Features of a car loan in the Philippines

What is Car Loan?

A car loan (also known as Auto Loan or automobile loan) is akind of chattel mortgage that allows potential vehicle consumers to buy their dream auto in monthly basiswith interest instead of paying for it in one payment. In simple words, you borrow money from either bank or other leading services to pay for the vehicle. And if you fail to make payments, the vehicle will be repossessed.

A car loan, just like any personal and chattel mortgages, can be either a secured or non-secured depending on the circumstances. However, most lending services and banks offer secured loans, which requires consumers to offer collateral.

How To Apply for a Car Loan

For the first-time car buyers who are a bit overwhelmed and have no idea how to start their journey in auto loaning, here’s the process of auto loan and how it works.

Step 1: Check your credit score qualification

Your credit score will stand as your resume when applying for a personal loan as well as auto loans. Your credit score will be based on your credit reports and the better your credit reports are, the higher your credit score is. And if you are a first-time car buyer with a high average credit score, you can get a low mortgage rate that will help you have lower interest and save more money.

Step 2: Choose the best payment option

Before you decide to borrow for your vehicle, make sure to compute how you can realistically afford. Figure out how much you can pay monthly without straining your budget, then use a car loan calculator and amortize the amount you can pay monthly to know the total value you can spend on a vehicle.

Then, you can choose the best amortization option for you, whether it’s 3-, 4-, 5-, or 6-year terms. The longer the term is, the lower you pay for your debt monthly but with much higher interest.

Step 3: Choose your dream ride

Once you figure out how much you can spend on a vehicle, choose something that fits your budget perfectly. If you are thinking of buying a used car rather than brand-new ones, you can still use your pre-approved auto loan. The interest in a brand-new car credit ranges up to 80% of the purchase price whilst in a pre-owned ranges up to 70% of appraised value. If you consider buying a pre-owned vehicle, you can afford a luxury ride without paying for its original price when it was released, and we all know that a new released cars loses 20% of its value after a year that it was released, which makes it more affordable.

Step 4: Finalize all the needed documents

Once you made a deal with the lender as well as the seller, make sure to finalize all the documents, paperwork, and agreements to avoid any confusion in the future.

Step 5: start paying for your debt and enjoy the ride

After finalizing the deal and the sale, you will receive the information about your payment schedule monthly and then finally take home your new personal ride. Assume that you were unable to pay this month’s payment, don’t worry, there is usually a maximum of 3 months allotted time (this depends on the contract that you signed) before repossession takes place. But, make sure to never miss any payment to avoid difficulties.

How to get approved for an auto loan: Requirements and Checklists

Requirements:

For locally employed consumers:

• Duly accomplished application form.
• Valid government-issued I.D. (with signature and photo)
• The latest proof of billing.
• Copy of Certificate of Employment with compensation and latest (ITR).
• Three months’ worth of pay slips.

For self-employed employees or business owners:

• Certificate of Business Registration with DTI (sole proprietorship) SEC (under partnership/corporation)
• Latest ITR.
• Latest financial statements (Audited Financial Statements, Statement of Assets and Liabilities, Statement of Income and Expenses, bank statements, and/or photocopy of your passbook for the last three months)
• The latest proof of additional/other income) lease contracts, certificate of deposits, and/or stock certificates)

For OFWs

• The latest employment contract (with the authentication of the Philippine Consulate)
• For Seafarer/Seaman- latest crew contract.
• Proof of remittance (last three months or more)

Checklists

• Get pre-approved
• Review and examine all required paperwork and documentation from the bank or any leading lending services
• Review the agreement’s terms, conditions, and details
• Choose the best car for you that fits your budget
• Choose the best term payment option for your budget
• Keep in contact with the lender for any additional details or requirements
• Prepare all needed documents
• Complete and submit all requirements and paperwork

The Best Car Loan in the Philippines

Find the best auto/car loan in the Philippines using Upfinance! Upfinance is a site where you can find all the current best Philippine credit offers with the cheapest and the lowest interest and their complete information on financial services. You can also use Upfinance to write sample offers, anywhere in any amount to find the cheapest offer that perfectly fits your budget!

Here are the top 10 best car loans offers in the Philippines

RCBC Bank

• Brand New – interest rates 5.75% – 30.3% APR, term up to 60 months
• Second Hand – interest rates 8.4% – 33.9% APR, term up to 48 months

Eastwest

• Brand New – interest rates 5.9% – 31% APR, term up to 60 months
• Second Hand – interest rates 7.19% – 36% APR, term up to 48 months

Producers Bank

• Brand New – interest rates 6% – 9% APR, term up to 60 months
• Second Hand – interest rates 8% – 14% APR, term up to 24 months

UCPB

• Brand New – interest rates 9,95% – 11,43% APR, term up to 60 months
• Second Hand – interest rates 9,95% – 14% APR, term up to 36 months

Security Bank

• Brand New – interest rates 6.77% – 37.63% APR, term up to 60 months
• Second Hand – interest rates 16.5% – 24% APR, term up to 48 months

Robinsons Bank

• Brand New – interest rates 8,6% – 10,2% APR, term up to 60 months
• Second Hand – interest rates 16.7% – 22% APR, term up to 48 months

PNB

• Brand New – interest rates 9,4% – 10,4% APR, term up to 60 months
• Second Hand – interest rates 12% – 20% APR, term up to 48 months

Maybank

• Brand New – interest rates 12,48% – 18% APR, term up to 60 months
• Second Hand – interest rates 18% – 20,76% APR, term up to 48 months

BDO Network Bank

• Brand New – interest rates 17.33% – 30% APR, term 36 – 60 months
• Second Hand – interest rates 14.11% – 30% APR, term 24 – 48 months

Sterling Bank of Asia

• Brand New – interest rates 14% – 19,04% APR, term up to 60 months
• Second Hand – interest rates 19,74% – 26,65% APR, term up to 48 months

Author Emilia Tueres from Upfinance