Not all loan providers offer this option. But from time to time I encounter this option especially for mortgage / home loans. If Juan is presented such an option and s/he can afford the amortization using diminishing balance, s/he should go for it to save some more on interest payments.
Juan doesn’t pay much attention to the cost of borrowing. He cares more on the monthly amortization (short-term thinking) rather than the total costs involved (longer-term thinking) And that costs Juan much. Ouch.
With more and more ride-sharing apps sprouting everywhere, the taxi business is getting more and more competition but it is not evolving in step with technology so to speak.
Not all businesses can operate with good cash flow at all times. In fact every business would experience some problems with their cash flow at some point in time. Although it can get quite challenging, cash flow problems are part and parcel of every business. Business owners just need to make sure that they find solutions to bring in cash to continue the operations.
Viya is lodged as an asset and a liability in my personal SALN. The asset side, which is the car value, I depreciate regularly (I read somewhere that normally, cars depreciate 20% in price by year 1, 10% for years 2 to 6 and 5% for years 7 to 10. Which leaves you 10% salvage value by year 10).
Whether you’re just nerdy, a fan of constant improvement (kaizen) or just plain cost- and emissions-conscious (all of the above for me), it is important to be able to measure your car and your driving style’s fuel efficiency.
Banks do not lend 100% of the appraised value of the collateral, they usually put a cap to it, like 70% or 80%. This cap is the LTV ratio requirement. So if one is borrowing money to purchase a PHP1M car, the bank will just lend PHP800k or 80% of the value.
Both options above are illiquid and very long term commitments. Meaning if you change your mind, or have a need for cash beyond your emergency funds, it will be more difficult to sell these items to have cash.
Find A Driver. A good, reliable, trustworthy driver that is. Or drivers. This can be the make or break of a taxi cab business, according to cab drivers themselves.