Are you planning to purchase a vehicle soon? Be it brand new or used car, we all know that buying a car is one of the biggest investments a person could make and, unfortunately, not all of us are financially blessed to pay the price in full.
Good thing you can avail of a car loan. This allows you, the borrower, to loan money from a bank or lender to purchase a vehicle. The catch is that you’ll have to pay them back with interest over the course of the agreed loan term or risk repossession of your ride.
Who can get a car loan?
Filipino citizens between 21 but not more than 65 years old when the loan matures with a joint monthly income of at least P30,000 (P40,000 for some banks) may apply for a car loan. In the event that the borrower doesn’t meet the minimum monthly income, a co-maker’s income can be included.
Meanwhile, some banks will require the borrower to be employed for at least two years on a permanent or regular basis.
What if I’m living/working abroad?
Those living abroad or working as OFWs may apply for a car loan as long as a related qualified Filipino citizen guarantor or co-maker is available.
Meanwhile, foreigners living or working in the Philippines can also get a car loan if endorsed by the company he/she is working with and has a qualified co-maker/Filipino citizen guarantor.
What are the physical requirements I need to apply for a car loan?
Locally employed borrowers will have to present and submit the following items listed below:
- Duly accomplished application form.
- Valid government-issued I.D. with signature and photo such as Driver’s License, Passport, etc. of borrower and co-maker (if available).
- Latest proof of billing.
- Copy of Certificate of Employment (CoE) with compensation and latest income tax return (ITR).
- Three months-worth of pay slips.
For those who are self-employed or have businesses:
- Certificate of Business Registration with DTI for entities with sole proprietorship or SEC if under partnership/corporation.
- Latest ITR.
- Latest financial statements such as 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.
- Latest proof of additional/other income such as lease contracts, certificate of deposits, and/or stock certificates.
If you work abroad, you will need the following documents:
- OFWs must provide the latest employment contract authenticated by the Philippine Consulate.
- Those working as a Seafarer/Seaman must have their latest crew contract.
- Proof of remittance for the last three months or more.
Apart from these documents, physical assets such as real estate and other owned vehicles can be used as additional proof of capacity to pay thus increasing your chances of getting your bank loan approved.
How much money can I borrow from the bank?
Now that we’re done with the physical requirements, you can now shop for a brand new or used car. Once you’ve selected the vehicle that you want, it’s time to find out how much money you can borrow.
A borrower can loan up to 80% of the vehicle’s price that can be paid from 12 to 60 months. Banks, however, will require a downpayment of anywhere from a minimum of 20% up to 50% of the vehicle’s price before releasing the loan.
You can check your desired financing rates on the AutoDeal Car Loan Calculator, which by the way is in partnership with three banks: Banco De Oro (BDO), Security Bank, and Union Bank. Using the latter’s car loan calculator will give you the chance to earn as much as 15,000 GetGo points that you can use to avail a round trip to your preferred destination.
How do I pay my car loan?
There are many ways a borrower can pay off their car loan. One method is over the counter of the respective bank via cash or post-dated cheque (PDC) payments. Meanwhile, other banks allow payments through “bayad centers” located in malls or corresponding branches.
Online banking, on the other hand, is probably the most convenient option available as it allows you to make secure payments anytime, anywhere as long as there’s an internet connection.
Getting a car loan is easy, well, as long as you meet (or surpass) the bank’s requirements and, of course, be able to pay the monthly amortization on time. To avoid any inconveniences during the loan term, always remember to insure your car with the bank, have it serviced periodically, and drive defensively.