Pros and Cons of Buying a Repossessed Car in the Philippines

Thinking of buying a used car? Consider a repo, also known as a bank-repossessed car.

Banks take back cars from people who fail to repay their car loans and then put the repossessed vehicles on sale. Somebody else's loss could be your gain—this is how repossession works.

Be careful when shopping for repossessed cars for sale because there are benefits and drawbacks. Consider the pros and cons of buying a repossessed car before spending more on a new vehicle.

The Pros and Cons of Buying a Repossessed Car in the Philippines

Is it good to buy repossessed cars in the Philippines? Learn more about both sides of the coin below.

The Benefits of Buying a Repossessed Car

pros and cons of buying a repossessed car - advantages of buying a repossessed car

👍 Buying Repo Cars at Lower Prices

With car prices increasing in the Philippines due to economic reasons, budget-conscious car buyers remain on the lookout for cheaper options such as repossessed cars. Buying a repossessed car in the Philippines can save you between 20% to 40% off the cost of a brand-new car.

For example, a repossessed 2022 Toyota Vios sold by a bank can cost up to ₱680,000 while a new unit usually costs ₱831,000. Of course, the car's value has depreciated over time. But the savings worth ₱151,000 is just too hard to pass up for someone who's just after a decent car on a limited budget.

Banks sell repossessed vehicles for much less than their worth, even offering occasional promo prices. This is because they aren't looking to make a profit from selling repos. They just need to dispose of these second-hand cars as soon as possible to reduce the costs of storing and maintaining the vehicles.

👍 Easy to Find Newer Cars in Good Condition

Repo cars go up for sale not because of deteriorating conditions but because the former owners could not keep up with their loan repayments. That's why you're likely to find bank-repossessed cars that are only a few years old with lower mileage. Most banks sell 2017 and 2018 models, and some even have 2021 and 2022 models for sale.

Unlike privately sold used cars, repossessed cars are less likely to have been involved in an accident, crime, or flooding. Also, a five-year-old repossessed car may still have its manufacturer's warranty. That's one less thing to worry about.

👍 Opportunity to Score a Great Deal

Under the list of pros and cons of buying a repossessed car, chalk this up under pros. You're more likely to score great cars for bargain prices when you do your homework. So research the market value of the make and model you're looking for and compare used car prices diligently.

If a bank's selling price is too steep, wait for the right timing before you bid. Banks slash the prices if nobody bids on them. Make an offer only when they lower the prices significantly.

👍 Safe and Trustworthy Transactions with Banks

Another thing to note when considering the pros and cons of buying a repossessed car is that you don't have to worry about the legitimacy of the repo cars for sale.

When buying a repossessed car from a bank, you're assured of a legal and secured transaction since you're dealing with a reputable financial institution. On the other hand, you might run across fraudsters when attempting to buy a second-hand car from private sellers.

Here are some banks selling repossessed cars with listed prices:

Maybank^[1]
Metrobank^[2]
PSBank^[3]
RCBC^[4]
Security Bank^[5]

👍 Easy Car Financing Options

Depending on the bank where you'll buy a repossessed car, you can pay cash upfront or get an auto loan. A full cash payment means no interest payments while an auto loan is easier on the pocket because of the monthly installments.

Compared to buying a brand-new car, a repossessed car purchase involves less paperwork. Banks just want to sell their repo units right away.

The Risks of Buying a Repossessed Car

pros and cons of buying a repossessed car - disadvantages of buying a repossessed car

👎 Can't Be Sure About the Car's Actual Condition

Of course, this list of pros and cons of buying a repossessed car wouldn't be complete without the drawbacks. For one, repossessed cars are essentially pre-owned units, so their quality depends on the driving and maintenance habits of the previous owner. If the owner was in a tough financial situation (which is probably why they defaulted on the loan), chances are the car may not be in top shape.

Because banks sell repo cars on an "as is where is" basis, the buyer takes on the risks (including any hidden defects) on the quality of the purchased car. If you purchase a repossessed car and spot damage later, you can't sue the bank for that.

When purchasing a used or repo car, make sure to avail of auto insurance to avoid future headaches in the future.

👎 Effort in Finding the Best Repossessed Car

You have to put a lot of hard work into the entire buying process. Expect to send a lot of bids to various banks on repossessed cars.

Banks may reject your bid if it's below the floor price, which is the minimum amount that banks set for each repo car for sale.

👎 Need to Clean the Repossessed Car

Because banks store repossessed cars in huge warehouses, these vehicles tend to become covered in thick layers of dust and gunk over time.

But then again, it's not that huge of a downside. If you scored a repo car for a fair price, what's a few bucks more to pay for a quick car wash, right?

👎 Can't Test Drive the Vehicle

Another disadvantage to add to your list of pros and cons of buying a repossessed car is the fact that you can't test-drive the vehicle before purchasing it. You won't be able to pinpoint problems, if any, until you start driving the car.

However, some banks allow you to start the vehicle. Be sure to come with a trusted mechanic to help you assess the car's condition.

Repossessed vs Second-Hand vs Brand-New Cars: Which is the Best Option?

Even if they look and work like brand-new cars, repossessed cars are more affordable. They're considered second-hand only because the previous owner can no longer make the car payments. So you get a new car for a much lower price.

If you're not sure whether to get a repossessed, second-hand, or brand-new car, just look at the pros and cons.

	Pros	Cons
Repossessed Car	Cheaper than a brand-new car Safer to buy than a second-hand car Less paperwork when buying	Must be bought "as is where is" Potential quality issues May be more challenging to find a particular model you want to buy
Brand-New Car	Mint condition Easy to choose which car to buy Freebies with your car purchase	Depreciates quickly More expensive insurance premiums
Second-Hand Car	Lower purchase price and insurance premiums Some models can still gain value	May have hidden defects or issues May require more maintenance

pros and cons of buying a repossessed car - How to Buy a Repossessed Car in the Philippines

Decided on buying a bank-repossessed car? The process of buying a repossessed car from a bank is similar to that of buying a car from a dealership. Most banks follow the same process.

Here's how to buy a repossessed car from the bank:

Choose which car to purchase. Visit the bank's website and browse the available repossessed cars on its used car list. If you want to make a personal inspection, you can also visit the showroom.
Bid or make an offer. Some banks will post the starting bid and the buy-now price of a repossessed car. You can choose to bid or just buy the car now, depending on your budget.
If you choose to buy now, make the offer to the bank by submitting the necessary forms and documents. If you choose to bid, wait for the results of the bidding. The bank will officially notify you if you have the winning bid, usually after three days of the bidding cut-off.
Pay for the car. Depending on your chosen payment mode, pay for the unit in cash or through a car loan. You may need to make a reservation fee while your car purchase is being processed. So it's best to get pre-approved for a loan before you go car shopping.
After completing all the requirements and making a successful transaction, you can now drive home with your repo car!

Final Thoughts

Now that you know the pros and cons of buying a repossessed car in the Philippines, you can decide if it's suitable for you. If you choose to shop for repo vehicles, be strategic so that you can buy a high-quality car at the lowest price possible. As with any kind of major purchase, do your homework, make a shortlist, and sleep on it before you make the decision!

Meanwhile, if you need extra funds to purchase a repossessed car, consider a personal loan. Compare your options and apply easily through Moneymax:

Personal Loan Provider	Minimum Loan Amount	Maximum Loan Amount	Minimum Annual Income	Approval Time
Metrobank	₱20,000	₱1 million	₱350,000	7 days
BPI	₱20,000	₱2 million	₱300,000	5 to 7 banking days
EasyRFC	₱10,000	₱150,000	₱120,000	As fast as 24 hours
Maybank	₱50,000	₱1 million	₱300,000	Apply online in just a few clicks
RCBC	₱50,000	₱1 million	₱360,000	5 to 7 banking days
SB Finance	₱30,000	₱2 million	₱180,000	5 banking days
CIMB	₱30,000	₱1 million	₱180,000	24 hours
HSBC	₱30,000	₱500,000 or 3x gross monthly salary, whichever is lower	₱168,000	5 to 7 banking days
CTBC	₱20,000	₱1 million	₱180,000	3 to 5 banking days

Sources:

^[1] Maybank
^[2] Metrobank
^[3] PSBank
^[4] RCBC
^[5] Security Bank

Is It Good to Buy a Repossessed Car? Consider These Pros and Cons

Venus Zoleta