Financial Blog

Buying a car in the Philippines is no simple task. Part of the reason is the number of questions you’ll need to ask yourself at every step: “Do I buy a brand new or second-hand car?” “Should I buy or lease?” “How should I pay for my car?”

Trust me though, getting through this process is worth it. With the horrendous traffic situation in the Metro, owning a car in the Philippines has become synonymous with convenience.

Read more: The Best First Car for Every Budget

When it comes to paying for your purchase, buying a car is a lot like buying a house, in the sense that they’re both major investments for the long haul. Before even canvassing loan options for the best interest rates or monthly installments, you should ultimately decide whether buying a new car is really the most practical option for you at the moment.  Here are some things you need to keep in mind.

The operative word here is “need.” Instead of being sidetracked by all things flashy in a car, look for features that will give you maximum benefits (and the best bang for your buck).

Start by choosing the proper size. For example, SUV’s are great as a family vehicle, while smaller, more compact cars are ideal for young professionals or those with small parking spaces.

We can’t stress this enough: Consider Fuel Expenses. If you want more mileage for less fuel, it may not be the best idea to buy a car with an automatic transmission or a car that runs on gas instead of diesel. For city driving with heavy traffic, consider getting a hybrid car instead of a four-cylinder.

The choice between a new and repossessed car will greatly depend on your budget.

If you have the means to pay for monthly car amortizations, then go for a new unit. But if your finances are rather unstable, or you’re just really short for money at the moment, check with your bank to see their offerings on used or pre-owned vehicles.

Buying and leasing a car both have their pros and cons. It may be more costly to buy a brand new car since you need to settle a down payment and deal with monthly payments. The good thing here is that you can get a car loan in the Philippines to finance your car purchase. When interest rates are low, it’s more practical to buy a car instead of leasing one.

Let’s talk about car leasing for a bit. It’s similar to renting a car in a sense that your paying to use the car during the leasing period (which is typically longer than renting), and returning it when the leasing period ends. You incur the cost of depreciation, interest, monthly payments plus other fees. There’s also a limit on the car’s mileage and going over it will also incur fees.

In a nutshell, leasing is cheaper and is preferable if you just need a car for a few years. But if you see yourself needing a car for a long time, loaning is definitely the best option.

And let’s not forget: the biggest bummer, of course, is you never really own a car that’s on lease.

Whether you’re purchasing or leasing a car, your monthly car payments should not exceed 20 percent of your net income. Anything more should set off an alarm for you to step back and reconsider the deal you’re getting into.

Ask your broker or bank for an estimate of your monthly amortization based on the purchase price, initial cash out, interest rate, and loan period. Be firm and objective if the figures are something that you can afford.

You’ve decided on new or second hand, loaning or leasing; you’ve gone this far and you shouldn’t rush your actual choice of car brand and model. It’s important to avoid making decisions in haste. In other words, throw impulse out the window.

Make a list of all cars in your target category and narrow it down to your top three. This should be a good number to compare and contrast in terms of pricing, specifications, and features.

Sometimes, you’re strapped for cash at the moment. But that doesn’t mean you can’t get the car that you want. After all, getting a car is costly and would require you to seek out help from a dealer or a bank. If you are really determined to buy a car, try considering an auto loan. Owning a car is an investment and it’s definitely worth it in the long run.

Consider auto loans that have flexible payment terms and have low-interest rates. Try comparing auto loan deals from dealers and banks and see what’s best for you. If you’re undecided between a dealer and a bank, this article could help: Dealership Vs Bank Financing.

Check out how much you can borrow by using our Auto Loan Calculator below:

There’s nothing like having a feel of everything about a car—from the seats and the paint job to gauges and controls, brakes, and even the speakers. Here’s a useful guide on how to test drive your new set of wheels.

Go through the nitty gritty like how your choice of color looks in daytime, the feel of the clutch, and the noise of the engine. And don’t forget: make it clear to the car seller that you’re still in the scouting stage, so there will be no strings attached from your end.

Getting a car is not at all a simple idea that you just face head on. Following these tips will reward you with some peace of mind, assuring you that the car you’re driving home is indeed the right one.

If you’re still not confident with your decisions (or if all else fails), bring someone who’s car-savvy to help you along the way.