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Car loans of May 2022 in Philippines

Apply car loans in Philippines from companies verified by our specialists. On 27.05.2022 you have access to 1 loans with a rate of 0% per day. Increase your chances of getting money — fill out a multi-application with a free credit rating check.

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Car loans of May 2022

Car loans

In today’s time, it’s more of a necessity to have a car simply because of hectic daily commotions. The banks and lenders in the Philippines understand the situation, which is why they offer auto loans so that the citizens of the Philippines can afford a car by filling out an auto loan application and repaying it through fixed interest rates.

The companies offer convenient options to Filipino citizens like flexible repayment schedules, low-interest rates, etc. to attract more customers. However, the borrower must be aware of all these tactics and should properly understand the requirements before filling out the car loan application.

What is an auto loan?

The auto loan, also known as a car loan, is a sum an individual borrows from banks or lenders to purchase a vehicle. The process for applying for a car loan is similar to that of other loans. The loan duration depends on the term accepted by the borrower, which usually varies from 24 to 60 months. This type of loan is also known as financing and might include a variety of fees and taxes. The borrower cannot invest the amount borrowed for a car loan in any other use: they will have to invest the money in buying a vehicle. An auto loan is the safest way to get a vehicle without any hassle.

Main types of auto loans in the Philippines

Majorly, there are two types of car loans that one can avail in the Philippines:

New car loan

If an individual is planning to purchase a brand new car from a showroom but doesn't have sufficient funds in their pocket to make the said purchase, then they can apply for a new car loan from a bank or a lender. A car loan assists in bridging the gap in the fund and making the purchase, in return to which, the borrower will have to pay back the amount to the bank with interest over a set period, and one can do the same in easy monthly payments.

Car collateral loan

When an individual needs quick funds, then they can apply for a car collateral loan. If the borrower is eligible for the loan, the amount will get transferred to their account immediately. Now, the borrower might use the car as collateral to get funds to purchase a new car. One should keep in mind that the interest rates for such car loans are considerably higher than these of the other car loans.

Secured loan

In a secured auto loan, the borrower needs to place collateral or security with the bank while opting for a car loan. Essentially, car loans are secured by the very same vehicle the borrower intends to buy, or the borrower may be asked to deposit a sum of amount which would reduce the risk for the lenders or bank. The primary reason people prefer a secured auto loan is because the bank offers better terms and the interest rates are lower if compared to the unsecured card loan. However, it is not out of place to mention that if the borrower defaults on the auto loan, the lender can sell the car or the collateral to pay off the loan and cover up the loss. Secured car loan are available at a fixed interest rate, which is beneficial for the borrower as the repayment amount won't get fluctuated by the interest rates in the future.

Unsecured auto loan

Nowadays, opting for auto loans without any collateral or security is being very popular among the citizens of Philippines. The unsecured auto loans are given out on the basis of the credit history of the borrower. One can find these loans available with small time money lenders or institutions. If the borrower is unable to produce salary slips or any collateral, then unsecured loans are the best option available for them. Although one should always keep in mind that unsecured auto loans often come with high rate of interest, they are more flexible as well. In an unsecured auto loan, the risk is higher for the lender or the bank because if the borrower fails to pay back the loan, the ownership of the vehicle remains with the borrower. It is advised while opting for an unsecured auto loan to ensure that the borrower submits a larger down payment so that they have bargaining power with interest rates and tenure of the auto loan.

Refinance car loan

Car loan refinancing simply means borrowing money again to pay off or replace your existing car loan. It can either be from a different lender, or the borrower can also apply with their original lending partner. Refinancing a car loan can prove to be very useful in terms of interest rates and repayment schedules. Whenever a person applies for a new refinance loan, it comes with additional benefits, features, and terms. It also provides the borrower with enough time to evaluate each of these parameters.

Refinance allows the borrower to have lower interest rates, modify loan tenure, change the co-signer, or modify existing terms. A major drawback of refinancing is the cost of pre-closure. In most cases, in order to refinance, the borrower has to foreclose their existing loan which attracts an extra penalty of 2-5% based on their lending partner. Apart from that, refinancing a car loan will not give you the same value which you received on your first loan because of depreciation. So, if the borrower has already paid out a major chunk of his auto loan, it's better to stay away from refinancing car loans. However, if you are someone who is yet to reach that point and you have found a good deal, that offers better APR along with other favorable parameters, and you should not shy away from using refinanced car loans.

How to apply for a car loan?

The steps to applying for a car loan are similar to that of other loans.

  1. An individual can either visit the bank or apply from their home through the website.

  2. If the individual is visiting the branch, they'll have to acquire the requisite forms from the counter and fill them carefully.

  3. If the borrower is applying for a car loan through the website, then they will have to choose the type of a loan they are applying for. They will be redirected to another website to fill out the form.

  4. Once the forms are carefully filled, the borrower will be asked to upload or submit their ID and other valid documents.

  5. After that, the borrower will get a call in a few days in regard to either the approval or rejection of the loan application. In case of a of rejection, the borrower can sort the reasons and re-apply for the car loan.

  6. Once the car loan application is approved, the amount will be transferred immediately into the account of the borrower.

What are the main requirements for obtaining an auto loan?

Before applying for a car loan, the borrower should be aware of all the prerequisites to ensure quick approval. The loan process requirements are different based on your employment history.

Locally employed

Here, the borrower must be 18 years or older to be eligible for this loan. They will have to submit a certificate of employment along with a proof of income tax return and the BIR form 2316. The submission should also be attested with a photocopy of government-issued IDs. Apart from that, proof of billing is required to be submitted by a locally employed borrower.


Here, the borrower also must be 18 or above. However, they are also required to submit their bank statement for the last 3 months. Along with that, they have to submit the DTI registration, a photocopy of their government-issued identification, and their current proof of billing.

Applicant employed abroad

Apart from the regular details, here, the applicant has to present the summit's latest crew contract or employment contract duly authenticated by the Philippine consulate. Along with that, they also have to present their proof of remittance for last three months

Ways to get auto loans

Getting a car loan in today's time has become much more accessible due to the emergence of multiple lending companies that focus purely on auto loans. If you want to take a car loan, you can approach the following lending solutions.

Bank financing

In this car financing scheme, the bank or the lender will lend a specific amount so that the borrower can buy a new car. The tenure of the loan normally varies between 12 and 16 months. This type of financing scheme is also known as direct lending because the borrower gets the loan directly from the bank instead of going through the dealership. Financing an auto loan from a bank is one of the easiest ways to establish a good credit standing with the bank. The car loan interest rates in bank financing is lower than these of dealer financing.

Dealership financing

Another way of purchasing a vehicle in a car loan industry is through the dealer. This is one of the best options if the borrower is looking to buy and fund the car in just one place. Essentially the borrower and lender sign a contract wherein the former agrees to pay the loan with interest amount to the latter. Usually, the dealer has tie up with some banks who deal with all the loans and collect the monthly payments on time. An individual can find a variety of car financing options from multiple partner banks and lending companies. The loan application process is comparatively easier, and the approval is fast.

Credit card

One can also use a credit card to get the needed loan amount. Not many people would prefer this financing option to get a vehicle, but if the individual has a credit limit high enough to cover the cost, this is also a viable option to go. This kind of transaction can be arranged by the dealer.

Home equity loan

This is another car financing option available in the Philippines wherein one can borrow the money against the equity or the appraised value of the individual's home. The money individual receives for the home equity loan may be used for buying a vehicle.

How to repay a car loan debt

Repaying your car loan on time is very important because of its impact on your credit score. If you pay all your dues on time, it becomes easier for the bank to provide you with better offers for your next term. Repayments can be done through the following means:

Online repayment

The borrower can either choose to repay the auto loan by choosing the online mode. In the online repayment mode, the user will have multiple options like Gcash and other online merchants tied up with their banks. It is advised to look at the bank’s website and identify the online repayment options available. Once the verification is completed, the user can redirect to the payment form and repay the loan via the online vendor.

Over-the-counter repayment

If the user is not able to pay online, then they have an option to complete the payment by submitting the amount over the counter. For this, the individual is recommended to visit the official website of the bank and check the available options like the BDO centre and 7-eleven store and many more. To pay the due amount, the user can visit any of the listed stores and deposit the amount at the counter. Some banks provide access to loan repayment via an external remittance centres, but the borrower will have to check on the bank website whether their bank provides this option or not.

Pros and cons of taking a car loan

As there are so many options available, the borrower is lured into taking multiple car loans, which also buries them in a debt trap. To avoid such scenarios, one should analyze all the pros and cons of taking a car loan beforehand.


  • Auto loans may assist a user to improve their credit history. As long as the borrower is making the repayment on time, they will experience an enhancement in the credit score, which will assist the user in the future for financing requirements such as a home loan or other similar loans.

  • If the user has a willingness to go for the secured auto loan, the same comes with low-interest rates, which means that over a term of five years, the entire interest paid on the loan will be only a few thousand pesos. A secured loan has lower loan term, and often, the borrower can negotiate the interest rate.

  • One could get a brand new car without having to pay anything upfront. When it comes to auto loans, 100% financing is common, and most people do not have the necessary savings to pay for a car in full, so they would rather use their savings for a house deposit or investment and get a vehicle through an auto loan.


  • The depreciation rate of a car is higher, which means the amount you still owe to the bank might be higher than the market value of the car. One should keep in mind that the rate of the depreciation completely depends on the type of car.

  • If the auto loan is unsecured, then the interest rates may be higher to mitigate some of the risks. The interest rates completely depend on the credit history of the borrower, but in most cases, the lender covers the charged interest amount through the origination fee.

  • If, for any reason, the borrower opts for this scheme but is unable to repay the same on time, this might heavily affect the credit score. The negative impact on the credit score might cause future hindrance while availing of another loan.

Legal regulation of the car loans market in the Philippines

One of the pertinent legal regulations for financing companies to adhere to in the Philippines is to register themselves with the Department of Trade and Industry and the Security and Exchange Commission.

SEC has published a notice to all the lending institutions that, if any bank or lending company is found violating their terms, legal regulations, or restrictions, then they will be summoned by the security and exchange commission for direct inquiry. The SEC has the power to revoke the license and heavily penalize the financing companies.

Before opting for an auto loan with any bank, the user is advised to check for an online lending site. To know the website's credibility, the user should look for SSL and the padlock symbol demonstrating the security compliance. It is legally required for the bank to expressly mention the interest rate in the contract term. Without abiding by this regulation, the bank cannot charge the interest to the borrower.

What the total cost of a car loan includes

Many banks charge origination fees between 1%-5% in their loan terms, which can also be taken as a commission. For instance, if you chose ₱2000, and the bank charges 5% of the origination fee, then the loan amount you receive will be ₱1900, but the borrower will have to pay back ₱2000 with interest. These issues must be considered by every borrower before opting for car loans.

The total cost of a car loan might turn out to be more than just the principal amount and interest rate. One needs to read the loan contract attentively to get a better knowledge of which kinds of fees or penalties the bank can levy upon the borrower in case of a default or otherwise. There are many lending companies that also charge borrowers with an extra origination fee, which is deducted from the disbursed amount.

Apart from that, there is another fee charged, which is called the chattel fee, imposed by the bank for availing of a car loan. In the usual course of business, the rate of chattel fee ranges between 2-5%.

If you have the amount that will square off the loan once and for all, look for the prepayment charges that the bank will impose and then compare what is the better option: pay off the loan, submit the charges, and be debt-free or to go on with the usual loan term channel.


As per reports, car loans in the Philippines have seen a considerable increase in demand as Filipinos move towards a more convenient mode of transit. However, applying for a car loan out of the blue can be dangerous and push the borrower into a never-ending debt trap. Due to this, it has become even more important to evaluate all the advantages and disadvantages of getting a car loan for your next car.

The best way to buy a car is always with 100% cash, but if you are facing financial difficulties, it's wise to opt for a car loan with a low to average interest rate. The borrower can also apply for a personal loan and use that amount to finance a car. If you want to get a low-cost car loan, a good credit score is always helpful. It's important to know your credit score before you step in to apply for a car loan; this provides you with the knowledge to negotiate with the lender. There are many borrowers who are looking to apply for a car loan for a second-hand car, which can be problematic because there are low to fewer benchmarks to devise the current value of that vehicle. Due to this, the loan in most cases goes underpaid.

Keeping all that in mind, to be successful with your loan application, you will have to present all the required documents, along with attested income proofs. If you have presented all the documents properly and you already possess a good credit score, it will become much easier for you to get a car loan. All these tips can be helpful for individuals who are looking to apply for a car loan.