Not Sure How to Finance Your New Vehicle? Check Out These Options - Philippines Loan

Not Sure How to Finance Your New Vehicle? Check Out These Options

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4 Car Financing Options in the Philippines

When it comes to car financing, there are a few options to choose from. Here are the four most common car financing options in the Philippines:

  1. Bank car loan. This is probably the most popular car financing option in the Philippines. Banks offer car loans with low interest rates and flexible payment terms. You can use the car loan to purchase a new or used car.
  2. Car leasing. If you don’t have enough money to buy a car outright, you can lease one instead. Car leases usually have lower monthly payments than car loans, and you don’t need to have a good credit score to get approved. However, you won’t own the car at the end of the lease and you may be charged extra if you damage or wreck the car.
  3. Car pawning. If you need money urgently, you can pawn your car for a short-term loan. The downside is that you’ll have to pay back the loan plus interest and fees within a few months, and you’ll lose your car if you can’t repay the loan.
  4. Credit card auto financing. Some credit cards offer auto financing as a way to help customers buy a car. This type of car financing usually has high interest rates and short repayment terms, so it’s not ideal for people who want to finance a car over a long period of time.

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Pros

  • Low interest rates
  • Flexible repayment terms
  • Can be used to purchase a new or used car

Cons

  • You may be charged extra if you damage or wreck the car
  • Short repayment terms
  • High interest rates

If you’re planning to buy a car, it’s important to understand your car financing options. The four most common car financing options in the Philippines are bank car loans, car leasing, car pawning, and credit

Car Insurance CompanyFeatures
MAPFRE Insular10 years of casa eligibility
366 accredited repair shops
PHP 5,000,000 maximum total sum insured
Overnight accommodation – Yes, up to PHP 3,000
Towing – Yes, up to PHP 5,000
Vehicle removal crane services – Yes, up to PHP 10,000
Malayan Insurance3 years of casa eligibility
58 casa repair shops
PHP 7,500,000 maximum total sum insured
Overnight accommodation – Yes, up to PHP 1,000
Towing – Yes, up to PHP 4,000
Vehicle removal crane services – Yes, up to PHP 8,000
New India Assurance10 years of casa eligibility
30 accredited repair shops
PHP 3,500,000 maximum total sum insured
Overnight accommodation – Yes, up to PHP 1,500
Towing – Yes, up to PHP 4,000
Vehicle removal crane services – Yes, up to PHP 10,000
Prudential Guarantee10 years of casa eligibility
PHP 3,000,000 maximum total sum insured
Overnight accommodation – Yes, up to PHP 2,000
Towing – Yes, up to PHP 5,500
Vehicle removal crane services – Yes, up to PHP 15,000
SGI Philippines5 years of casa eligibility
36 accredited repair shops
PHP 5,000,000 maximum total sum insured
Overnight accommodation – Yes, up to PHP 2,000
Towing amount – Yes, up to PHP 5,000
Vehicle removal crane services – PHP 10,000
Stronghold Insurance10 years of casa eligibility
167 accredited repair shops
PHP 3,000,000 maximum total sum insured
The Mercantile Insurance Corporation10 years of casa eligibility
77 accredited repair shops
PHP 5,000,000 maximum total sum insured
Overnight accommodation – Yes, up to PHP 2,000
Towing – Yes, up to PHP 5,000
Vehicle removal crane services – Yes, up to PHP 10,000

There is a demand for car loans and leasing not only among Filipino citizens, but also among businesses of different sphere. Companies that issue consumer loans to individuals also provide car loans services. This kind of financial product has always attracted interest among the audience of different segments of the population and from companies of different levels.

Various organizations offer car loans at a different interest rate and on different terms.

The list of lenders who issue car loans in the Philippines

BDO Bank

The main lender’s requirements for individuals, who want to get a car loan, are the following: borrowers, who work in salaried jobs, must provide copies of the bank deposit statements for the last 6 months and certificate of income as well; self-employed citizens must provide a copy of registration with the tax authority and a copy of the confirmed financial statements for the last year.

Flexible repayment terms allow you to get a loan for a period of up to six years. Quick loan processing allows you to find out about the decision taken within 24 hours from the date of application. The interest rates are very convenient – their amount is no more than 10.43%, and their fluctuations depend on the chosen loan term. Car loans are issued both for SUVs and vans, and for cars as well.

Car loan from BPI Bank

Main requirements:

The age requirements are standard. The minimum age of the borrower must be at least 21 years, and the maximum age isn’t more than 65 years. A copy of the employment certificate must be provided; self-employed citizens must provide a copy of the confirmed financial statements for the last year and a copy of registration with the tax authority. The required minimum income of the borrower is from 30,000 pesos per month. Additionally, you will need: a copy of the passport, driver’s license, digitized TIN identifier, GSIS/SSS identifier, PRC identifier, postal ID.

The decision making is quick. The waiting time is from three to eight hours only. The interest rate, which starts at just 4.10% for new cars, and at 7.72% for used ones, is very affordable. The loan term is up to 60 months.

Metropolitan Bank & Trust Co. (Metrobank)

This lender has specific requirements for borrowers. The requirements for employed citizens are the following: a copy of the employment certificate, a copy of the last full monthly fare. The requirements for self-employed citizens are: a certificate of business registration, a copy of the latest bank statements, a certified copy of the financial statements for the last year.

Loan period is from 12 up to 60 months. Car loans are granted to a minimum of two hundred and fifty thousand pesos and a maximum of 80% of the net selling price. Early repayment of the loan can be made in a month after formalization. There are different methods of the loan repayment right up to the postal order. The peculiarity for applicants, working in salaried jobs, is that they must work for at least two years at the last place of work. For self-employed citizens it is necessary to have the self-employment (or practice) in one place for at least five years.

Interest rates

Car loanInterest rates (during the loan overdue)Interest rates (in one month)
12 months8,44%7,27%
18 months8,44%7,57%
24 months9,24 %8,56 %
36 months9,44 %8,93%
48 months9,53%9,13%
60 months9,68%9,35%

Car loan from PNB bank

The loan period is up to 60 months. It is issued for all makes and models of new cars. The interest rate varies from 5.29% up to 28.10%. Loan conditions are standard. The borrower’s age must be at least 25 years. Affiliate firms and corporate companies are also eligible for a car loan from the Philippine National Bank. The requirements for the submitted documents are standard.

Interest rates table

TermCompletely new
 EIRAOR
12 months9,36%5,29%
18 months9,54%7,72%
24 months9,74%10,46%
36 months9,94%16,05%
48 months10,03%21,80%
60 months10,18%28,01%
Used vehicles
TermUsed
 EIRAOR
12 months12.40%7,97%
18 months13,82%11,29%
24 months14,01%15,25%
36 months14,20%23,39%
48 months15,05%33,70%
60 monthsNot AvailableNot Available

The variety of issued loans and a large number of lenders make the Philippine car market very wide. In this case, the borrower’s opportunity to choose is large, and everyone can choose the favourable conditions for themselves.

Bank Financing

Bank Financing is the most popular car financing option in the Philippines. Some of its advantages are low-interest rates and flexible repayment terms. It can be used to finance either a new or used car. The only downside is that you may have to pay extra if you damage the car.

Car Leasing

If you don’t have enough money to buy a car outright, car leasing is a great option. It usually has lower monthly payments than car loans. You don’t need to have a good credit score to get approved. However, keep in mind that you won’t own the car at the end of the lease and you may be charged extra if you damage or wreck it.

Dealership Financing

Dealership financing is another popular car financing option in the Philippines. Car dealerships offer car loans with low interest rates and short repayment terms. This type of car financing is ideal for people who want to finance a car over a short period of time. Keep in mind that dealership financing usually has high interest rates.

Credit Card

Some credit cards offer car financing as a way to help customers buy a car. This type of car financing usually has high interest rates and short repayment terms, so it’s not ideal for people who want to finance a car over a long period of time.

Home Equity Loan

If you have a lot of equity in your home, you can use a home equity loan to finance a car. Home equity loans usually have low interest rates and long repayment terms. This makes them a great option for people who want to finance a car over a long period of time.

How to Get Car Financing in the Philippines

Step 1: Check if You’re Qualified for an Auto Loan

If you’re planning to buy a car, the first thing you need to do is check if you’re qualified for an auto loan. Most banks offer car loans with low interest rates and flexible repayment terms. You can use the car loan to finance a new or used car.

Car Loan Eligibility Requirements

To be eligible for a car loan, you must meet the following requirements:

  • Be a Filipino citizen or resident
  • Be at least 21 years old
  • Have a minimum monthly income of PHP10,000
  • Have no existing car loans

Good Credit Score

If you have a good credit score, you may be eligible for car financing with low interest rates and flexible repayment terms. Car loan approvals usually depend on your credit score, so it’s important to keep your credit score in good standing.

If you’re not sure how to improve your credit score, or if you have questions about your credit report, you can contact a credit counseling service for help.

Auto Loan Pre-Qualification

If you’re not sure if you’re qualified for a car loan, or if you want to get a car loan before you buy a car, you can pre-qualify for a car loan. This will help you find out how much you’re eligible for and what your monthly payments will be.

  1. Go to the website of your chosen bank.
  2. Look for the section that says “Car Loan.”
  3. Click on the link that says “Pre-Qualify Now.”
  4. Fill out the form with your personal information.
  5. Click on “Submit.”

Step 2: Compute How Much You Can Borrow

Factors That Affect the Cost of a Loan for Car Financing

When you’re looking for car financing, it’s important to know how the cost of the loan is determined. The interest rate, repayment term, and car price are all factors that affect the cost of a loan.

Interest Rate

The interest rate is the percentage of the car’s price that you will have to pay each year. The interest rate varies depending on the bank and the car model.

Repayment Term

The repayment term is the number of years you will have to repay the car loan. The repayment term also affects the interest rate. Longer repayment terms usually have lower interest rates.

Car Price

The car price is also a factor that affects the cost of a car loan. The higher the car price, the more you will have to borrow and the higher your monthly payments will be.

How to Compute an Auto Loan in the Philippines

  1. Decide how much you want to borrow.
  2. Multiply the car price by the interest rate.
  3. Divide the result by 100.
  4. This is your car loan’s annual interest rate.
  5. Multiply the car price by the number of years in the repayment term.
  6. This is your car loan’s total cost.
  7. Divide the result by 12 to get your car loan’s monthly payment amount.

How to Use a Loan Calculator for Financing a Car

*** How to Use a Loan Calculator for Financing a Car

To use a loan calculator:

  1. Enter the car’s price and the interest rate.
  2. Select the number of years in the repayment term.
  3. Click on “Calculate.”
  4. The loan calculator will show you how much you will have to borrow and what your monthly payments will be.

Step 3: Compare Loans

Step 4: Complete the Car Loan Requirements

Car Loan Requirements in the Philippines

When you are ready to purchase a car, you will need to obtain a car loan from a financial institution. The requirements for a car loan vary depending on the financial institution, but typically include the following:

  • Proof of income
  • Proof of residence
  • Identification documents
  • Vehicle registration and insurance

Step 5: Submit Your Loan Application

You can submit your car loan application in person at the branch or through online banking. Make sure you have all the required documents ready before submitting your application.

Step 6: Wait for the Loan Approval and Release

Received car loan approval and release within one business day after submitting complete application with all required documents.

FAQs on Car Financing in the Philippines

1. Is getting a loan to finance an auto a good idea?

There is no one definitive answer to this question. It depends on your individual financial situation and your needs. A car loan can be a helpful way to finance the purchase of a car, but it is important to carefully consider all of your options before borrowing money.

2. Who becomes the owner of the car financed through a loan?

The car financed through a loan becomes the property of the lender until the loan is paid off. This means that you will not be able to sell or give away the car until the loan is fully repaid.

3. What are the types of auto loans in the Philippines?

There are a few different types of car loans available in the Philippines:

Secured car loan: This type of car loan requires you to use your car as collateral. If you fail to make your monthly payments, the lender can take possession of your car.

Unsecured car loan: This type of car loan does not require you to use your car as collateral. However, the interest rate on an unsecured car loan is typically higher than on a secured car loan.

Balloon payment car loan: A balloon payment car loan is a type of loan in which you make lower monthly payments for a set period of time, and then you have to pay the remaining balance of the loan in one large payment at the end of the term.

4. What is chattel fee?

Chattel fee is the fee that the financial institution charges for processing the car loan. This fee is generally a percentage of the car’s value, and is payable upon the approval of the car loan.

5. Can I finance a second-hand car through a loan?

Yes, you can finance a second-hand car through a loan. However, the interest rate on a car loan for a used car is typically higher than on a car loan for a new car. You will also need to provide proof of the car’s value when you apply for the loan.

6. My loan application was rejected. What should I do?

If your car loan application is rejected, you may want to consider applying for a car loan from a different financial institution. Make sure you have all the required documents ready before submitting your application. You can also try negotiating with the financial institution that rejected your application to see if they will be willing to approve your loan if you meet certain conditions.

7. Which type of car loan is best for me?

It depends on your individual financial situation and needs. It is important to carefully consider all of your options before borrowing money.

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