All-in DP, cash discounts, zero-interest, chattel mortgage fees: What do these mean?

Here’s a detailed explainer
by Leandre Grecia | Aug 12, 2021
PHOTO: Shutterstock

So you’ve finally decided to pull the trigger on that brand-new car you’ve been saving up for. You then proceed to TopGear.com.ph to check out all the available cars that fall within your budget and come up with a shortlist.

Afterwards, you go around the internet to check all the currently available offers on your shortlisted cars. However, upon visiting a few websites here and there, you find yourself greeted with a bunch of terms like ‘all-in down payment (DP)’ or ‘outright cash discounts’ that all sound like jargon to you, a first-time car buyer.

So we thought we’d help you guys out with all that. We enumerated here some of the common terms that a customer will encounter throughout the entire car-buying process. Next time you see an online ad tempting you with enticing numbers, you’ll be ready.

1) All-in down payment

The difference between standard down payment and ‘all-in’ down payment is that the latter includes all the other fees (more on these later) such as Land Transportation Office (LTO) registration, Chattel Mortgage fees, and insurance.

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For example, if a dealer is requiring an all-in DP of P100,000 for, say, a midsize SUV, then that amount already has all the other fees covered. That P100,000 is all the cash you’ll be paying in order to be able to drive your brand-new car out of the dealership.

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There are also other down payment packages that car brands offer from time to time, such as zero- or low-DP deals. These usually entail that the customer meets other parameters—such as having a certain amount of money in his bank account—but it varies depending on the specific promo mechanics. Most people get blinded by such enticing deals, but take note that there’s almost always a catch to them.

Now, as for the other fees we mentioned earlier, we’ve listed them down here.

  • Chattel Mortgage Fee
    CMF, as it is also called, equates to a small percentage of the total loan amount that customers are required to settle along with the initial DP. This is often included in all-in DP packages or in some instances, is waived by the dealer.

    As a car buyer, you must know that a chattel mortgage—the loan available through in-house financing—is a type of secured loan, meaning there is collateral that the loaner can seize in the event that you default on your monthly payments. In this case, the financed vehicle automatically serves as the collateral.

    In other instances where the car was purchased using an unsecured loan obtained through a different source, then the loaner—say, the bank—has no right to seize any collateral when the customer fails to settle his monthly dues.
  • LTO registration and compulsory third-party liability insurance (CTPL)
    The initial three-year LTO registration is standard for all brand-new vehicles. And when promos cover registration fees, it usually includes the CTPL insurance as well. The fees depend on the type of vehicle being registered.
  • Comprehensive insurance
    If you’re purchasing a car via in-house financing, then the dealer will require you to pay for comprehensive insurance as well. This sometimes comes free with all-in DP deals. As with the aforementioned LTO registration and CTPL fees, comprehensive insurance fees also depend on the subject vehicle.
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2) Cash discounts

Whenever you read ‘cash discounts’ in a promo, note that this only applies when you’re paying the full amount with cash. If you’re purchasing your car through in-house or bank financing, you normally won’t be able to avail of these discounts. But do ask your sales agent if the cash discount can be applied to a financing deal. These people have leeway with negotiations. 

3) Zero-interest payment plans

Through these types of financing plans, customers only pay the entire SRP in total, without the hefty interest that banks usually charge. However, a zero-interest plan often requires a high DP amount, similar to those low-monthly payment plans that other carmakers regularly have on offer.

4) Free monthly amortization

You might not see this often, but every once in a while there are brands that waive payments for a certain number of months. These are different from deferred payments, as free amortization means that for the indicated period, your monthly payments are already considered settled. Think of it as a cash discount, but for financing plans.

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5) Free PMS packages

A lot of carmakers now offer free preventive maintenance services for a certain period or for the first few thousand kilometers. If you plan to avail of these, however, make sure that you’re familiar with the promo mechanics, especially the indicated time or mileage interval.

If the promo says the first PMS should be within the first month or the first 10,000km, make sure you get your vehicle serviced before exceeding either. The moment you fail to follow the maintenance schedule, there’s a good chance your freebie will be rendered void.

6) Extended warranty

Some promos included extended warranties (on the engine, parts, or both) of up to five or even 10 years, or up to a certain number of kilometers. However, just like the free PMS package, the warranty ends as soon as the time period or mileage is exceeded.

So, what else do you need? Car-buying advice, perhaps? Maybe you can learn a thing or two from fellow readers’ experiences as well. 

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