What you need to know before getting a car loan

Updated Oct 14, 2021 | Same topic: Best Advice for Car Buyers

Everything you need to know about getting a car loan in the Philippines and the things you need to do and prepare.

To most people, a car isn’t just something you buy just because you suddenly want to. That’s because a lot of people who buy cars for themselves have tried their best to work hard to achieve this goal.

While there are wealthy people who are capable of buying cars whenever they want, most people treat this as a dream.

It’s a good thing though, that people no longer have to prepare millions worth of cash just to pay for a car in one blow. The good news is that there are now car loans if you don’t want to pay millions right upfront.

Today, we’ll be breaking down all the info you need to know about before applying for your own car loan in the Philippines.

Though every car sales attendant may look nice and helpful, they’re really aiming to sign you off to a deal that will best benefit them. This is why it’s still highly suggested that you do your own research for your own sake. You won’t only be able to understand the process of taking a car loan.

You’ll also be able to know if there are available options and choices in which you can benefit from the most.

So what are these options? What do you need to prepare to get a car loan? Is there anything you can do to get approved faster? How can you pay your loan back? Read everything you need to know right in this article from Philkotse.com:

Who can apply for a car loan?

Most banks in the Philippines only allow borrowers that fit the criteria listed below:

  • Must be a Filipino citizen living in the country or abroad
  • Must not be more than 65 years old when the loan matures
  • Must be 21 years old at the time of application.
  • Can also be a foreign resident residing in the Philippines but has qualified Filipino co-borrowers
  • Has a household income of P 30,000 to P50,000 per month.
  • Has a minimum of 2 years of profitable business record or employment

If the qualifications all apply to you then you’re ready to get pre-qualified.

Car, calculator and coins

There are now car loans if you don’t want to pay millions right upfront

>>> More to read: Ultimate guide for Filipinos on how to deal with car loan defaults

What is the pre-qualification process?

The process of pre-qualification tells you if you're actually ready for the burden of a car loan. It will also tell you the amount that you can most possibly afford to borrow. This requires you to answer a pre-qualification test online if you’ll be applying for a car loan in Metrobank, BPI or Security Bank.

The process of pre-qualification

The process of pre-qualification tells you if you're actually ready for the burden of a car loan

When applying for a car loan, keep in mind that late payment can also leave a black mark on your credit score. If you don't know about this, make sure to check our article on car loan defaults and voluntary surrender of vehicle Philippines.

How can I calculate my car loan?

Almost every bank in the Philippines that offers a car loan has a loan calculator. You can access this by visiting the respective bank’s website. This will let you estimate how much exactly you will spend after you borrow for your car.

How can I use a loan calculator?

An online calculator will help you compute the amount you’ll spend in regards to financing your dream car. Most car loan calculators will require you to choose the vehicle type that you like, the repayment term as well as the down payment.

Most car loan calculators will also require you to input the selling price of the vehicle you have your eye on. There are also some calculators that may ask for more info.

BPI Auto Loan

An online calculator will help you compute the amount you’ll spend in regards to financing your dream car

The results will reflect the amount of the loan. This is usually about fifty to eighty percent of the vehicle’s selling price. This will also show you the monthly amortization and the down payment amount.

You can always re-compute and change the numbers to see if it will change and be in your favor. Try selecting a shorter or longer-term or a lower or higher down payment.

Why would I need to compare car loans?

You need to compare car loans so you won’t have regrets once you find out that a particular bank has better terms than the one you chose. Researching will allow you to check which offer will be best suited to your financial capabilities.

Check which bank has the most suitable loan amount, repayment terms, interest rate and down payment terms that you can rely on. Banks like BPI, BDO, PSBank, EastWest Bank and Security Ban all offer comprehensive car loans.

car loan

Researching will allow you to check which offer will be best suited to your financial capabilities

These are applicable for both second-hand and brand-new vehicles for both business and personal use. Most banks also have varying maximum age limits when it comes to used cars.

A very good example is BPI. This bank only provides financing support for vehicles that are less than five years old. Security Bank, on the other hand, can accommodate vehicles that are as old as eleven years old.

Metrobank does not accept used cars as collateral when availing of their car loans. It also doesn’t allow the borrowers to use the loaned cars as a ride-hailing service or taxi.

>>> Make sure you know: 8 Things to Consider to Get a Car Loan in the Philippines

Which documents do I need to prepare for my car loan application?

So, once you’ve decided which bank you’ll be asking for help, it’s now time to prepare your application. You will need to gather all the documents that may be required by your chosen bank to prove your identity.

You will also need to provide proof of your income or profit if you have a business. Listed below are some common documents that are demanded by banks from their borrowers:

Government-issued valid IDs

Some examples of these are driver’s license, passport, Alien Certificate of Registration, SSS ID, OFW ID, UMID and so on.

Government-issued valid IDs

Government-issued valid IDs are required in the car loan application

Proof of employment

This could be your certificate of employment, payslip or income tax return.

Proof of business

You can present a business permit, bank statements or business registration certificates. If you’re self-employed, you can submit an audited financial statement.

Business permit

You can also present a business permit

Other documents

These can be payslips of those working abroad, certificate of employee and proof of remittance.

How can I submit my application?

Most of the banks today accept two ways of accepting applications. You can either refer to their website and follow their instructions or walk-in to the nearest office in your location.

Hanna Sanchez

Hanna Sanchez


Hanna is one of the most competitive swimmers in the country during her day. It was not long before she discovered her passion for the automotive industry as well. Nowadays, she balances her passion through writing as well as coaching.

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