Don't Buy Your First Car Before Checking These Tips On Applying For Your First Auto Loan!

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Here's how to seal the deal before you drive off in your new wheels!

You can just hear the engine roaring away as your foot is on the pedal, ready to drive away in your first ever car. And then you hear the words “sorry, your car loan has been rejected”. If you don’t want to be heartbroken like this, then be prepared for how to apply for your first car loan! There are a lot of options for banks, so we will give a run down of tips you should be aware of before considering which is the best bank for auto loan Philippines.

best bank for auto loan Philippines

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5 tips to think of before choosing the best bank for auto loan Philippines

Maybe you’re thinking of buying a car for Christmas. Or using your 13th-month pay to put down as your deposit. You’ll need to apply for a car loan before you can think about your shiny new vehicle. Educating yourself is paramount to success. Stepping directly into a dealership, seeing the car you like and putting pen to paper seems easy enough. But borrowing from a bank can be three or four per cent cheaper than taking a loan from the dealership. Here are five tips to be aware of before you commit to a huge financial commitment!

 

1. Get pre-approved

best bank for auto loan Philippines

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First things first, let’s see whether you even qualify for an auto loan! Becoming pre-qualified shows you if you’re eligible and how much you can afford to borrow, both very useful pieces of information in the long run! You’ll need to answer an online pre-qualification test through any major bank like BPI, Metrobank or Security Bank.

 

2. Have a good credit history

best bank for auto loan Philippines

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This might seem obvious but for many first time borrowers, your credit history can be a make or break factor! After all, the lender needs to have good faith that you’ll be able to pay them back what they’re loaning you. And since they’ve never met you, the only thing they can base their judgement on is your history of paying bills responsibly on time. 

Doing a credit check can help indicate your credit history’s health and repair as required. In fact, you can get your credit score from an accredited credit bureau.

Once you can show off your impeccable credit history through bank statements and all your various income streams, you will win the lender over that you’re a responsible borrower!

 

3. Stay in your job for at least two years!

best bank for auto loan Philippines

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We’re not trying to sound like a nagging parent, we promise! But all banks have the following requirements for auto loans:

  • Aged at least 21 years old, can’t be older than 65 years old upon loan maturity
  • The minimum monthly household or family income should be from Php30,000 to Php50,000
  • The applicant should be a resident of the Philippines (if an OFW, the beneficiary of the vehicle must be a Filipino resident)
  • The applicant should also be a regular employee for at least two years.

On the bright side, this gives you a chance to steadily save and even get promoted, thus earning more monthly income. It is still possible for your auto loan to be approved, but it’s less likely without fulfilling this requirement.

 

4. Compare rates using auto loan calculators

best bank for auto loan Philippines

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Figuring out how much you can borrow is an essential piece of due diligence everyone should do. After all, you wouldn’t play a poker hand without looking at your cards, right?

Thankfully, many banks have online auto loan calculators that help give rough estimates on your monthly payments based off the car’s value and your loan duration. It’s not 100 per cent accurate but it’s a good starting point. From there you can figure out what is feasible without leaving you struggling to stay afloat each month.

 

5. Be realistic and stick to the plan!

best bank for auto loan Philippines

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So if you’ve followed our guide so far, the key thing is to be responsible. That means if you’re earning Php30,000 and compared the different auto loans on offer using calculators and they’re all showing monthly payments of Php200,000 on that sports car you really want…doesn’t seem like the most sensible decision!

We know it is tempting to get a luxury car. Lenders might even suggest you upgrade from your initial application since you could technically afford it. But if this means you’re left with Php50 every month after paying your auto loan, that’s also no use to anyone! Once you’ve seen the auto loan offers and made your monthly budget, commit to your plan. You’ll get a better car in the future, so there’s no need to rush!

 

Which is the best bank for auto loan Philippines?

best bank for auto loan Philippines

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So if you’ve followed the above steps, you’re ready to check the best bank for auto loan Philippines!

If we compare the loan terms by three different banks by using their calculators, you can see the different interest rates and subsequent monthly payments you’ll be paying for. We’ve assumed the car price as Php1 million and the lowest available down payment. While monthly payments are set for 48 months.

 

1. Metrobank

  • PhP 1,040,000.00
  • PhP 208,000.00 (20%)
  • PhP 832,000.00 
  • PhP 21,041.00
  • 48 months
  • Required monthly income: Php50,000

 

2. BPI

  • Selling Price: P1,000,000.00
  • Downpayment: P200,000.00 (20%)
  • Amount Financed: P800,000.00
  • Monthly Amortization: P20,397.00
  • 48 months
  • Required monthly income: Php50,000

 

3. BDO

  • PhP 1,000,000.00
  • PhP 200,000.00 (20%)
  • PhP 800,000.00 
  • PhP 20,397.00
  • 48 months
  • Required monthly income: Php51,000

 

Has our comparison for the best bank for auto loan Philippines helped you? Share with your friends if anyone is looking to buy a new car!

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Written by

Vinnie Wong