The Ultimate Guide to Car Loan Applications in the Philippines

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The Best Car Loan Deals in the Philippines

How to Apply for a Car Loan in the Philippines

Buying your own car is just one of the few things that make you feel like you are next-level “adulting.” It’s just one of the most exciting things because it’s such a huge investment, and it gives you more than just a display of wealth–it’s more about comfort, convenience, and safety.

The Best Car Loan Deals in the Philippines
The Best Car Loan Deals in the Philippines

If you’re already thinking of purchasing your dream car, congratulations! There will be lots of deciding factors you need to consider when you finally make a move. The biggest factor, of course, would be financing it. Not many people can afford to make a one-time payment for cars–which is why auto loans are a thing. It’s normal and secure if you make a transaction with legitimate dealers.

Let this be your guide to know all the tips and step-by-step guides in applying for a car loan in the Philippines!

What does a car loan mean?

A car loan means borrowing money from a financial institution or a company to purchase your car. In return, you have to pay them in monthly payments with interest. This practice is legal and is also recommended for those who cannot pay the full price of a car upfront. Monthly payments typically range from 12 to 60 months, depending on the institution you’re applying for a loan from.

What are the types of car loans?

There are several types of car loans that you can use to finance your car:

Secured Loans

This type of loan is usually the easier way to get a loan. It means that your car will be used as collateral. The bank or lender will repossess your car if you cannot pay your monthly payments. Secured loans allow lending a large amount of money, unlike unsecured loans. If you’re getting a secured loan, make sure you can pay your monthly payments consistently to avoid getting your car repossessed.

Unsecured Loans

This type of loan is normally used for borrowing smaller amounts of money. It takes a bigger risk for lenders because, unlike secured loans, there is no collateral. However, this kind of loan charges higher interest rates. You’ll need a good credit rating to be eligible for an unsecured loan.

Who is eligible to apply for a car loan?*

Not all people can apply for a car loan. To prove that you can shoulder the usually large amount of money to purchase a car, you need to be:

  • Filipino citizens are at least 21 years old and not more than 65 years old when the loan term ends
  • Employed for at least two years in your current company or at least 2-3 years employed (if overseas)
  • With a minimum gross monthly income of P30,000 to P50,000 (depending on the bank)

*Eligibility may vary depending on the financial institution

What are the requirements to get a car loan?

Find the Best Car Loan in the Philippines
Find the Best Car Loan in the Philippines

Pre-processing requirements* vary depending on the financial institution, but here are some of the usual things financial institutions need to process an auto loan application:

For locally employed

  • Duly accomplished application form
  • Photocopy of valid ID
  • Latest ITR or Form 2316 or payslip
  • Certificate of Employment with Salary

For self-employed

  • Articles of Incorporation/by-laws
  • Photocopy of audited financial statements
  • Bank statement/passbook photocopy within the last 3 months
  • DTI Registration
  • Income Tax Return
  • General Information Sheet

For overseas workers

  • Certificate of Employment
  • Proof of monthly remittances
  • Notarized Special Power of Attorney
  • Crew Contract and Exit Pass

For businesspersons

  • Business Registration Certificate
  • Financial Statement
  • Proof of other income
  • Trade references
  • Rental or Lease Contract (for those with rental of properties)
  • Photocopy of title (for those with rental of properties)
  • Business Permit

For foreigners

  • Alien Certificate of registration with work permit
  • Current employment contract

For practicing doctors

  • Clinic schedules
  • Income Tax Return with audited financial statements

*Pre-processing requirements vary depending on the financial institution. The abovementioned requirements are just the usual and may be subject to change.

What is an Auto Loan calculator?

This online calculator lets you compute your possible monthly car loan payment. Many banks have these on their websites, giving you an overview of how much you will pay for the car you want. It usually consists of the brand of car, the type of car, the percentage of your down payment, the loan term, and the car price. This is a helpful tool to calculate your car loan because you can easily compare which bank may give you an advantage over the others.

We’ve linked some of the Philippine banks’ auto loans calculator listed below:

Note: The computation for auto loans are for illustration purposes only. Actual computations are given upon processing the application.

How to Submit Car Loan Application

Once you’ve prepared all the requirements and compared car loan pricing of different banks and lending institutions, it’s time to submit your requirements. Make sure these are authentic documents to avoid getting your car loan denied because of falsified documents.

There are two ways to submit your application:


Bring the necessary requirements, both original and photocopy, when you go to the bank.


Most banks now have a website where you can upload a scanned copy of your requirements so that you won’t have to physically go to the bank to submit the hard copies.

How long does a car loan application get approved?

Most banks usually take only one banking day to process applications. However, to save time, you may take pre-screening qualifications online to check whether you may pre-qualify for a car loan.

What to do once the auto loan has been approved?

Congratulations! You’re one step closer to buying the car of your dreams. Now that you’ve been approved, you need to do the following:

  • Sign the loan agreement. Make sure to read it carefully.
  • Provide any other additional documents that the lender might need from you.
  • Get the check for your car loan.
  • Pay for the car’s downpayment (if applicable) and other necessary fees.
  • Get a car insurance policy.

What are the possible reasons for getting a denied car loan application?

Don’t fret because you can always reapply. Some factors affect auto loan applications. Here are some of them:

Poor credit score

If you have unsettled debts, then it might be a factor why you got your loan rejected. Your credit score tells the lender if you can pay your monthly payment obligations to them when you finally get your car. Make sure to settle your debts before considering applying for a car loan.

Loan amount

Before buying a car, you must ensure it fits your budget. Sure, your gross monthly income falls in the range of the required income, but if the car you want to purchase is not commensurate with your income, then the financial institution might reject the amount you’re loaning. It’s important to decide upon purchasing a vehicle that fits your budget, leaving extra for other expenses such as insurance, maintenance, and other sudden car expenses.

Irregular income

Most banks require borrowers to be employed for at least 2-3 years in a company to be eligible for a car loan. This tells them that you have a stable flow of income. Suppose you’ve been jumping from one company to another. In that case, chances are it can suggest that you won’t be able to repay your monthly amortizations since you don’t know whether you can pay on a particular month.

Falsified documents or Paperwork errors

This can be prevented if you properly accomplish the initial requirements for the auto loan. Never falsify a document because it might just cause you more trouble. Incomplete or incorrect information may also further delay your loan request. Before applying, you must double-check and prepare all the documents needed to make the process smoother for you and your chosen bank.

Things to consider after getting a car loan

Getting your car loan approved doesn’t end there. There are more things to accomplish once you get the car of your dreams. Here are some of them:

Get comprehensive car insurance.

Aside from being required by law, it safeguards your car from liabilities. But before you get enticed by free car insurance, compare and do your research. Know the insurance’s coverage, services, and pricing.

Pay your monthly payments diligently.

After getting a car loan, you’ll need to pay for the monthly amortization. Ensure that you don’t have missed payments, or else you might just end up getting your car repossessed–meaning you loaned and paid for a few months for nothing. This is why it’s important to buy a car that fits your budget–it might not be your ultimate dream car, but if you can pay for your monthly payments without compromising anything, it’s worth having, after all!

Process requirements after paying off your car loan.

At last, after years of payment, you’re only a few steps away from being the legitimate owner of the car. To process this, go to the bank, check the collateral document’s availability, claim the documents, cancel your chattel mortgage, and head to the LTO branch to remove encumbrance, which means that the loan has been fully paid.

Now that you’ve learned all the tips and guides to car loan applications in the Philippines, research well on the car you’re eyeing and the bank you want to loan from. Consider alternatives, ask other car owners, and prepare your documents to ensure everything goes well. It can be a long and tedious process to finally finance a car, but nothing worth having comes easy, right?


What happens after you are approved for a car loan?

After getting the car loan approval, the bank will provide a list of instructions that includes all the needed documents to proceed. Review the terms, payment schedule, and vehicle guidelines before you meet your car dealer.

Do you have car loan experiences you might want to share with the readers? Share it with us in the comments section below!

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