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Should You Buy a Car on a Loan?

Security Bank Car Loan
For us Filipinos, the ultimate dream is a simple one—to buy and secure a house for our family. While most of us dream of a better home, it’s also true that a good many of us end up buying a car instead -- sometimes as an early investment in preparation for a bigger and grander bucket list. Most of the time, it’s exactly what we need. Yes, we are even willing to forget about fuel, depreciation and maintenance costs,  and the countless hours spent in traffic as long as our family is safe and comfy. On the flip side, the gridlock on EDSA paints a sorry state of affairs that has somewhat become the embodiment of stress and anarchy in the Metro. With traffic and public transportation becoming a hot topic nowadays, so is acquiring the one thing that lets us traverse the urban jungle. The burning question is: What’s stopping you from buying a car? Let me rephrase: If you do need a car, do you even have enough cash on hand to buy one? One of the best, if not the best, way to finance your purchase is through a car loan. Many Filipinos are enjoying the convenience of getting their car financed through flexible and easy payment terms offered by lending institutions. If you’re having second thoughts and afraid to get a car loan, you should know that financing a car has never been so easy. Of course, you still want to make sure your application goes as smoothly as possible. Make a checklist of requirements and research. If you’re not sure how much you can borrow, you can try Security Bank’s loan calculator here. Another thing to note is that every bank has their own unique car loan programs: fast approval, lower interest rates, and free car insurance to name a few. To help in your car loan application, here are some tips you might want to consider:
  • Research for banks with good rates. You might get overwhelmed with the numerous offers from different banks all with their enticing car loan  options. Start doing your homework by researching banks that provide low interest rates. There are banks that offer 1-day approval with FREE first year comprehensive car insurance program—including acts of nature (perfect for the stormy Philippines)—that can protect your vehicle from accidents and damage.
  • Go straight to the banks. There’s nothing wrong with going to multiple in-house car dealers for car financing, but the best and safest flexi car loan deals are with the banks. Chances are, you can get the better deal for lower rates, not to mention the peace of mind that you’re dealing with a credible financial institution.
  • The bigger your down payment, the better. In principle, interest is charged as an add-on rate and not on diminishing balances, which means the effective rate is actually higher for car loans. You can lower interest expense by paying a higher equity portion. The bigger amount you pay upfront, the smaller your monthly amortization will be.
  • Consider buying pre-owned cars. Some banks also let you use the car loan to finance the purchase of either a brand-new or pre-owned vehicle. In a nutshell, buying pre-owned is cheaper but is more advisable if you’re looking for something short term. In terms of quality, however, you have nothing to worry about because bank-repossessed cars are not broken down. Remember, these cars were not given up because they were failing but because owners couldn’t pay for them anymore.
Car ownership is aspirational, and can give first-time (or even seasoned) buyers the fulfillment of their hard-earned money. Keep in mind that there is no lack of options here in the Philippines when it comes to financing. All it takes is some research and diligence on your part.

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