How to get a car loan in the Philippines

If you want to buy a new vehicle, you have seen a used vehicle for a good price and you want to buy a car, you must keep in mind that this is one of the largest investments that a person can make throughout their life.

Not everyone has the cash they need to purchase a vehicle at any given time. In addition, at the time of the purchase of the vehicle, insurance and registration must also be paid. 

For this reason, car loans are one of the best financing options for Filipinos. This way, if you want to get a car, you can get it in a short time frame.

You can access a loan through a financial institution or bank. The only drawback is that you will have to repay the money with interest during the term determined by the loan contract.

What is a car loan?

Filipino citizens who are over the age of 21 and under the age of 65 can access a car loan if they have a monthly income of at least PHP 30,000 or PHP 40,000. This is one of the requirements that must be complied with in order to apply for a car loan.

It may arise that the borrower does not meet the minimum monthly income, but a loan can be requested if you have another person who can act as your guarantor.

In addition, another fact to keep in mind is that some banks may require that the borrower has been employed for at least 2 years permanently or regularly in the same company. This information will help the bank financial institution ensure that you will be able to pay the loan.

What if I am living and working abroad?

For those who work or live in another country like OFW, you can also apply for a car loan as long as there is a related or qualified Filipino citizen as guarantor or co-owner.

Foreigners living or working in the Philippines can also access a car loan if they are backed by the company they work for or have a guarantee from a Filipino citizen.

How to apply for a car loan?

In order to apply for a car loan at a financial institution or bank, borrowers must be locally employed and must also present or send the following documents:

• Duly completed loan application form.
• Valid government issued photo ID. This can be an identity document, driver's license or passport.
• The last proof of payment of utility bill to the residence in which you live.
• A copy of the work certificate known as COE with compensation and the last income tax return known as ITR.
• In addition, three payslips are required.

For those who are self-employed or have their own businesses, they must present the following documents:

• In addition to those mentioned above, a commercial registration certificate known as DTI must also be presented for entities with sole proprietorship or operate as a company.
• Also, the last income statement.
• And the latest financial statements from your bank accounts.

If you are working abroad you will need to provide the following documents:

• You must provide the latest work contract authenticated by the Philippine Consulate.
• Proof of payment for the last 3 months or more.
• In addition to other physical assets that can be real estate or other privately owned vehicles that can be used as collateral.

How much can you borrow from the bank for an auto loan?

The borrower must have up to 80% of the price of the vehicle that can be paid in a period of 12 to 60 months. However, some financial or banking entities require that an initial payment of between the minimum of 20 to 50% be made, depending on the price of the vehicle. All this procedure must be carried out before granting the loan to the user.

How do I repay the autoloan?

There are many ways a borrower can pay off their car loan. One of the most used methods is at the counter of the respective bank through cash or post-dated check (PDC) payments. Other banks also allow payments through "Partner Centers" located in shopping centers or corresponding branches.

If you have access to online banking, it is the most convenient option since you can make payments safely at any time as long as you have an Internet connection.

Getting a car loan is quite easy as long as you meet the requirements of the bank or financial institution.

To prevent any inconvenience from arising during the term of the loan, you can insure the car with the bank or carry out periodic reviews so that you do not have any problems.

Advantages of applying for a car loan

The advantages of applying for a car loan are the following:

1. You can get a new or used vehicle if you access the necessary financing.
2. You can pay in easy instalments.
3. You can access a personal offer with a financial or banking institution.

Disadvantages of applying for a car loan

The main disadvantages of applying for a car loan are the following:

1. You must meet some minimum requirements to be able to access the financing you want.
2. You have to repay the loan within the terms established with the financial or banking entity.

How to find the best car loan offer online?

If you want to access the best online car loan offers, you can use a credit simulator like Finpanda's. Thanks to this service you can calculate the amount of money you need and then you only have to complete the application with your personal data.

Once you select the offer that we have suggested to you, you only have to wait for the lending partner to contact you so that you can access the financing you need to acquire the car of your dreams.