What to Do after You've Fully Paid Your Car Loan

What to Do after You’ve Fully Paid Your Car Loan

So you’ve finally paid off your car loan! Hooray!

Now what?

The next thing to do is get your original car documents back, have the mortgage and encumbrance cancelled.

How?

1. Get Original Documents from the Bank

This may be the bank or any other financial institution that you’ve taken your loan from. Call ahead to determine what they’ll need you to bring. They will also require a notarial fee (usually P300) for notarizing the release.

What you will get:

  • Original Certificate of Registration (CR) and Official Receipt (OR)
  • 2 Copies of Release of Chattel Mortgage
  • Original Registered Promissory Note with Chattel Mortgage

2. Go to Registry of Deeds to Have Mortgage Cancelled

  • Go to the Registry of Deeds (RD) where the mortgage was registered. You can check this in the Promissory Note with Chattel Mortgage as a blue stamp like in the photo below. In this case, it’s at Pasay City. There are times though that this stamp is not clear. In such a case, try the RD in the city of the registered car owner (as indicated in the CR).

Registry of Deeds

  • Fill up a form with your details. Note that presenter need not be the same as the registered car owner.

Registry of Deeds Form

  • Submit the above form together with a copy of your valid ID, the 2 copies of Release of Chattel Mortgage, and the Original Registered Promissory Note with Chattel Mortgage
  • They’ll process it and ask you to pay a fee at the cashier. The fee varies on the amount mortgaged. One time I paid P918, the second time I paid P1,128.
  • Depending on the availability of the one who will sign, you may get your documents back that same day or they may ask you to come back. I was asked to come back the next day because the signatory was on leave that day.
  • What You will Get Back:
    • Official Receipt (OR) of what you paid for
    • Assessment form and pay order
    • 1 copy of the Release of Chattel Mortgage with the needed stamp and signature (they’ll keep the other)
    • Promissory Note with Chattel Mortgage

3. Go to LTO for Cancellation of Encumbrance

  • Up until now, your CR still has the word ENCUMBERED written on it.

Encumbered, as defined by the financial dictionary, a property owned by one party on which a second party reserves the right to make a valid claim

Encumbered Certificate of Registration

  • Although it is an extra step, you’d want to do it for 2 reasons:
    • Just so your papers are clean and no one can make a valid claim on your car
    • So as not to scare away any potential buyers of your car should you wish to resell it
  • To go about this, proceed to the branch of Land Transportation Office (LTO) of your CR. In the above case, it’s the Mandaluyong branch. It’s imperative that you proceed there and not any other branch as the mother records are there.
  • What to Bring: 
    • Official Receipt (OR) from the RD
    • Release of Chattel Mortgage with the needed stamp from RD
    • Promissory Note with Chattel Mortgage given back by RD
    • Fee of ~P280.00
    • Original Certificate of Registration (CR) and Official Receipt (OR) of the car
    • Copy of the latest OR of the car
    • Car for stencilling
    • Copy of valid ID of registered car owner
  • Tell the inspecting officer that you are there for the cancellation of encumbrance. They will inspect your documents and stencil the car engine. You’ll then be asked to wait as they have to call the bank to verify. When everything checks out okay, you’ll be asked to pay the fee and they’ll print a new CR for you. All the documents regarding the cancelled mortgage will not be returned. The whole process took about 1 to 2 hours.
  • Ta-da! Your vehicle is now officially yours! Congratulations! 🙂

Clean Certificate of Registration

I hope you found this post helpful! 🙂

67 thoughts on “What to Do after You’ve Fully Paid Your Car Loan

  1. Thanks for the information. Not many knows that upon fully paying off your car loan you need to have the encumbrances cancelled. This is helpful to first time car owners through financing.

  2. Hi

    Thanks for this! Very informative and easy to understand. At first I was unsure where branch to go because as there more than 2 cities indicated on the documents haha. Now i know how to do it on my own. My husband is working abroad and i am left with all the paper works needed for our car. 😛

  3. There are two types:
    1. Like this one, its a retail transaction(bank etc)
    Register of deeds(cancellation of mortgage/annotation) and then LTO (cancellation of encumbrance)

    2. Finance lease transaction(in house financing etc)
    Pnp hpg(clearance) and then LTO(transfer of ownership).

  4. Thank you very very much,very impormative sa tulad naming bago sa ganitong kalakaran sa auto loan,great big help sa mga may balak kumuha ng auto loan,katulad ng iba…akala after you made your payment completed ay okey at pwede ng masabing iyong iyo na ang car matapos mong bayaran,marami pa palang proseso..thank you again.

      1. Di pa fully paid Mam, under in-house financing, RCBC bank. Pero yung OR/CR nga blank lang walang encumbered na word. Hmmm..

  5. Hi Cherly!

    First of all, Thanks for this informative blog. It’s very helpful.

    I wanted to remove the encumbered from CR.
    Unfortunately, the original CR was lost, I only have the photocopy of it.
    I have the original OR btw.

    Please let me know what should I needed to do first.

    Should I go to the LTO and request for the original CR?
    or
    Should I go to Registry of Deeds to cancel the chattel mortgage? (Will the ROD accepts a photocopy of CR? Since the next step is go to LTO and the LTO will issue a new CR with encumbered is removed)
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    1. Hi Tesla,
      Thanks! 🙂 You can proceed to the Registry of Deeds as they do not require the original OR/CR there. Once you’ve gotten your documents, you can proceed to the LTO and ask them about the lost original OR. 🙂 Hope that helps.

  6. Hi Cherly,

    Thanks for giving us the heads-up on how to change our CRE.

    Anyway, you mentioned in your article that …

    – To go about this, proceed to the branch of Land Transportation Office (LTO) of your CR. In the above case, it’s the Mandaluyong branch. It’s imperative that you proceed there and not any other branch as the mother records are there.

    My question is can i go to any LTO branch? Let say Marikina branch to change my CRE? Or do i need to follow the LTO branch which is written n my CR or OR? thanks

  7. Hi, Thank you very much for sharing the important piece of information, what should we do after fully paid a car loan. I’m about to take a car loan and I didn’t know that after taking a car loan, we have to get cancelled our mortgage and encumbrance.

  8. Hello Good Day!

    May i ask po fufully paid ko na po kasi ang car loan ko, nalilito lang po kasi ako kasi ang alam ko po kapag kukunin ko na po ang documents especially yung original or cr po sa bank akala ko irerelease na lang, may nagsabi po kasi sa akin na bago ko makuha ang or cr eh may need ako ipay sa bank ng amounting 30k? ang alam ko kasi is irerelease na lang sya sa akin kasi ifufully paid ko na sya, totoo po ba na may need pa ako ipay bago ko makuha ang documents ko?

    BDO bank po ang car loan ko and hopefully ay may makasagot po salamat po =)

    1. Hi Alona, if you’ve fully paid your load already, you will be sent a notification by bdo. When you claim your documents, you don’t have to pay for anything anymore. 🙂

        1. Hi Mam Cheryl ang sabi po pala nila sa akin is ang need ko daw po ipay is yung sa release of chattel mortgage sa bank po

          Is it true na ganoon po sya kamahal amounting 30k or more?

          1. Hi Alona, maybe it’s for the notarization, which is just a few hundred pesos. I don’t remember paying for anything the last time I went to claim though. That was just early this year.

  9. Sir,
    Question my Toyota Vios model 2002 acquire thru employee loan. The copy of my CR not mention encumbered but addres below TFS ( Toyota Financing Service ) / other name. I ask the other name to make deed of sale and she do. I need to check or process the cancellation of mortage?

  10. thank you for the information…it really do helped alot.. it only took us 15 minutes to finish the transaction and totally vanquished the “encumbered” in our certificate of registration…

  11. Hi can i ask , if i bought a car recently, im from region 3 and the Registration of Car located at Region 5, i have here the original ORCR of the car which is encumbered , with promissory note with chattel mortgage and cancellation docs. but unfortunately the seller didn’t give to us the deed of sale, they say that it would take 1 month for us to get the original Deed of sale from the bank because it is a reposessed car. i know that i have the original documents but can i ask if i can cancel the mortgage without the deed of sale? Even if im not the person indicated in the CR ? do i need to submit SPA to process the paper? since it is encumbered? im clueless about this . Please help me. Thanks

  12. What if the seller did not give the deed of sale? do you have any idea what will be the best course of action that i will do?

    Can i go to Registry of deeds for the cancellation of chattel mortgage? i have the PN and the cancelation from the bank

    1. Yes, anyone can do the one for registry of deeds, not necessarily the owner. Once you’ve done that, you can maybe give a call to LTO on what to do next, if in case you won’t be able to get the deed of sale.

      1. Thank you so much.

        So i need to prepare the docs from the bank and my valid ID (as presenter) not the valid id of the owner indicated in the CR?

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