There are special privileges attached to having your own car: you’re better equipped to handle the Philippines’ traffic situation, you have more freedom to choose your daily routes, and your time is less tied down to the schedules of public transportation. These practical considerations as well as others enjoying the freedom to travel, make it especially appealing to own a car. And if you don’t already have one, you may be thinking of getting one through a car loan program at your local bank.

You wouldn’t find it too difficult as most banks have streamlined their car loan application procedures for easier compliance. But that doesn’t mean that you’ll be approved the same day you hand in your papers. You will need to meet certain conditions to guarantee your loan acceptance 100%.

The most common conditions are listed below. Keeping these in mind and preparing accordingly can increase your chances of being approved!

    1. Be at least 25 years old or have a co-signee who is of eligible age. Most car loan programs in the Philippines require that you’re at least 25 years old. But if you can meet the bank’s standards of being financially secure before you’ve hit your 25th birthday, you can opt to have a co-signee to sign all the paperwork with you. This practice is observed by financial institutions to ensure that someone of that age is legally responsible for the loan’s repayment, saving the bank any legal troubles.
    2. Prove that you have a stable source of income. To predict how reliable you will be in paying off your car’s monthly amortization, banks will be looking at your income. You’ll have the highest chances of being approved for your loan if you have a legitimate, consistent means of income,  (i.e., reasonable for what you will be paying for your car). Thankfully, it will be easy to prove this to your bank with documents like a Certificate of Employment, the Bureau of Internal Revenue (BIR)’s Income Tax Return form or Form 2316, or an ID from the Professional Regulation Commission (PRC) to prove that you are a highly paid professional (architect, engineer, doctor, lawyer, etc.).
    3. Maintain a bank account that your creditor deems healthy. When it comes to securing a car loan, having a lot of cash in your bank account is important. However, it is not the only thing that the issuing bank will be paying attention to. They will also judge the account based on whether or not it has enough healthy activity behind it namely, regular and consistent debits and credits that are expected of someone of your station. These will be assessed before they allow you to use it for your car repayment.
    4. Pay off all your outstanding debts and show an excellent credit history to your bank. You are more likely to get your car loan approved if you come to the bank with a clean borrower’s slate (i.e., showing them that you have no other outstanding debts or loans to get in the way of your car repayment). It’s highly recommended that you collect proof of paying your debt on time like your credit card bills, to give your bank a good impression of how you manage your credit obligations.
    5. Time your application for when you’re secured in your job. Many financial experts deem the right time to apply for a car loan as three years into your current job. Conversely, it’s not recommended that you apply for a loan right after you switch jobs. For better chances of approval, you should have tenure or at least three years’ worth of experience at your current job under your belt.
    6. Opt for a down payment that is higher than the bank’s minimum. Most banks require at least 20% of the vehicle’s suggested retail price (SRP) as a down payment before the loan period begins. But it would actually be a good idea on your part to put down a higher sum that for your down payment. On one hand, your bank will see you as a more reliable and committed borrower, and on the other, you’ll have a smaller amount to pay for your monthly amortization and thus, be charged less interest on it.

Don’t think of a car loan as an application that can be prepared overnight. Instead, think of car ownership as a long-term goal with similar long-term specifications for the fulfillment, as payment will take place within a span of 12 to 48 months.

Above all, be diligent with your documents and careful about managing your money. If you’ve achieved that, then there won’t be much in the way of getting your car loan stamped for approval!