One of the solutions people in the Philippines usually choose to take is getting a car loan. An automobile or car is one of the most expensive necessities that people strive to purchase. The sooner they obtain it, the better, so they focus on their finances to achieve it.
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What is a Car Loan?
A Car Loan is a service a bank offers to people who want to buy a vehicle. People can only use the money borrowed through this service for cars and not for something else.
Banks offer car loans for brand-new or used cars. Some banks even have a catalog of brand-new and used cars that you can buy through their auto loan service.
How to Apply for a Car Loan?
Where to Get a Car Loan
Usually, banks are the ones that offer auto loans. However, other organizations provide car loans or something similar. For example, some auto companies offer installment loans so people can pay for their cars monthly.
However, these companies typically ask for a downpayment which is not a small amount. That is the reason for people preferring auto loans instead.
Car Loan Requirements
In the Philippines, people can get a car loan if they are at least 21 years old. However, they should not be more than 65 years old by the time their car loan matures. They also need a monthly income of at least PHP 30,000.
If employed, they must be a permanent employee of at least two years. As for business owners, their business should have been profiting for the last two years. These car loan requirements will ensure that the borrower can pay.
Car Loan Features
Car loan features differ for each bank. But usually, the main features of the car loan include the loan amount, loan terms, and interest rates.
The loan amount depends on the brand and model of the car you want to purchase. Loan terms are the number of months when you need to pay for the loan. In comparison, the interest rate is the percentage of the loan amount added to your monthly payments.
You can compute your monthly payments through a car loan calculator. Most banks give you an auto loan proposal and calculate everything for you. But if you are looking to compare car loan offers to get the best interest rates and monthly payments, UpFinance has that feature on site.
How You Can Get approved for a Car Loan
As stated earlier, there are requirements to get a car loan. It means that not everyone is eligible for a car loan. However, if you meet the requirements, here is what you should do to get approved for an auto loan.
What to Look for When Applying for a Car Loan
Before you get an auto loan, you need to do your research and canvass for the best car loan proposals. To ensure you get the best loan deals in the Philippines, here are some factors you need to consider.
Loan Amount Limit
Although your loan amount depends on the car you wish to purchase, you are still subject to the loan limit. It means a bank will still look at your credit score and ability to pay and set an amount limit for your car loan.
For example, based on their assessment, you can only loan PHP 1 Million at max. Thus, you should ensure that the car you purchase is within that loan amount limit. The best thing to do is to aim for the cheapest car prospect.
Monthly Payment and Loan Terms
It would be best for you to make sure that the monthly payment is something you can afford without trouble. If the monthly payment is too costly, you should switch to a longer payment term or reduce the loan amount.
Also, ensure that you selected a loan term that you can still actively pay. For example, if you are considering early retirement, be sure your loan term will not overlap with that period.
Annual Percentage Rate
The APR is the interest rate banks will add to your monthly payments yearly. Some banks present their interest rates monthly to look as low as possible. Make sure to ask the bank for the annual percentage rate of your car loan before getting the loan.
Penalties and Fees
Aside from the monthly payment, car loans have fees and penalties that banks don’t usually include when they initially offer the loan. Don’t forget to ask how much these penalties and fees are so you know what else you need to pay.
The List of Documents Needed for a Car Loan
- Car loan application form
- Valid Government-Issued ID
- Proof of Billing
- Certificate of Employment and Three Months of Payslip (if employed)
- Certificate of Business Registration, ITR, Financial Statements, and Proof of Additional Income (if self-employed)
- Philippine Consulate-authenticated employment contract or Crew Contract and Three months Proof of Remittance (if overseas worker)
- Documents of Owned Assets (optional)
How to Apply for A Car Loan
The specific application process depends on the institution that offers the auto loan. Contact or visit your bank prospects to find out about their car loan application process. You can get their contact details and branch address on Upfinance.
The Best Car Loan Philippines Service
Now, you are prepared to start researching the best car loan deals in the Philippines. Lucky for you, you don’t need to visit each bank’s website to check out their car loan offers and list their features. That is because Upfinance has consolidated all that information for you.
You can research more about the auto loan offers on Upfinance. We have an online car loan calculator where you can do your computation. Also, we have highlighted car loan services with great rates so you can easily pick the lowest interest for your loan.
Explore the Upfinance website now! The best part about Upfinance is that you can directly apply for a car loan through the website. You need to sign up and supply the required details. Within minutes, you will get a list of legitimate car loan proposals from our partners to choose.
Author Maria Torres from Upfinance.
