When you’re planning to buy a car, one of the biggest challenges you will face would be financing the vehicle. Unless you’re fortunate enough to be able to afford a car from the get-go, you’re probably going to need to look for some alternative financing options so that you’re able to own a car.


With that in mind, getting a car loan in the Philippines isn’t a piece of common knowledge for everyone. If this is your first time trying to buy a car and you want to get a car loan but aren’t informed about it, then this article is for you.


In this article, we’ll be talking about how to get a car loan in the Philippines and other information related to it that might be able to help you.


Different Car Financing Options


Before you get a car loan, it’s a good idea to familiarize yourself with the different types of car financing options available.

Bank Loan

A bank loan is probably one of the most common types of financing options available to someone who’s looking to buy a car.  A bank loan for car financing is a type of loan that enables you to finance the purchase of a car.

The bank will give you the money to buy the car and then take it back as collateral for repayment. The interest rates on these loans are usually much lower than those on unsecured loans.

This loan is typically repaid in monthly installments, which are then deducted from your monthly income.

The amount of money that you can borrow will depend on your credit score, the value of the vehicle, and the term of the loan. The more you make and the better your credit score, the higher your borrowing limit will be.

Home Equity Loan

A home equity loan is a loan that is secured by the equity in your home. The interest rate on this type of loan is usually lower than for other types of loans because it is secured by your home.


The money from the loan can be used for anything, but typically people use it to buy or improve their car. The lender uses the equity in the home to secure the loan, so if you default on your payments, they can take away your house.


Many people use this type of loan for financing their car purchases. It is typically cheaper than a traditional auto loan because it doesn’t require an appraisal or any other collateral.

Loan with the Car Dealership

A car dealership loan is a type of financing that is offered through a car dealership. This type of financing is available for both new and used cars.


The dealership will have an agreement with a bank or credit union to offer loans to the customer. The interest rates on these loans can be lower than other types of financing, such as a home equity loan or personal loan.


Another drawback is that you may not be able to get out of the contract if your financial situation changes after signing the contract. However, it has a much easier approval rate than with a bank.

Personal Lease

A personal lease is a lease that is not for commercial purposes. It is often used to finance a car or other vehicle.


In a personal lease, the lessee (the person leasing) receives the right to use the leased vehicle in return for making periodic payments. The lessee also has responsibility for routine maintenance and repair of the vehicle, although some leases may require that this be done by an authorized third party.

Credit Cards or Credit Unions

Credit cards are a great way to get approved for car financing. Credit unions are another good option for car financing. They offer flexible terms and longer loans. However, one thing that you need to keep in mind is that they usually have higher interest rates, and they have a lot of fees that they may attach to your loan.


You can look at reviews and complaints on the credit card or union company’s website before applying for their services.


What is the Difference Between a Secured and an Unsecured Loan?


Another way for you to categorize different types of car loans would be to see if they are secured or unsecured loans.


Secured loans are the most common type of loan, and they are backed by collateral. On the other hand, unsecured loans don’t require collateral to be provided, but they usually have higher interest rates than secured loans.


The main difference between a secured and an unsecured loan is that the former requires collateral while the latter does not.


Both secured and unsecured loans may be offered by a bank or credit union, and unsecured loans may be offered by a variety of institutions.


Dealership vs. Bank Financing: Which is Better?


The two types of financing options that people are likely to get for getting a car loan would usually either be from a bank or from the car dealership where they’re buying it.


Dealer financing is a popular option for many car buyers because it allows them to avoid the hassle of going through the bank or credit union. However, with car dealerships, there is a lot of pressure to buy and you may end up paying more than you wanted to or getting a car that you don’t want if you’re easily pressured by people.


Bank financing is a great alternative for those who want more flexibility and control over their loan terms. A bank typically offers lower interest rates and better terms than what you’ll find at a dealership, but this is offset by the fact that they don’t take your trade-in or offer any assistance with negotiating the price of your new car.


Steps on Getting a Car Loan in the Philippines


Once you’ve decided on what financing option you’re going to get, now is the time to get a car loan. Here are the steps that you should take:

STEP 1: Figure Out What Car You Want to Get That Fits Your Budget

Having a clear idea of what kind of car for sale that you need to get will make it a lot easier for you to dictate how much you need to loan. It also lets you know what budget you need to allow for the down payment and how much the rest of the car loan is going to help you.


If you’re still indecisive regarding the car that you want to buy, then you might not have a good idea of how much your overall monthly financial obligations are going to be.

STEP 2: Choose Between the Financing Options

We’ve covered before what the financing options are for getting a car loan. As mentioned before, the financing options that people most commonly opt for would be the financing option from the car dealership as well as the bank loan.


The financing option that you choose will dictate the requirements that you need to bring with you, the likelihood of getting approved for a loan, how much you’re going to get, the interest rate, and many more. That’s why you should weigh your options.

STEP 3: Check If You Are Qualified to Getting a Loan

The general qualifications for getting a loan approved usually from a bank would be the following:


  • Must be 21 years old and above, but not 65 years old once the auto loan matures
  • Must be a Filipino citizen, living in the Philippines and abroad
    • You can be a foreign resident of the Philippines as long as you have a qualified Filipino citizen co-borrower
  • Minimum monthly income ranging from PHP 30,000 to PHP 50,000
  • Minimum of two years of employment or profitability in the business


Even if you fall under these qualifications, there may still be reasons why you won’t get approved for a car loan. A good credit score and getting pre-qualified for an auto loan can help make it easier for you to know if you’re going to qualify for a loan.

STEP 4: Identify Your Financial Capabilities

Your financial capabilities will let you know how much downpayment you will be able to get. In conjunction with that, the downpayment that you are able to put into the car will let you know how much you need to loan from the financial institution of your choice.


You also need to know your financial capabilities because you want to make sure that you are able to live comfortably while still paying off your monthly dues.

Factors That Affect How Much Your Car Loan Will Be

If you want to know what factors affect how much your car loan will cost you, then here are some of them:


  • Type of car you’re getting
  • Price of the car
  • Your down payment
  • Loan term length


Knowing these factors will let you know how much you need from the financial institutions so that you can narrow down your choices based on the ones that can fulfill your needs.

STEP 5: Research Different Interest Rates

At the end of the day, it’s important to research all of your options when you’re looking for a car loan. You want to make sure that you’re getting the best possible interest rate and loan terms. This will help you save money in the long run and give you more flexibility.


There are some bank institutions that have online calculators to make it easier for you to figure out what their interest rates are.

STEP 6: Submit Car Loan Requirements

Once you’ve finally decided on the place where you’re going to get a car loan, it’s now time to submit car loan applications. Here are some of the general requirements that you need to prepare.


  • Application Form
  • Valid IDs and Photocopies of Valid IDs
  • Certificate of Employment
  • Income tax returns, payslips, or Form 2316
  • Business registration certificate, business permit, and audited financial statements if you’re self-employed


Do note that different financial institutions require different documents. It’s a good idea to double or triple-check with them what those are so that you are prepared when the time comes to apply.

STEP 7: Wait for the Loan Approval

Once you’ve submitted your application, there’s nothing else left to do but wait for the approval. These days, you can either do this online or walk into the financial institution.


Tips on How to Get Approved for a Car Loan


If you want to get approved for a car loan or have a higher likelihood of getting approval, then here are some tips you can apply.

Clean Up Your Credit History

If it’s going to be a while before you ever consider applying for a car loan, then use this opportunity to clean up your credit history. Have savings, don’t spend a lot of money, don’t get loans for a while, and so on.

Have a Bank Account

Having a bank account is necessary in order to get approved for a car loan. A bank account will show that you are credit-worthy and can be relied on to make your monthly payments.

Have All the Documents Ready

When submitting the documents or requirements to the financial institution, especially to the bank, make sure that you have all the documents ready. That way, you don’t get a rejection just because you didn’t bring all the documents with you. Plus, it would be way less of a hassle because you don’t have to go back and forth with submitting documents.

Don’t Change Jobs Soon Before You Get a Loan

It is important to know that changing jobs before you get a car loan approval will significantly impact your chances of getting the loan. The reason for this is that the lender will need to know that you have a stable source of income and if you just changed jobs, that can indicate something different.

Be Clear About Financial Capabilities

You should be as honest as possible about your financial situation. Even if you do get the approval of the financial institution, if your financial situation is incapable of taking that loan on, then they will eventually take back your car or whatever you had as collateral anyway. Therefore, it’s easier to be honest about it.


What to Do After Getting the Car Loan


If you get approved for the car loan, here are the next steps that you can take.

Get Insurance for the Car

You should get car insurance as soon as you get approved for the loan. The reason is that most people don’t think about insurance until they are already driving their new car. And if they wait until they need it, it could be too late.

Pay Your Monthly Dues

Of course, you surely don’t need to be reminded that you have to maintain the payment of your monthly dues. After all, as mentioned, if you don’t, they’re going to take the vehicle from you anyway or whatever it is that you signed up as collateral.

Make Sure to Process Documents After Fully Paying Off the Loan

It’s important for you to make sure that you process the documents after fully paying off the loan.


Some people think that they can just get the title and then forget about it. However, this can actually cause some serious problems in the future. The lender may not know that you’ve paid off your car loan and they may try to take your car back at some point in time. To be safe, just go through the process so that you are officially finished with your obligations.




Getting a car loan doesn’t have to be a scary thing. Doing your research will make it a lot easier for you to figure out what you need to do to be able to avail of one. That way, you are one step closer to being able to own the car that you want.


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