How to Choose the Best Car Financing Option in the Philippines

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Purchasing a car is one of the most significant decisions, especially if it is your first car. By choosing a car, you are committing to spend a lot of money on something. This can include gas, maintenance, insurance, repairs, and depreciation. It is important to pick a car that is right for you, and often, selecting a vehicle among a vast array of options is no easy task. 

You may get carried away by all the different car choices. Many vehicles have smart features that persuade you to buy a particular model. When you think about it, car shopping can be challenging and sometimes even confusing. But once you have surpassed that first step of narrowing down your selection, you will now have to deal with choosing the best car financing option.

Financing options come in different forms, according to the lender, your needs as a borrower, and the vehicle you are about to purchase. Here are the main options available to get a clear picture of the different car financing processes and variables.

4 Car Financing Options and How to Choose the Best One 

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There are different car financing options available in the Philippines. It is important to understand them to choose the best one for you and to secure your car loan approval later in the future. 

1. In-house Financing

It is sometimes referred to as “buy here, pay here” because you buy the car directly from the dealer. You may avail of this car loan option when you visit your chosen dealership, or through a car sales agent you may encounter at a mall. They usually have more attractive deals in the mall to entice people to avail of their discounts and packages.

This financing option typically requires a lower down payment than bank financing. This is a big help if you cannot afford to shoulder a large amount upon purchasing your vehicle. If you also cannot pass bank car loan qualifications or you do not have a good credit history, in-house financing is a good choice for you. 

One of the most obvious advantages of in-house financing is its convenience. Unlike other options, you get everything in one place. Since you buy and pay there, the car dealership becomes your one-stop shop to get your car. 

Although in-house financing offers a good jumpstart for purchasing your car, the consequence is sky-high interest rates. The rule of thumb here is, if you can afford a higher down payment, make use of it because this will help lower the interest and cut down the duration of your payment term. 

Car dealers often make “all-in” packages and promos when selling a car. They may mention freebies such as car accessories, fuel, and free chattel mortgage or comprehensive insurance. These items are not free; these charges are hidden in the fees and interest rates you are paying for. You must stay mindful of these tactics and avoid unnecessary add-ons. Checking other dealerships will also broaden your alternatives.

2. Direct Financing

This type of car financing is as simple as when someone else pays for your car, and you pay them back plus the interest. This includes lenders like banks and credit unions. Banks require a certain percentage for down payments but offer low-interest rates. The same applies if you were to get a car loan from credit unions and finance companies. These organizations are just less strict with credit scores compared to banks. 

Asialink Finance is one of the country’s online financing companies. Depending on your budget and chosen car, you can avail of their auto loan and 2nd hand car financing. Asialink’s auto loan has competitive interest rates and gets as low as 1.5%. You get to be in charge of making your periodic repayments according to the agreed term. Asialink’s 2nd hand car loan also provides the same advantages. 

Since banks and credit unions are generally reputable and trusted, you can avoid schemes that unreliable lenders might have. There are also perks if you have been a long-time customer of a bank, such as getting pre-approved for a car loan. You may also consider online loans in the Philippines.

Banks typically do not offer a flexible down payment despite the low-interest rates. They have strict requirements and will carefully screen you if you meet their qualifications. Having a good credit score helps in this department. Another disadvantage with direct financing is handling the paperwork and processing of your purchase.

3. Home Equity Loan

From the name itself, home equity loans use your home’s current value as security to get money to pay for your car. Since your home is a form of insurance, this can also be considered a collateral loan

This type of loan offers low-interest rates, and its payment term is significantly more flexible than other loans. You can arrange the payment to last as long as 10-15 years, which allows smaller monthly expenses. 

The extended repayment terms can also be a disadvantage because it prolongs your commitment to having to pay for something. You may have to pay closing costs on top of the interest rate, increasing the overall cost of your car. Another drawback with this loan is the risk of losing your home if you cannot maintain payments. 

4. Personal Lease

Leasing is another option you can look into. A lender buys a car and then leases it to you. Like with other loans, you would make fixed monthly payments and shoulder any maintenance and repairs within the lease period. You have three choices at the end of the lease term: return, refinance, or buy off the car. 

Leasing is somehow more budget-friendly because it usually has lower monthly rates and allows you to get a new car at the end of the term. The catch here is that you do not have ownership over the vehicle. But you are given the option to own it at the end of the contract when you are done paying for it. 

Ready, set, go! Finance your auto

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The automotive industry offers a broad range of vehicles that would indeed have options that would suit your needs. But remember, car financing requires a good amount of planning, research, and saving up. Now that you better understand those car financing options here in the Philippines, it is time to ask yourself, should I buy a car

It is important to make the right choices because buying a car is a big decision, and how you finance it should be an arrangement that would work for you in the long run. If you want the best car loan deals, apply now at Asialink Finance. One of the top financial institutions in the country, Asialink Finance offers a variety of handy loans with low-interest rates.

Gab Doromal