UP CREDIT COOPERATIVE

Diliman, Quezon City

DATE :

August 1, 2014

TO

Board of Directors

FROM:

Credit Committee

RE

CAR LOAN

The following are the credit parameters for the application of car loan to be implemented
by the by the UP Credit Cooperative.
I. OBJECTIVE:
This is to maximize the funds held such as time deposits and savings and remaining idle
in the hands of the Cooperative. Also to assist and help the members who have money
and capacity to pay.
II. TARGET MARKET:
The target markets are members who have a substantial deposit with the Cooperative
and with high salary.
II. CRITERIA
1. The borrower should be a member of the Cooperative.
2. The loan applicant should be a member in Good Standing in the Cooperative.
3. The borrower should have the capacity to pay.
4. The maximum loan amount is P1,000.000.00.
5. The term of the loan payments is flexible between 12 to 60 monthly amortizations
OR for the employees retirement remaining period whichever is less.
6. The interest rate is based on prevailing interest rate at time of loan application for
the prevailing rates.
7. The forms of payment are automatic debit arrangement with the Cooperative
deposit accounts, post-dated checks, and cash or check over-the-counter,
whichever is applicable.
8. The initial requirement is a completely filled-out car loan application form.
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9. The Certificate of Employment, pay slip, ITR, SALN and copy of valid IDs may be
required to support declared income of the member, its spouse and co-makers.
10. The down payment should not be lower than 20%, except approved by the Board
of Directors.
11. The borrower and the spouse should have a combined salary of P100,000.00 per
month or other source of income, except approved by the Board of Directors.
12. The borrower should be required to have co-makers, which is member of the
cooperative.
III. CONDITIONS:
1. Car loan should be granted for the purpose of private use.
2. For the purpose of loan granting, the Cooperative shall conduct field verification
and inspection that includes:

Car physical condition

Certificate of the vehicle
Salary of the member and its co-makers
SALN
Certificates/copies of the deposit or investment with other banks and other
financing company
Other information indicated in the application

3. Upon completion of application form and credit investigation, the application shall
be decided by the Cooperative Manager, Credit committee, and Board of
Directors. These includes interest rate to be given, computation of amount
financed, monthly loan amortization, form of payment and other conditions.
4. If the car loan application is approved, documentation will immediately prepared,
such as fill-up of PN, CHM, down payment, LTO registration and Insurance.
5. After the documentation requirements are completed, the cooperative will pay the
car dealer for the amount to be financed by the Cooperative.
IV. TYPE OF CAR:
1. All types of passenger vehicles or family van.
2. The vehicle should be brand new car.
3. The vehicle to be availed should be for the private use of the member.
V. RESPONSIBILITIES OF THE COOPERATIVES OPERATIONS COMMITTEE
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1. To verify and approve the eligibility of the applicant based on established criteria.
2. To identify qualified applicants for endorsement to the Board of Directors of the
Cooperative.
3. To provide analysis for applicant information profile.
4. To keep all necessary records and documents in the employees personal file.
5. To process loan deductions together with payroll processing on a monthly basis.
6. To ensure that the monthly loan installment should not exceed 25% of the
employees basic salary
7. To report the loan release and approved on a monthly basis.

VI. RESPONSIBILITIES OF COOPERATIVES FINANCE AND ACCOUNTING:

1. The Finance & Accounting department will be responsible for maintaining a
separate loan account to keep all loan transactions.
2. To disburse the members loan entitlement amount once approved by the
committee in line with the established car loan parameters.
3. To keep the guarantee check till the mortgage formalities are completed.
4. To keep original copies of all documentations.
5. To monitor the car loan borrowers its payments and other requirements during the
period of payment.
VII. RESPONSIBILITIES OF LEGAL CONSULTANT:
1. Ensure all the documentations are in order prior to final release of the car loan
amount to the borrower.
2. To review and verify the followings:

Signed Guarantee cheque of loan total value.

Signed Promissory Notes
Signed Mortgage contract.
Signed letter of acknowledge and undertaking.
Signed Admission For loan Repayment

3. Keep legal copy loan agreement including mortgage certificate.

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VIII. INDIVIDUAL MEMBERS RESPONSIBILITIES:

1. Submit application with complete documentations to the Cooperatives office.
2. To mortgage the car to the Cooperative immediately form the date release of full
payment of the loan entitlement.
IX. DEATH OF LOAN APPLICANT EMPLOYEE:
1. In case of death of the applicant, the company reserve the right to utilize the
deceased employees End of Service Benefit in order to fully recover the amount
of loan granted.
2. Once the loan is fully recovered, the company will transfer the ownership of the
car to the legitimate beneficiary.
3. In the event that the deceased End of Service Benefit is not sufficient to recover
the loan granted, the company has the sole right to sale the car at the current
market rate and to reimburse the difference to the beneficiary if any.
X. RESIGNATION / TERMINATION OF STAFF
1. In the case of a resigned/terminated employee, she/he must pay in full the
remaining loan amount.
2. The company also reserved the right to recover the loan amount balance by
deducting his/her End of Service Benefits.
3. In case the employee failed to settle the full loan amount, the balance will be
deducted from his/her EOSB. If the EOSB is insufficient the company has the
right to sell the car at the current market rate, to deduct the remaining loan
amount and reimburse the difference to the beneficiary if any.
X. LOAN PROCEDURE
1. The borrower for car loan has to fill the required application form.
2. Application form to be submitted to Cooperatives loan processor for review and
verification if the borrower pass the loan parameters of the Cooperative, prior
submission to Loan Administration Committee.
3. Loan Administration Committee (LAC) Secretary has to prepare meeting minutes,
distribute the report to the committee members and after receiving their input and
comments submit the final report to the LAC for approval.
4. LAC after sorting qualified applicants, submit the List for the Credit Committee
(CRECOM) for their approval.
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5. After the approval of the CRECOM, it will be submitted to the Board of Directors
for their approval.
6. The Board of Directors review applications and recommend qualified applicants
for approval and endorsement by the Chairman.
7. Qualified applicants receive letter stating the approval of their loan entitlement
8. Upon receiving loan entitlement letter approval, qualified borrower has to meet
Manager to complete all the necessary legal documents required to enable
him/her precede the loan payment with the Cooperative.
XI. LOAN PARAMETERS TO BE CONSIDERED FOR THE EXERCISE OF APPROVAL
AUTHORITY FOR CAR LOAN APPLICATIONS
1. CHARACTER
a. No sum of money or replevin case has been filed against the applicant,
spouse during the last five (5) years and no estafa case has been filed against
them during the last (10) years.
b. He has a good credit standing with the creditors, that is, no adverse
experience with creditors or no derogatory information on the applicant as
reported based from the field investigation.
c. Has not been habitually delinquent by two (2) or more installments on existing
or paid accounts wih the Cooperative. Delinquency will be considered habitual
if the total number of times that client had two (2) or more delinquent
installments correspond to at least 30% of the lapsed term/period.
2. CAPACITY
a. Income is regular and from a stable source. The applicant must be
permanently employed with the U.P. for a minimum of two (2) years.
b. The Net Monthly Installment (NMI) should not exceed 40% of the reasonably
verified total combined gross monthly income of applicant and spouse,
provided that:

Applicant own his/her house; and

Residence is not encumbered

Otherwise it should not exceed 30%. Obligations with other financial institutions
shall be considered in computing the NMI to determine whether the formula
remains to be satisfied.
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c. If the applicant is separated from his spouse, he should have his own source
of income.
3. CONDITION.
a. Of legal age and not more than 65 years of age upon maturity of the loan.
b. Convenience and efficiency in servicing of loan.
c. At least two (2) years in present or previous residence unless residence is
owned. Does not reside in slum, squatters or notorious area or living in a
shanty or dilapidated residence, Does not reside in a hotel, tenement house or
employers quarter.
d. Presently employed for at least two (2) years or must be a regular employee.
Length of stay may be disregarded if applicant is occupying a managerial
position in U.P.
4. COLLATERAL
a. Units is for personal / business use and not for accommodation of another
party
b. Units is among the products eligible for financing (see below schedule)

BRAND NEW UNITS

Passenger Cars
Asian Utility Vehicle
Light Commercial Vehicle

USAGE
Private
Private
Private

DOWNPAYMENT
(Based on net
selling Price
20%
30%
30%

TERM
60 months
48 months
48 months

c. Down payment is within the minimum requirements set for the units to be
financed under the cooperatives policy.
For your review and comment.