Do you want to buy a new car but can’t pay for it all at once? A car loan in the Philippines might solve your problem. Many banks and financial companies offer good rates and flexible terms making it easier to get the car you want.
You have lots of choices for car loans in the Philippines. This article will help you understand the process, from the cheapest car loans to the best auto loan rates in the Philippines. We’ll show you how to get a car loan in Philippines, compare top banks and what they offer, and give you tips to get the best deal for your budget and needs.
Understanding Car Loans in the Philippines
What is a car loan?
A car loan is a secured personal loan that banks and financing companies offer. It lets you purchase a vehicle and make monthly payments over a set period. This kind of loan helps you reduce your upfront cash payment by borrowing part of the car’s price. You’ll pay a fixed interest rate, which is the extra cost for taking out the loan.
Types of car loans
- Bank financing: has a lower interest rate and cheaper monthly payments than dealer financing. But banks ask for a minimum downpayment of 20% of the car’s retail price.
- Dealer financing: Car dealers and their partner lenders provide this . It needs a lower downpayment but comes with higher interest rates than bank car loans.
Eligibility requirements
To get a car loan in the Philippines, you need to:
- Be a Filipino citizen between 21 and 65 years old
- Have a gross monthly income of at least Php 40,000 (you can combine this with your spouse’s income)
- Show proof of income (self-employed people need to provide 2 years’ worth)
- Hand in required documents
OFWs and foreigners can also apply to get car loans but might need someone to co-sign or guarantee the loan.
Top Banks Offering Car Loans
BDO Auto Loan
BDO provides auto loans for new and pre-owned vehicles. You can submit an application if you’re a Filipino between 21 and 65 years old or a foreigner who has lived in the country for two years. Your family should earn at least P50,000 gross income per month. The interest rates range from 16.48% to 29.51% for new cars and 16.39% to 34.93% for used ones. The smallest loan amount is P100,000, and used cars need higher down payments.
BPI Auto Loan
BPI Auto Loan offers flexible payment terms and quick approval. You can use it to buy new or second-hand cars, get money back for a new vehicle, or refinance a used car. The loan covers up to 80% of the price for new cars and 70% of the value for used ones. You can spread payments over 12 to 60 months for new cars and 12 to 48 months for used ones.
Security Bank Car Loan
Security Bank gives car loans that last up to 60 months. Their interest rates begin at 6.72% APR. You need to borrow at least $2,000. They lend money for new and old cars, but the rates change depending on how old the car is. If you set up automatic payments from a qualifying bank account, you can get a 0.250% APR discount.
PNB Auto Loan
PNB Auto Loan lets you borrow up to 80% of your brand new car’s price, with a minimum loan amount of Php300,000. To qualify, you must be a Filipino citizen or a foreigner with a valid ACR aged 21-65 when the loan matures. You need to have a steady income, either by working for at least a year or running a business for at least three years.
Comparing Interest Rates and Terms
When you look for a car loan in the Philippines, you should compare interest rates and terms from different banks. This comparison can help you find the best deal that suits your budget and needs.
Interest rate ranges
Interest rates differ among banks ranging from 4.63% to 37.63% for new cars. Security Bank, for instance, has rates between 6.77% and 37.63%, while Metrobank’s rates begin at 4.63%. These rates have a big impact on your monthly payments and total loan cost.
Loan tenure options
Most banks give repayment terms from 12 to 60 months for new cars. Some, like Maybank, offer terms up to 84 months. Keep in mind, a shorter term means you’ll pay more each month but less interest overall, while a longer term leads to lower monthly payments but more interest over time.
Down payment requirements
Banks usually ask for a down payment between 20% and 50% of the car’s price. As an example, Security Bank Maybank, and EastWest Bank all want at least 20% upfront. Putting down more money cuts your loan size, which might result in better loan conditions and less interest to pay.
How to Apply and What You Need
Papers You Must Have
To get a car loan in the Philippines, you’ll need to gather several papers:
- Completed application form
- Government-issued ID that’s still valid (like a driver’s license or passport)
- Income proof:
- Employees: Job certificate latest tax return, and recent pay stubs
- Business owners: Business registration latest tax return, and bank records
- Overseas workers: Job contract and money transfer proof
How to Apply
- See if you qualify (between 21-65 years old earning at least ₱40,000 )
- Collect needed papers
- Hand in your form and papers to the bank
- The bank will call to check your info
- If they say yes, sign the loan papers
How Long It Takes
Banks need a few work days to process and make a decision on your application. After approval, you’ll have to sign papers, make the down payment, and get car insurance before they give you the loan.
Tips to Get the Best Car Loan Deal
Boosting your credit score
Your credit score has a big impact on getting a good car loan. To raise your score, make sure you pay debts on time and regularly. Don’t max out your credit cards to keep your credit use low. Having credit for a long time and different types of credit can also help. Don’t apply for many new accounts at once, as this can hurt your score.
Talking to banks
When you’re looking to get a car loan, make sure to haggle with banks. Grab quotes from dealers and use them to talk about better deals with the bank. You might end up with a smaller down payment or monthly payment. Think about going for bank financing instead of dealer financing, as it has lower interest rates. Keep in mind, putting more money down can result in better loan terms and less interest to pay in the long run.
Looking at special deals
Watch for special deals from banks and car makers. BPI’s MyKotse program, for instance, gives flexible payment options up to 84 months on certain brands and models, with a 15% minimum down payment. Metrobank has offered promotions that waive security interest registration fees and provide special interest rates. These deals can cut your total loan costs a lot, so it’s smart to check them out before you decide.
Overview of the Philippine Car Loan Market
The Philippine car loan market is growing fast pushed by a bigger middle class and more people owning cars. The market is set to hit $51.6 billion by 2027 growing at 10.2% each year. This growth comes from more people moving to cities helpful government rules, and new tech in banking.
Current trends
You’ll see that new car loans make up 70% of the market, but used car loans and refinancing are getting more popular. Most people like loans that last 3-5 years, but longer loans are becoming more common. You can now apply for loans online and set them up making it easier for you to get car finance.
Key players
The market includes a blend of big banks, car company lenders, and new fintech rivals. BDO Unibank BPI, and Metrobank have a big chunk of the market, while Toyota Financial Services Philippines and Ford Motor Credit Philippines serve brand-loyal customers. Fresh startups like East West Bank’s CoVault are shaking up the old ways with new ideas.
Market size
In 2022, the market hit $23.2 billion and is set to grow fast. Banks have the biggest piece at 60%, car company lenders follow at 25%, and non-bank money lenders make up 15%. This growth gets a boost from rising incomes and Filipinos wanting more ways to borrow money.
Things to Think About When Picking a Car Loan
If you’re looking for a car loan in the Philippines, a few important things can shape your choice. Your credit score is a big deal, as a better score often results in lower interest rates. The loan length has an impact on your monthly payments and total cost. Shorter periods mean you pay more each month but less interest in total. Watch out for fees and costs, including early payment penalties that some lenders charge. Good customer service matters too, so check out what people say on sites like TrustPilot and Better Business Bureau. Keep an eye out for common gripes such as poor communication and lack of clarity. By weighing these points, you can find a car loan that fits your money situation and needs best.
Top 5 Car Loan Providers in the Philippines
Bank profiles
If you want to get a car loan in the Philippines, you have a few choices. BPI, Security Bank, PNB, Metrobank, and RCBC stand out as the best options. These banks give you good rates and loan terms you can adjust to fit what you need.
Loan features
These banks give loans for new and used cars, and you can pay them back over up to 60 months. The interest rates change, but Metrobank starts as low as 4.63%. Some banks even throw in free insurance for your first year. How much you can borrow and how much you need to pay upfront can be different, so it’s smart to use tools like Moneymax to compare them.
Pros and cons
Banks offer good rates flexible terms, and sometimes special deals. But each bank has its own rules for who can apply and what papers you need. When picking a loan, think about how much you can borrow, the interest rate, and how long you have to pay it back. Keep in mind, while lower monthly payments might look good, paying for a longer time means you’ll pay more interest in the end.
Special Car Loan Programs
Electric Vehicle Financing
You can now buy an eco-friendly car with EV financing options. Banks like BPI let you pay for select brands and models over up to 84 months. This green option helps you buy electric or hybrid cars with lower monthly payments and 15% down. You just need to earn Php 30,000 a month to apply.
OFW Car Loans
As an Overseas Filipino Worker, you can turn your dream of owning a car for your family back at home into reality. Your regular money transfers serve as evidence of your financial responsibility boosting your loan application. Think about getting a family member to join as a co-applicant to increase your odds. Search for lenders who have experience working with OFWs to make the process go more .
Used Car Financing
When buying a new car doesn’t fit your budget, financing a used car can work well for you. Asialink Finance and similar companies offer good rates, with interest starting at 1.5%. You can borrow up to 70% of what the car is worth for vehicles made in 2005 or later. You can choose to pay over 36 or 48 months, and put down as little as 30% upfront.
Car Loan Application Tips and Tricks
Getting your papers ready
To make your car loan application easier, get your important papers ready ahead of time. You’ll need to show who you are (with a driver’s license or passport), prove your income (with pay stubs or tax returns), and show where you live (with utility bills or a lease). Remember your Social Security number too – they’ll use it to check your credit. If you’re buying a used car, have all the car details on hand, like the VIN and how many miles it’s been driven.
How to boost your chances of approval
To improve your chances of getting the green light first find out your credit score. Look over your credit report to spot any mistakes and challenge them if you come across any. Cut down your current debts to make your debt-to-income ratio look better. Show you have a steady income by providing recent pay slips or bank records. Think about going for a cheaper car to up your odds of approval. Look around for the best rates and conditions from various lenders.
Common mistakes to avoid
Don’t ask to borrow more money than you can afford. Make a sensible monthly budget that includes all your costs. Pay attention to your credit score; try to make it better before you apply. Another error is not getting pre-approved. Pre-approval helps you know your budget and gives you an edge when you’re haggling at the car lot. , make sure you have the right insurance before you buy your car.
The Basics of Car Financing in the Philippines
How car loans work
When you want to buy a car in the Philippines, car financing can make it more affordable. A bank or financial institution has an influence on your purchase by lending you money to pay for the vehicle. You pay back the loan through monthly installments over a set period. This breaks down the cost making it easier to own a car. You have choices like bank financing, which gives you higher loan amounts and lower interest rates. Or you can go for dealership financing, which makes things easier by handling both the purchase and financing in one place.
Secured vs. unsecured loans
Secured loans use your car as security giving the lender the right to take it if you miss payments. These loans often come with lower interest rates and fees higher loan amounts, and longer repayment periods. They’re also easier to get if you have less-than-perfect credit. Unsecured loans don’t need collateral but have higher interest rates and fees lower loan amounts, and shorter repayment periods. They’re tougher to qualify for but give you more options.
Fixed vs. variable interest rates
Car loans with fixed rates keep the same interest rate for the entire loan period giving you steady monthly payments. Loans with variable rates have interest rates that might change based on what’s happening in the market. Fixed rates give you stability and let you know what to expect, while variable rates could save you some cash if interest rates go down. Think about how much risk you’re okay with and what interest rates are doing right now when you’re picking between these two choices.
Looking at What You Need for Your Car Loan
Figuring out your budget
To work out the car you can afford, begin with your monthly take-home pay. Money experts recommend using no more than 10% to 15% of this sum for your car payment. Let’s say you take home $3,500 each month, shoot for a payment between $350 and $525. Keep in mind, all your car costs, including insurance, upkeep, and gas, shouldn’t go over 20% of your monthly income.
New vs. used cars
When choosing between new and used cars, think about what matters most to you. New cars let you customize and have the newest tech, but they cost more and lose value fast. Used cars are easier on your wallet and don’t lose value as , but you might have to give up some features. If money’s tight, a used car could be your best bet, with cheaper insurance and slower value loss.
Loan amount and time
Your loan length affects your monthly payments and the total interest you’ll pay. Longer loans mean you pay less each month but more interest overall. Shorter loans have higher monthly payments but less total interest. Think about your money situation and future plans when picking a loan length. Keep in mind longer loans increase the chance you’ll owe more than the car’s worth as it loses value.
Top Banks and Their Car Loan Offerings
Interest rates comparison
You’ll find good rates among big banks in the Philippines. Security Bank has rates that start at 6%, while BPI’s add-on rate begins at 5.43%. EastWest Bank gives even lower rates starting at 5.10%. Metrobank stands out with rates as low as 4.63%, or 3.98% if you pay one month in advance. Robinsons Bank offers rates from 4.31% making it one of the cheapest options.
Unique features
Security Bank gives away free car insurance for a year making it a great pick for work or personal needs. BPI has a full range of after-sales help such as loan papers and dropping off collateral. Maybank catches the eye with its longer payback time of up to seven years, while PSBank boasts a 24-hour okay process and cuts on extra payments.
Customer reviews
Though we don’t have exact customer feedback, banks focus on keeping customers happy with clear terms quick service, and one-on-one help. They try to meet each person’s money needs and offer good rates to appeal to many types of borrowers.
Getting to Know Car Loan Rules and Details
Ways to Figure Out Interest
When you borrow money for a car, it’s essential to understand how interest works. Banks typically use two ways to figure out interest: amortizing and simple. Amortizing interest is common for car loans. You pay the same amount each month, but the interest part changes over time. Simple interest is more straightforward and depends on specific terms. To find out your monthly payments, you can use a loan calculator. Just enter the loan amount, interest rate, and how long you’ll be paying.
Prepayment Penalties
Some auto loans hit you with fees for paying off the loan early or making extra payments. These are called prepayment penalties. They protect lenders from losing money on interest. Usually, the fee is about 2% of what you still owe. Not every lender uses these penalties, and some states don’t allow them. To steer clear of these charges, look for loans that don’t have prepayment rules or try to work something out with your lender.
Insurance Requirements
When you get a car loan in the Philippines, you must have full insurance coverage. Banks need this to protect what they’ve invested if something unexpected happens, like crashes, car theft, or natural disasters. This insurance helps both you and the bank reducing money problems if you need to make a claim. If you don’t follow the insurance rules, you might face fines or lose your loan.
Other Ways to Finance a Car
In-house financing
You have the option to get financing straight from car dealerships. This choice gives you fast approval in about 2 hours, because they’re not as strict with their rules. You might get perks like little to no down payment and extras such as free chattel mortgage fees or a year of full insurance coverage. Just keep in mind that the interest rates tend to be higher than what banks offer.
Peer-to-peer lending
P2P lending links you straight to individual lenders on online platforms. This choice might work for you if your credit isn’t stellar. P2P loans don’t require collateral so your car can’t be taken if you miss payments. But watch out – interest rates can skyrocket if your credit is shaky. Keep in mind there are upfront costs, and if you can’t pay, it’ll still hurt your credit score.
Lease-to-own programs
Rent-to-own plans let you rent a car while part of your payments go toward buying it. This choice often doesn’t need credit checks, which helps if you have bad credit. You pay weekly or every two weeks, and some or all of this money counts toward the car’s price. But keep in mind, cars often cost too much, and you don’t get a warranty.
The Philippine Auto Industry and Financing Scene
The Philippine auto finance market is growing fast, thanks to a rising middle class and more people buying cars. In 2022, the market was worth $23.2 billion. Experts think it will grow by 10.2% each year reaching $51.6 billion by 2027. Banks control 60% of the market, while captive finance companies have 25%. New car loans make up 70% of all loans, and most people choose terms between 3 and 5 years. , companies have started to offer online applications and digital sign-ups making it easier to get financing. Looking ahead, we can expect to see AI used to check credit, blockchain used to improve processes, and team-ups with fintech firms to help more people access financial services.
Key Components of a Car Loan
When you’re getting a car loan in the Philippines, you need to understand its main parts. These parts decide how much you’ll pay and for how long.
Principal amount
This is the money you borrow to buy your car. Let’s say you buy a car for ₱1,000,000 and put down ₱200,000 as a down payment. In this case, your loan principal would be ₱800,000.
Interest rate
The interest rate has an impact on your total repayment amount. It represents the cost to borrow often shown as a yearly percentage. To illustrate, a 10.56% yearly rate on a ₱1,000,000 loan for 5 years leads to a monthly payment of ₱21,523.64.
Loan term
The loan term refers to the time you have to repay between 24 and 84 months. Choosing a longer term results in lower monthly payments but increases your overall interest costs.
Monthly payments
These payments combine principal and interest. At first, a bigger part goes to interest, but this balance changes as you pay down the principal over time.
Comparing Bank vs. Dealership Financing
Pros and cons
When deciding between bank and dealership financing, think about what each offers. Banks have lower interest rates and give discounts to existing customers. This lets you bargain like you’re paying cash. Dealerships can process your loan on the same day and work with different credit scores. Keep in mind, banks often have tougher rules, while dealerships might charge higher interest.
Interest rate differences
Banks tend to have better rates if your credit is good. You can look at several options to find the best deal. Dealerships sometimes add to the rates to make money, but they may have special offers from manufacturers, like 0% APR deals. It’s smart to get approved by a bank before you go to a dealership. This gives you more power to get better rates.
Flexibility in terms
Car dealers often give you more wiggle room when it comes to financing. You can put less money down and stretch out your payments over a longer time. But watch out – this might mean you end up paying more in interest as time goes on. Banks, on the other hand, tend to have stricter rules but are more upfront about their prices. Before you decide between the two, think about your money situation and how much it’ll cost you in the long run.
Top-Rated Car Loan Programs in the Philippines
Bank profiles
You’ll find many top-rated car loan providers in the Philippines. Security Bank has great options to use for business and personal needs. BPI Auto Loan gives competitive rates starting at 5.43%. EastWest Bank has interest rates from 5.10%, while Metrobank’s rates start at 4.63%. Robinsons Bank stands out with rates as low as 4.31%.
Loan features
These banks offer flexible terms for new and used vehicles. Loan amounts and down payment needs vary. Some banks, like Maybank, give longer repayment terms. PSBank approves loans in 24 hours, while RCBC lets you pick your loan type. Many banks let you apply online for ease.
Application requirements
To apply, you need to show who you are prove your income, and show where you live. A good credit score helps, but some lenders are more relaxed about it. You must also give details about the car and show you have insurance. Be ready to pay the down payment in your preferred way.
Getting the Most Out of Your Car Loan
Ways to Bargain
To land the best deal, kick things off by securing a loan pre-approval before you step foot in the dealership. This approach gives you an edge and signals that you mean business. During talks, zero in on the car’s total cost instead of monthly installments. Don’t hesitate to walk if the offer doesn’t fit your requirements. Keep in mind, dealers might inflate interest rates, so it’s smart to check offers from several lenders.
Understanding the fine print
Take a close look at your loan agreement to spot any hidden charges early repayment fees, or lump sum payments. Make sure the interest rate matches the offer you got and figure out if it’s fixed or can change. Watch out for extra stuff you don’t need that can make your loan bigger. If anything’s not clear, don’t be shy to ask questions or get legal help before you sign.
After-sales services
Good support after you buy can make owning a car much better. This might include warranty coverage, plans to keep your car in good shape, or help with technical issues. When a company gives good support after you buy, you’re more likely to stick with them and tell others about it. As you pick a lender or dealer, think about how good their after-sales support is. It can add value to what you’re buying and might save you money down the road.
FAQs
1. Which bank has the most appealing car loan interest rates in the Philippines?
Metrobank offers one of the lowest interest rates to get car loans in the Philippines starting at 4.63%. But if you pay one month in advance, the rate drops to 3.98%. This makes it a great choice for young people who want to borrow.
2. What are the best banks to get auto loans in the Philippines?
Many banks have a good reputation for giving auto loans in the Philippines such as BPI, Security Bank, PNB, and Metrobank. Each of these banks gives different loan choices that fit people who want to buy a car.
3. Which bank offers the best interest rates for car loans?
Metrobank has a reputation for offering competitive interest rates on car loans. This makes it an attractive option for people looking to finance their car purchase without breaking the bank.
4. Is it more advantageous to secure a car loan through a bank or a dealership in the Philippines?
Getting a car loan from a bank means lower interest rates than dealership financing. Dealerships might ask for a smaller down payment, but bank financing tends to save you money in the long run. This makes bank loans a smarter financial choice overall.
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