Despite spiked gas prices and persistently unbearable traffic, cars remain a necessity in the Philippines. Among others, insufferable heat, unreliable transport systems, and infrastructure gaps have driven Filipinos to purchase vehicles that offer comfort from heat and rain, safety, and faster travel times.
Combined, these needs and comforts have resulted in car sales rising for four consecutive years in the country, according to data from the Chamber of Automotive Manufacturers of the Philippines, Inc. This consistent growth is a testament to the many Filipinos who have successfully turned the necessity of mobility into a reality through proper financial planning.
To some, it may seem like buying cars is as straightforward as budgeting one’s way towards enough savings to purchase the vehicle of their dreams. However, modern financing has created various methods that allow individuals to acquire cars in simpler ways, and possibly at lower prices.
One of the most common choices is bank financing, often referred to as an auto loan. Many major banks in the Philippines provide car loans with competitive interest rates and flexible repayment terms ranging from 12 to 60 months. Applicants for the loan are typically required to submit a completed application form, proof of income, valid IDs, and additional documents depending on the circumstances.
Another option is the in-house financing offered directly by car dealerships. This setup can be considered convenient because buyers can complete both the vehicle purchase and financing process in one location. The drawback is that interest rates may be slightly higher than those offered by banks in exchange for faster approval times and less stringent requirements.
Leasing is also a growing alternative for Filipinos looking to own a car. Under this arrangement, customers pay a fixed monthly fee to use a car for a set period, typically between two and five years. Once the lease term ends, the customer may choose to return the vehicle, purchase it at a predetermined price, or upgrade to a newer model through a new lease agreement.
With several financing options available, choosing the right one is only part of the car-buying process. Equally important is understanding how to make a practical and financially sound decision before purchasing a vehicle.
First-time buyers are encouraged to prioritize fuel efficiency, reliability, and low maintenance costs as these are more affordable both in their initial price and with their maintenance. Generally, vehicles like subcompact sedans or small crossovers are popular choices in the market, known for their budget-friendly entry point and reliable performance. Smaller vehicles are also excellent considerations that keep monthly gas and maintenance expenses low.
Should first-time buyers want more flashy yet still affordable vehicles, they may consider looking at second-hand vehicles. According to global data firm Research and Markets, a new car depreciates 20-30% as soon as the owner drives it off the dealership. In the first three years, it can even further depreciate by up to 50%, depending on the model.
Once an individual has chosen their car of choice, they begin to start looking at the vehicle’s sticker price, which is already pricey for most Filipinos, and takes years of discipline and sacrifice to save up for. Unfortunately, a car’s true cost can be much higher due to other factors separate from a brand-new model’s initial value.
Aside from the down payment, car buyers should also prepare for several additional expenses that come with vehicle ownership. These include Land Transportation Office registration fees, which are often covered by the dealer for the first three years but should still be considered in future budgeting, as well as car insurance, which is essential and commonly required throughout the duration of a car financing term. Buyers should also account for the chattel mortgage fee, a mandatory charge when financing a vehicle through a loan.
Beyond the initial purchase and financing costs, prospective car owners should also prepare for the recurring expenses associated with maintaining and using a vehicle daily. Fuel costs, which are particularly high for now, can vary greatly depending on driving distance, traffic conditions, and driving habits.
Additionally, regular preventive maintenance service (PMS), which includes oil changes and routine inspections every 5,000-10,000 kilometers, is also necessary to keep the vehicle in good condition. Likewise, comprehensive car insurance must be renewed annually after the first year of coverage. Drivers in busy urban areas such as Metro Manila should also budget for toll fees and parking expenses, as these can significantly add to monthly transportation costs.
Owning a car in the Philippines can provide convenience, comfort, and greater mobility, but it also comes with financial responsibilities beyond the price itself. Carefully planning for financing, maintenance, fuel, insurance, and other expenses helps buyers make smarter decisions that keep car ownership practical and sustainable in the long run. — Jomarc Angelo M. Corpuz
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