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Everything You Need to Know About Car Loans in the Philippines

Nowadays, cars have become a necessity rather than a luxury. For many Filipinos, getting their first car is a huge milestone — a rite of passage into adulthood, even. It’s because for most people, a vehicle is the single biggest purchase they will ever make in their lives. Even so, very few people can actually afford to buy cars in full cash. Fortunately, car dealers are happy to honor bank-financed car loans.

If you are looking for advice on taking out your first-ever car loan, you’ve come to the right place. In this article, we’ll be answering some of the most frequently asked questions about getting a car loan in the Philippines, starting off with the most basic.

Is it more expensive to get a car loan than pay in full?

Definitely. Banks charge interest for every single thing, so by the time you finish paying off your car loan, you will have paid hundreds of thousands of pesos more than the actual amount of the car you got. The car loan option is only good for those who don’t have the cash to pay upfront. If you can afford to do that, then by all means, avoid the interest fees.

Am I qualified to take out a car loan?

If you are over 21 years old and will not be more than 65 years old by the time the car loan matures, you may qualify. You just need proof that you earn no less than P30,000 monthly from a stable employment arrangement. Banks prefer those who have been regularly and continuously employed for at least two years prior to applying for the loan. If you’re not confident about your income figure, you may have a co-borrower, in which case the bank will take a look at your combined monthly income to assess your capacity to pay.

I’m a Filipino citizen working/living overseas. Can I apply for a car loan?

Yes. Filipinos residing abroad may qualify for a loan, as long as they have a relative living in the Philippines, who is willing to be their co-borrower or guarantor. 

What if I’m a foreigner working in the Philippines?

The answer is still yes, provided that the company you’re working for endorses you, and as long as you have a Filipino co-borrower or guarantor.

How much can I borrow?

It depends. Do keep in mind that no bank will lend you the full amount of the vehicle you want. Usually, you will need to pay 20% of the car’s value as down payment, then the bank will pay for 80%. However, it all depends on your situation and capacity to pay. For people who have lower salaries or are not regularly employed, the bank may ask for down payment of up to 50% of the vehicle’s price before loaning out the rest.

Is it difficult to get a car loan?

Overall, it’s not. As long as you meet the requirements we enumerated earlier, banks are not likely to give you a hard time since car loans aren’t normally as big as home loans.

My loan application got accepted. How do I pay it back?

Congratulations. You have many options on how to pay the bank what you owe. The most common method is personally going to the bank to furnish your monthly payments over the counter. Some banks will allow you to pay through authorized payment centers or “bayad centers” usually located in malls and business centers. However, the most convenient way you can pay is through online banking. This method will allow you to make secure payments anytime, anywhere — even from the comfort of your own home.

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