Purchasing your first car can be an exciting experience. You browse through different colors, makes, and models to get into the hype of driving your own vehicle. But that excitement can get you carried away with the frills and overlook your financing options.
The most vital part of the car buying process is the auto loan application (if you plan to get financing assistance). Applying for a loan as a first-time car buyer can be intimidating if you don’t know what you’re doing.
The lender will consider multiple factors before they deem you qualified to get an online loan in the Philippines. For instance, good credit and a steady source of income can help you step closer to getting a loan. But, there are other criteria lenders look for. Learn more about how to get approved for a car loan below.
What is a Car Loan?
A car loan pertains to the sum of money a lender lets you borrow to finance your new car. As part of the terms, you regularly pay back the money you borrowed bit by bit, plus interest. Most car loans are classified as collateral loans; the lender can repossess your vehicle if you miss your payments.
How to Get Approved for a Car Loan
Before you get behind the wheel, you must sort out your financing first. Accelerate the car loan process by preparing everything the lenders are looking for.
- Make sure to have a clean or excellent credit history
Your credit history can affect your loan terms. Rough credit history may land you with a lender who’ll only offer you a loan with higher interest rates. Consequently, you get better loan terms if you have a near-perfect credit history. If you’d like to see the state of your credit, you can access your credit report through the Credit Information Corporation (CIC).
A clean credit history reassures lenders that you can pay them back on time. Hence, your chances of getting approved on a loan increase if you don’t have any existing debts or if you have proof of your ability to pay.
- Have a steady source of income
A steady source of income is another form of documentation that proves you can make your monthly payments.
It’s best to talk to your lender about the source of income requirements early on to prepare them beforehand and avoid delaying your loan application. You can present your Income Tax Return BIR 2316, payslips, bank statements, or employment contract.
Present a good employment history
Together with a steady source of income, lenders also evaluate applicants for good employment history. Before applying for a car loan, you should have stayed with your current employer for at least two years. Individuals who have worked for a company for several years have better chances of approval than someone who has just started working since they can be deemed more financially stable.
Prepare the necessary documents
Whether it’s a new or a 2nd hand car, the required documents for a car loan will depend on the lender. The typical documentation needed is a filled-out application form, two valid IDs, income documents, and proof of billing. Get all your documents sorted out before applying for a loan for a smoother application process.
Be as Practical as Possible
Spending time browsing through loan options for your new sets of wheels pays off. Don’t rush getting a car loan; polish your credit history and establish a steady source of income so that your chances of getting approved are high.
When comparing loan offers, you should check out Asialink Finance’s auto loan. It’s the best auto loan option in the Philippines, with low-interest rates (as low as 1.5%) for car refinancing and 2nd hand car financing.
Apply now at Asialink Finance for loans with competitive interest rates! We’re one of the leading finance companies in the Philippines, offering multiple accessible loan options, from car loans to truck loans.