Financial Blog

When you’re planning to buy a brand-new car, understanding car loan interest rates is essential. These rates directly impact how much you’ll end up paying over time. Even if the sticker price fits your budget, the interest on your loan could significantly increase the total cost of your vehicle. In this article, we’ll break down how car loan percentage rates work and what you need to consider when applying for an auto loan, especially in the context of current rates.

What Are Interest Rates?

A Car Loan Percentage Rate, or interest rate, is the percentage charged by banks or lenders as payment for lending you the money. This rate determines how much you pay over the duration of your car loan. Generally, longer loan terms tend to come with higher interest rates, meaning you may pay more in interest over time.

 For example, if you take out a ₱900,000 loan:

A 3-year term might have a lower interest rate at 21.5%.*

A 5-year term, while more affordable monthly, could come with a higher rate.

Choosing the right loan term depends on balancing monthly affordability with the total cost you’ll pay over the life of the loan.

*Based on Security Bank Auto Loan’s published rates as of May 2025

Brand New Auto Loan Rates 

Below is a table showing sample car loan percentage rates for brand-new cars. These rates vary depending on the loan term and whether you pay one month in advance:

• As you can see, longer loan terms generally come with higher interest rates. You also have the option to pay one month in advance, which can slightly lower your interest rate and help reduce the total cost of your loan.

What Affects Car Loan Percentage Rates?

• Loan Term: The table shows that longer loan terms usually come with higher interest rates. While they lower monthly payments, they can increase the total interest paid over time.

• Credit Score: Borrowers with strong credit histories are typically offered lower interest rates, as they’re seen as less risky by lenders.

• Down Payment: A higher down payment reduces the amount you need to borrow and lowers the lender’s risk—this can help you qualify for a better rate.

• Vehicle Type: New vehicles often come with lower interest rates compared to used cars, especially when banks or manufacturers offer special financing.

• Promotional Offers: Banks and dealerships may provide discounted rates during promotional periods or seasonal sales, especially for specific models or buyer profiles.

Choosing the Right Term

While a 60-month loan term can make monthly payments more affordable, it often comes with a higher interest rate—meaning you’ll pay significantly more in interest over the life of the loan. On the other hand, shorter terms such as 12 or 24 months typically offer lower interest rates, helping you save on overall loan costs. It’s important to strike a balance between manageable monthly payments and minimizing total interest paid.

Final Thoughts

When financing a car, it’s important to look beyond just the monthly payment. Consider the overall cost of the loan, including the interest rate and total interest paid over time. Choosing a shorter term may require higher monthly payments, but it can save you money in the long run. Always assess your budget, compare offers, and choose the loan option that best fits both your financial capacity and long-term goals.

Ready to find the perfect auto loan for you?

Explore flexible financing options and competitive rates with Security Bank Auto Loan today to get started!