Many young adults consider getting their first car to be a rite of passage of sorts. It’s also one of the biggest and most important investments they’ll be making in their lifetime. Even when buying used, a secondhand car can still cost several hundred thousand of pesos.
Taking out a car loan is one of the easiest ways to acquire the vehicle of your dreams, but what does it really take to get approved for one? Is there anything a person can do to get approved faster? Below, we’ll discuss some of the possible answers to these questions:
Meet the Basic Requirements
Most banks in the Philippines are happy to accept auto loan applications from people who are able to meet a short list of qualifications. You must be between 21 and 65 years old, though not older than 65 by the time of maturation of the auto loan. You must be a Filipino citizen currently residing in the Philippines, though Overseas Filipino Workers (OFWs) living abroad can also apply for a car loan, provided that the beneficiary is a resident of the country. Your minimum monthly household or family income should be between the range of PHP 30,000 to PHP 50,000. Finally, you need to have been regularly employed or have operated a profitable business for at least 2 years.
Gather the Necessary Documents
Banks will require you to submit a number of supporting documents to verify your identity. For a smoother loan application process, you’ll want to have these on hand and ready when they ask for them. These physical requirements include copies of valid government-issued IDs that carry your photograph and signature, such as a passport or a driver’s license; income documents such as a Certificate of Employment, your latest income tax return, and 3 months’ worth of pay slips; and finally, the duly-accomplished application form. For self-employed applicants or business owners, you may be asked for proof of business registration, as well as your latest financial statements. Your chances of getting your application approved can hinge on how well you are able to complete these requirements, so be diligent.
Open a Bank Account
Unless you’re the kind of person who stashes wads of cash underneath their mattress, chances are, you already have a savings account with the bank of your choice. However, different banks offer different loanable amounts, and interest rates and flexibility in payment terms vary from lender to lender, so it’s still good to shop around to determine where you can get the best deal.
Having a savings account with the bank you’re applying for a car loan with can also help your application get approved faster, since there won’t be a need to cross-check if you have sufficient funds.
Being Creditworthy Helps
Banks can’t just dole out money willy-nilly. They’ll want to look into a person’s spending habits and ability to pay back loans, among other factors. They can evaluate this by looking at your credit score, which is affected by your credit payment history (how regularly you pay off your debts, as well as how much and whether you’ve done so on time), your credit utilization ratio (how much of your credit limit you spend), length of credit history (how long you’ve had your credit card or loan accounts), types of credit used, and how often you’ve opened new credit accounts.
The cleaner your history is, the better your chances are at getting your car loan approved. If your credit score is high and you do not have a history of delinquent payments, your application may be approved within a single banking day.
Keep Your Current Job
Lenders and banks are more inclined to approve your loan application when they see that you’ve been employed by the same company for at least two years. It signifies that you have a stable source of income and can be counted on to reliably make your monthly payments. Preserving your employment history is important, so if you’re looking to switch jobs or move companies, only do so after your loan has been approved.
It’s never been easier to apply for an auto loan, and the process is fairly straightforward. By doing a bit of simple research and coming prepared, you too can be one step closer to the car you’ve always dreamed of.