Car Financing Guide
I’ve finally bought my car! I’ll write more about it in the coming days but for now I’d like to share with everyone a simple guide on car financing for brand new cars. I’m not an expert in this so I can only write what I personally experienced in my quest to get a new car (lol). Anyway, this is pretty straightforward and I hope this helps anyone here who’s planning on buying a car anytime soon.
What is Auto Financing?
Car financing is basically you borrowing money from the bank or any financial services company to pay for your car of choice. Note that you can only finance up to 80-85% of the total value of the car. You will still have to put up 15-20% as downpayment. Here are the basic steps for the complete cycle:
1. Picking a Car
2. Getting your Auto Loan Approved
3. Downpayment
4. Getting your Car
It’s really simple actually. As long as you have good cashflow and you’ve saved up a comfortable amount of money in your savings account, you can easily get a car. Only problem here is making sure that you pay your monthly dues.
Picking a Car
This is the fun part! I strongly suggest that you really research on your options. Buying a car is a big purchase and will affect your cash flow for the next 3-5 years so better make sure that you’re making the right decision. You can go to all the dealers (Honda, Mitsubishi, etc.) and ask for a test drive of your potential next car. I also suggest that you read up on the experiences of other people in various car websites and magazines such as C!. One website that I really found very helpful was Yehey’s Tsikot. Check out their forums as they already have dozens of threads with comparative analysis on various cars, including the great VIOS vs CITY debate.
Once you’ve decided, you now have to decide on which bank or company will finance your car.
Documents & other Requirements
You will need a bunch of requirements for various stages of this cycle. Here’s a list of stuff that you’ll need and I strongly recommend you get them since you’ll need them for other stuff down the road.
- Certificate of Employment with Compensation
- ITR/Form 2316
- 2 Government ID’s (Driver’s License, Passport, SSS, etc.)
- Company ID
- Sedula/CTR
Collect all of the documents listed above, make photocopies, and store them in a personal vault so you can use them again in the future.
Getting your Auto Loan Approved
For this part, you can go directly to the bank to get an auto loan approved or you can ask your car dealer to look for the bank that will finance the purchase. It’s much easier if you let the dealer do the work and it won’t really make a big difference on the total cash you’ll cough up in the end.
After you give your complete information to the dealer, you need to inform them on how much you’re willing to go on the downpayment. Usually it’s 20% but they can go as low as 15%. You’ll also have to discuss the duration of the loan. If you have good cash flow, best option is 2-3 years. If you’re really scrimping, then you can go 5 years or even up to 6 years. Monthly amortization can play around the 10k-20k depending on your terms and the DP you put up. The higher the DP and the lower the terms, the lower the monthly amortization.
The dealer will then look for a potential bank or financial institution for the loan. From my experience, they’ll contact about 5-6 banks and all of these companies will do a Credit Investigation on you. Expect to recieve calls on your cellphone and at home to verify all the information you gave the dealer. Approval usually takes a day or two. If you’re lucky you can even get it approved in a few hours.
Once you have the bank approval for the financing and you have the downpayment ready, all you have to do is to go to the dealer, pay them the DP, sign a bunch of forms, and you can already bring home the car that you want.
If I don’t have cash on hand and I really want the car, how can I get the downpayment money?
Well - if you’re really desparate, you can get a personal cash loan from financial services companies like China Trust, Citi Financial, or GE. Note that the interest rate here is a bit high but you’ll be able to get the cash in 3-5 working days upon filing your application. The requirements for the Cash Loan are the same as the ones I listed above.
Please note that I strongly recommend that you don’t do this because this will make you pay a lot more for the car. It’s better if you just save up on your monthly salary and wait until you have the complete downpayment with you.
That’s it! Next time I’ll write a guide on how to get your passport (LOL). Thanks everyone and I hope you’re all having a good weekend. Cheers!
May 11th, 2008 at 3:21 pm
Sir, anong kotse binili nio? :D
May 11th, 2008 at 7:39 pm
pag gus2 nyo mabilis makuha yung kotse sa mitsubishi
mga 1 to 2 months lang waiting time..
sa toyota 4 months minimum grabe hehe…
maganda outlander ganda nang speakers at radio…
May 11th, 2008 at 7:45 pm
honda civic ba napili mo sir?
May 11th, 2008 at 8:05 pm
I really like the new Lancer GTS!! With the nine-speaker Rockford-Fosgate system and it’s very own 30-gigabyte navigation and stereo system! para ka nang may sariling ipod sa loob ng kotse mo! And it’s a cheaper than the Honda civic. Kung pede lang bumili ng pareho eh Honda Civic at Mitsubishi Lancer hahaha!
May 11th, 2008 at 8:07 pm
alm nyo ung megatrike?..ng ttransform..ahaha..ganda un..kahit bungguan ka ng limang ten whiller truck..sure wasak mga yun..megatrike transform..pagung….
May 11th, 2008 at 8:08 pm
fafa wauks xp mode nman jannnnnnnnnnnnnnnnnnnnnnnnnnnnnn
May 11th, 2008 at 8:58 pm
lagi ako nauunahan ni qt na humingi ng EXP MOD!!! x3×3x3
May 11th, 2008 at 9:31 pm
gumagana ba d2 yung navigation?
eh bigla2x nag sara nang kalsada d2 eh hehe…
May 11th, 2008 at 10:25 pm
ung megatrike..my nighvision pa..kahit anu anu meron un..my ref pa..pwde ka pa mg ragnarok dun..ahah..
EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE EXP MODE WAUKSSSSSSSSSSS
May 11th, 2008 at 11:21 pm
Wag naman mag spam ng EXP MODE kasi wala naman magagawa yan dude. ^^; Please keep comments like that during the weekly updates. Otherwise I’ll just delete them.
May 12th, 2008 at 12:18 am
magkano downpayment Wauks? around what? 50k? 100k? 150k?
May 12th, 2008 at 12:25 am
wauks, i suggest keeping a car for at least 15years that way the first 5 years of sacrificing doesnt get wasted. Why?
Amazingly, a brand new car becomes 2/3 of its value to the resale market the momment it exits the showroom. and becomes roughly 50% by the 3rd year.
however, to support my argument. the fastest depreciation rate comes in the first 3 years then it slows down dramatically(at least in practice at the resale market)
Accounting wise your car is fully depreciated by the 5th year but this is obsolete in practice. how many 10year old cars do you see in ebay still selling at 1/3 their value? thats why i follow the resale market practice.
Anyways, good luck to your car. expect also major repairs on the 5th year especially if its automatic.
May 12th, 2008 at 12:27 am
Wow new Hot Wheels !!
waaa Sir wauks pwde ba pa request na un gtb gagana lng sa pvp area nabubulok kasi gtb sa kafra amf
May 12th, 2008 at 1:34 am
anong mangyyri pag nag miss nang downpayment sa car?
sir wauks pwde pirate dagger nman libre nyo ngyn month
yung may atk +10? khit sa 350 or 500 plz…
May 12th, 2008 at 2:13 am
sir wauks now kapa bumili ng car na pataas ng pataas ang gas… aabot yan ng 80per L.
/gg
May 12th, 2008 at 5:33 am
hehe..exp mode.ahah
May 12th, 2008 at 7:09 am
bka diesel binili ni sir pra mura hehe
May 13th, 2008 at 4:27 pm
hay.. bigyan nyo ng exp mode ung isa jan.. lahat ng tread puro exp mode hinihingi kahit OT.. sumesegue pero request sa EXP mode pa rin ang huling hirit.. /swt
August 17th, 2008 at 2:10 pm
[...] Philippines Car Financing Guide | Waukster: Free MMORPG, Ragnarok Online, Ragnarok Online 2, Naruto,… May 11th, 2008 at 1:15 pm [...]
August 28th, 2008 at 12:13 am
wow very informative, thanks for the info. How about if i have my own business what are the requirements? Thanks in advance
August 28th, 2008 at 2:06 pm
We,re planning to buy a honda city but we’re kinda undecided if we will opt for the 1.3 or the 1.5 AT. Can anybody help me on this one. Appreciate your suggestions.