Own Your Dream Car

Vehicles can be quite expensive nowadays while their value goes down quickly. Getting a car loan can help you finance the purchase of your car while also reducing the risk of your investment. An auto loan can finance up to 80% of the market value of the vehicle meaning you get to save your cash while enjoying the benefits of owning a vehicle. Some car loans also come with benefits such as free car insurance or a flexible payout of the remainder.

You can use a loan for both a brand new vehicle and a used one. Just keep in mind that the conditions of the loan will be different. For instance, the minimum amount you can borrow can differ (generally higher for new vehicles), as well as the interest rates (lower for new vehicles) and the payout period (longer for new vehicles). The reason is that a new car is a less risky purchase than a used car. Used cars generally require more repairs and can experience problems more frequently than new cars.
You could also choose from a range of vehicles - a car, van, SUV or a truck.

Even before you consider which vehicle you'd like to purchase via financing, you need to know whether you are eligible to be approved for a loan. Here are some of the eligibility requirements:

• You must be minimum 21 years of age and not more than 65 years old upon final maturity
• The gross income of your family should be regular and not lower than PHP 30,000 a month
• You must be a Filipino citizen or a permanent resident of the Philippines
• If self-employed, your business should be operating for a minimum of 2 years
• At the time of applying for the auto loan, you have to have been in the same organization for at least 1 year

If you are an OFW, you probably are sending quite a bit of money back home. If you decide to purchase a car for when you come back, or you want to get one for your family but can't afford to pay the full amount, you shouldn't worry! There are quite a number of banks that allow OFWs to avail of personal loans such as the auto loan:

• BDO Unibank
• BPI
• EastWest Bank
• PNB
• Philippine Savings Bank
• Security Bank

Some foreigners find it difficult to commute in the country, especially if they'll be staying for a long period of time. If you are employed in the Philippines and would like to purchase a car but can't afford paying with cash, you can still avail of an auto loan. Most of the leading banks can be a lender for a foreigner, you just need to make sure to provide the right documents (see next question for more details).

While the complete list of documents that you'd need to submit in order to be approved can vary from bank to bank, there are a number of items that are common across institutions. Do keep in mind that the actual requirements differ between providers, most notably in the periods covered by the particular document.

• Duly filled and signed application form
• Valid government-issued ID (including a photocopy) of borrower or signatory

For locally employed applicants:

• Original copy of COE or Certificate of Employment with Compensation
• Photocopy of at least 2 month pay slip
• ITR or Income Tax Return with BIR form 2316 (duly stamped by BIR) or bank stamp for at least 1 year

For self-employed applicants:

• Latest ITR/BIR Form 2316 (duly stamped by BIR)
• Latest Audited Financial Statements/Statement of Assets and Liabilities/Statement of Income and Expenses
• Certificate of Business Registration with DTI (sole proprietorship) or SEC (partnership/corporation)

For applicants employed abroad:

• Latest Crew Contract (if applicant is a seafarer)
• Latest Employment Contract authenticated by Philippine Consulate (if applicant is an OFW)
• Proof of remittance for at least 3 months (period requested may vary)

For foreign residents:

• Proof of Residency
• Proof of Income
• Alien Certificate of Registration
• Permanent Work Status

While reading up on auto loans, you might stumble on this term. Car loan refinancing happens when you take out a new loan to pay off an existing loan, using your vehicle as a collateral for the newly issued loan. This new agreement between the lender and the borrower has fixed terms that both parties agree to before signing off. The terms and conditions on items such as the interest rate, monthly payments, and loan duration, therefore, can differ depending on the initial agreement. Here are the potential benefits of refinancing:

• Quick & Easy - not much documentation is needed since you're offering your vehicle as a collateral
• Flexible Repayment Terms - you get the choose the duration, installments as well as the interest rates
• Lower Monthly Payments - since you have flexible repayment terms, reducing the interest rate or extending the duration of the loan (or both), can reduce your monthly payments
• Modifying the Loan Term Duration - you can shorten or extend the loan term duration. Shortening it can increase the monthly payment but can reduce the overall amount due to lower interest charges. Extending the loan term can lower the monthly payments but you might end up paying more in total

We understand that owning a car can be a necessity and is, therefore, an important financial investment. There are some major decisions to be made before you proceed: choosing the right vehicle for you, paying a fair price for it, and funding it in the best way possible. Before you start looking at car models there are several things you need to take care of in advance:

• Manage your borrowing - not only will any other debt affect your ability to finance the new purchase, but it also can influence your credit score and whether you'll be approved or not
• Budget the purchase - don't rush into anything before you understand where your spending goes. Apart from the down payment that can significantly lower your total loan amount, you have to ensure you have enough funds to make the monthly payments, especially if unexpected expenditures arise
• Explore options - if you're already affiliated with a bank, it might be tempting to make use of their available plans but keep in mind there are many other providers that can help you finance your vehicle. Try to browse as many options and get as many quotes as you can before making the final decision. See the next section for the most popular providers of auto loans
• Think ahead - sure, saving your cash and getting a larger portion of the market value financed is very tempting in the short run but would increase the monthly payments and the total interest charges. If you make a down payment larger than the minimum amount this will make your succeeding payments more bearable in the long run.
• Read up carefully - get the full picture while researching on the options. Some loan terms have fine print that contains important information while others come with great benefits such as a free car insurance for a year. Get the best deal by knowing everything about the term!

Now that you know what an auto loan is, how it works and how you can alter the terms to your benefit, here is a list of the leading banks offering such loan terms to help you choose:

• BPI
• BDO
• PNB
• Metrobank
• China Bank
• East West Bank
• Security Bank
• UnionBank