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Buying a car in the Philippines can be quite an ordeal, especially if it’s your first time and you don’t know what to expect.
We’ve all been there. That moment when you have finally come to realize that owning a car is a necessity, not a luxury. You’ve been bumming rides with friends or taking the bus for a while now and it’s time to get your own set of wheels.
But where do you even begin?
There are lots of things to consider when buying your car. We’ve prepared this comprehensive guide to ease that process, with discrete sections to cover whatever your specific car-buying needs might be.
Buying a Brand New Car vs. Buying a Second-hand Car
The first step in your journey is deciding whether you would like to buy a brand new or second-hand car.
Most prospective car buyers already have a solid idea of which route they would like to take, but for those who are still unsure, the following section should help you better understand which option works better for them.
Pros & Cons of Buying a Brand New Car
Going with a brand new car is a no-brainer if you plan on using a car loan to finance your purchase. The loan terms for new cars tend to be better than those for used ones, especially for newer models.
Most car dealerships offer flexible financing plans with low-interest rates, something that not all second-hand car dealers can offer.
Buying a brand new car is also your best choice if you’re in a rush. You won’t have to do as much research or legwork as you would for a used car. Just visit a showroom near you and pick a model that’s in stock or order one with the options that you prefer. If you have any questions, a sales rep will always be happy to assist you, especially if they smell a sale coming.
Brand new cars also come with a manufacturer’s warranty, which means that the manufacturer will be responsible for any major repairs on your vehicle for the next few years.
This is especially important in the Philippines, where unscrupulous mechanics can easily take advantage. If you don’t know the difference between a carburetor and a transmission, you may want to go with a brand new car just to save yourself the headache of dealing with them.
Brand new cars are also more fuel-efficient on average, helping you save more in the long run.
Even though buying a brand new car is a great option for the reasons outlined above, it’s not without its downsides.
The main problem of going this route is brand new cars usually depreciate at a much faster rate than used cars. Few things depreciate faster than a brand new car: its value drops by 10% the moment you drive away from the lot.
It doesn’t stop there.
The average depreciation rate of brand new cars after five years is 63%—and that’s only if you take good care of it. If you’re the kind of driver who likes to push your car’s limits, you can expect an even steeper drop in value over time.
Because of how quickly their value depreciates, reselling brand new cars is often a challenge. How many people are going to want a two- or three-year-old car that has already lost half of its value? If you plan on reselling your brand new car within five years, you might be shocked at how much more it will cost you if you factor depreciation costs into the equation.
Full insurance coverage is also a prerequisite for financing a brand new car and it can get expensive very fast. There are several factors that determine how much you’ll pay in premiums, but you can expect it to be higher the newer the model is.
Pros & Cons of Buying a Second-hand Car
As we noted earlier, the key downside of buying a brand new car is depreciation. If you go with a used car, you won’t have to worry too much about that—since its previous owners already took the hit for you.
It sounds kind of mean, but depreciation is your friend when it comes to buying used cars.
If you are eyeing a brand new car model you can’t afford, just wait a few years; its price will go down as time goes on, especially if it’s a more popular model. Because such cars—think cars like the Toyota Vios or the Honda Civic—are so common in the second-hand market, it will be easier to find a deal that’s perfect for you.
On top of that, while a brand new car’s value drops pretty much as soon as you sign its papers, a second-hand car can maintain or even increase its value if you do a great job taking care of it—making reselling a much more attractive option down the line.
A used car is also much less expensive than a brand new car, meaning that monthly installments and insurance premiums will typically be lower.
Note, however, that it isn’t uncommon for insurance providers to reject applications for cars that are older than 10 years old. More often than not, you’ll still be able to get insurance for cars of that age, it will just take a bit more work on your part.
Because used cars are, by definition, previously owned cars, they may not always be in the best condition.
They can have mechanical problems that were covered up before you bought them; they might also need repairs that were never done; some parts could even be missing altogether. There’s no way of knowing until you take it for a test drive, or have a trusted mechanic examine the car for you.
Such issues are less common if you buy a second-hand car from an authorized dealership, instead of a private seller.
Secondary market cars from dealerships should have some form of warranty that protects you from such problems, so you won’t need to worry about them as much. This peace of mind will, of course, come with extra costs.
If you have a trusted mechanic or know your way around an engine, buying a second-hand car from a private seller becomes a more attractive option.
Which is Right for You?
For most people, buying a car is a serious financial commitment. Aside from your home, your car is probably the biggest single purchase you’ll ever make. A wrong decision could haunt you for years.
So we understand how important it is to get it right the first time.
While we would love to give you a straight answer, the truth is that there is no one-size-fits-all answer, as the perfect car can change depending on your lifestyle and needs.
If you don’t mind paying a bit extra, brand new cars are significantly better than old or used vehicles in terms of reliability, build quality, and gas mileage. You also get a robust warranty and a dealer who is obligated to help you out in case of any trouble with the car.
You’ll also be saving lots of time by going with a brand new car. Simply visit any dealership and you’ll be able to choose from an entire fleet of new cars. Agents will patiently explain all the features of each car and even allow you to test drive them.
On the other hand, buying a second-hand vehicle is much cheaper than getting a brand new car. You also get a wider range of choices because there are more cars available, including older models that you can’t find at new car dealerships.
Second-hand cars are an especially great choice if you know a lot about cars, or have someone in your corner who does since you’ll be better able to gauge a used car’s condition and spot potential issues before making your purchase.
How Much Does it Cost to Own a Car in the Philippines?
We’re not just talking about car payments, but all other expenses that come with owning a car.
If you want to know how much a car really costs over its lifetime, then you need to factor in things like fuel efficiency, insurance, Land Transportation Office (LTO) fees, routine maintenance, occasional repairs, and parking or toll fees.
There’s no denying that cars with good fuel economy offer incredible value over the long term. These tend to be the smaller cars in a class.
Going with them means you’ll be spending much less on gas than other people who drive bigger and more powerful vehicles.
If saving money is important for you, we suggest sitting down and estimating just how much a car’s fuel efficiency will help you save each year to see if the amount matters to you.
Remember to factor in driving conditions, how far you drive every day, and which kind of fuel your car uses.
All registered cars in the Philippines must have Third Party Liability (TPL) insurance. This covers injuries to other people, as well as damage to their property due to your negligence or mistake.
It’s up to you whether you want to spring for other types of insurance for your car, such as comprehensive insurance, collision insurance, and personal injury insurance. These types of insurance help cover damages to your car and medical expenses that you may incur in the event of an accident.
Forgoing any insurance can be tempting, especially if you’re broke. But, as we all know, accidents are never planned.
What we can say for certain is that, if an accident does happen, you’ll look back at the time you signed your insurance papers with a whole lot of gratitude.
Car insurance costs vary based on several factors. We suggest booking a meeting with the agents at your preferred car insurer to get a better idea of how much it will cost for you.
A ballpark figure for insurance premiums for cars in the Philippines is PHP 15,000 per year.
There are several fees you must pay to the LTO as a car owner. These fees cover your car registration fees (renewed every year), emission testing fees, and fees to extend your TPL coverage.
Different models of cars are usually subject to different fees. Generally, you can expect to pay the LTO around PHP 3,500 per year.
Spending money on regular maintenance is crucial if you want to keep your car running like new. Some types of problems can be easily diagnosed and fixed by amateurs, but other repair jobs require the services of a professional mechanic.
An oil change is recommended every 5,000 kilometers. This might seem like a lot, but daily drivers should hit this mark easily in three months or so—even less if your job depends on driving.
If you drive an older car model, a tune-up may also be necessary every 10 to 20 thousand kilometers.
If washing your car on weekends isn’t your idea of fun, you’ll also have to prepare for periodic car washes—as well as extras like tire black and waxing if you want your car to look as new as possible for longer.
It is hard to estimate routine maintenance costs as they depend on how important your car is to you, how good your skills are at fixing things, and the age of your vehicle—among other things.
We would recommend setting aside PHP 30,000 per year for newer cars to be safe, and a little bit more for older ones.
In addition to routine maintenance costs, you’ll have to prepare for unforeseen car repairs. If your car breaks down in the middle of the night, you will not only have to pay for a new battery or part but also for towing fees.
Routine maintenance can help prevent some problems, but it won’t help much if your engine overheats, for example.
It’s impossible to provide an estimate of how much you’ll spend on repairs each year since the nature of the problem and how bad it is will determine your costs. The amount of money you’ll spend on car repairs is hard to predict and even harder to control.
No one ever plans on an accident, which is why they can be so devastating. It’s up to you whether you want to beef up your car insurance or take out a separate emergency cash fund for these kinds of emergencies.
Parking or toll fees
Parking or toll fees can be easy to overlook. But parking or toll fees, however small they are individually, snowball quicker than you might expect.
This is especially true if you live or work in an area with notoriously high parking or toll fees.
Alabang residents who work in Makati, for instance, can expect to pay nearly PHP 10,000 a month just on South Luzon Expressway (SLEX) toll fees and standard Makati parking rates.
And that’s only if you always drive and park correctly—fines can be an additional drain on your wallet if you aren’t careful.
Related: Personal Finance 101
How to Buy a Brand New Car in the Philippines
Buying a brand new car is definitely easier than getting a second-hand car, but it can be an overwhelming decision if it’s your first time.
We’ve outlined the basics of buying a brand new car below to help you make an informed purchase:
Step 1: Set your budget
Before setting your sights on a car model, you should be clear on exactly how much you can spend before you start shopping. It is easy to get carried away at a dealership, so set clear financial limits on yourself to avoid being taken in by overeager or pushy agents.
Your budget covers not just your car’s sticker price, but other costs as well—which we covered above. A few of the costs you must take into account are fuel, maintenance costs, parking fees, and insurance premiums.
Also, consider the cash you will be able to pay upfront. Dealerships usually offer a variety of down payment options. Specific terms can vary, but a useful rule of thumb is that the higher your down payment, the lower your monthly installments.
It’s best to prepare at least 20% of the car’s total value (for the down payment). So if the total value of the car you’re looking to purchase is P1,000,000, you need to prepare at least P200,000 for the down payment.
We suggest taking the time to sit down and calculating out all your costs in detail before shopping around. You could also ask someone more experienced—such as a friend or a family member—for their help.
Far be it for us to tell you exactly how much you should spend on a car or what to look for when shopping around. One person might be looking for something flashy and powerful, while another might want an affordable, reliable daily driver.
No one can stop you if you are willing to eat instant noodles every day for a year straight to afford your dream car.
But if you have other obligations to think about, the time you spend crunching the numbers can help you make a better purchasing decision that won’t adversely impact your everyday life.
Step 2: Research the types of cars you want
After setting a budget for yourself, you should next get a clear picture of the kind of car you want to get.
Do you want a low-key sedan that won’t raise eyebrows? Or do you want a sleek and shiny sports car that screams “I’ve made it”? Do you want a Sports Utility Vehicle (SUV) that can handle rough driving conditions? Or are you looking for an all-around reliable car that won’t break down on the road?
There are many different types of cars in the market, and finding one that is perfect for you can feel borderline Sisyphean if you don’t know what to look for. Fortunately, there are lots of resources online that help with this kind of research.
You can check out official car websites to see the different models and brands that are available in the Philippines. For each car, you’ll find a detailed description, photos, prices, and listings for car dealerships—all of which can help you learn more about the things you value the most in a car.
Car blogs are also a great resource. These blogs are written by car enthusiasts who take it upon themselves to share their knowledge and experience with others.
You can learn a lot from fellow car enthusiasts, including their opinions on the different brands available in the Philippines.
Try to go with blogs with writers whose tastes are similar to yours. Some blogs cater more to sports car enthusiasts, while some are written for more practical-minded shoppers.
There are thousands of car bloggers out there from all sorts of backgrounds, so finding one that matches your needs should just be a matter of time. We highly recommend the following content creators:
- Autodeal’s blog and YouTube channel
- TopGear Philippines
- Carmudi Insider
- RiT Riding in Tandem’s YouTube channel
Online platforms such as Carousell can also be helpful. Listings from other car enthusiasts can be a great way to get information and compare prices without going through the hassle of visiting a dealership.
Step 3: Decide on the best car for you
Now that you have a clearer sense of the type of car you want, it’s time to decide on which model is best for you.
List the features you can’t do without as well as features that are simply nice to have.
While we understand the allure of brand loyalty, keeping an open mind regarding a car model or brand can make it easier for you to make an objective assessment of all your options.
Use your research to narrow down your choices and compare three to five different models. You can make a choice before looking around, or leave it for later after you’ve had the chance to visit dealerships and test out different brands.
Step 4: Shop around online or visit nearby dealerships
Visiting a dealership is the best way of finding out about the features of each brand and model available.
If you are still having trouble making a choice, don’t be afraid to visit more than one dealership so you can compare their prices and features side-by-side. While at the dealership, you should also ask if they have any promotions or discounts that could lower prices further or give you a better deal.
It is not unusual to be reticent about visiting car dealerships nowadays, with the COVID-19 pandemic still going on.
Online platforms such as Carmudi and Carousell are an excellent way to check out your target car without having to go through the hassle of visiting an actual dealership.
Step 5: Test drive your target car
Before committing to buying a brand new car, a test drive is mandatory. Remember: unless you’re obscenely rich, you’ll have to drive this car for a decent chunk of time. Be sure it is something you can live with.
Try to simulate conditions you expect to face on the road so you can get a sense of whether or not the car will work well for you.
Drive the car at your normal speed to get a feel of its power and performance, fitting into traffic on a busy road so you can get an idea of how it handles tight spaces. If possible, take some time to drive around on different kinds of roads and traffic conditions to gauge the car’s abilities.
Take note of any unexpected squeaks or rattles while driving. A brand new car should be in the best condition it will ever be, so don’t accept anything that you feel could be a problem later on.
Don’t forget about the little things that make driving seamless. Play around with the car stereo to see if it sounds good enough for you to sing along to.
Check the trunk space to see if you can fit all your stuff in there comfortably. Stretch your legs to see if the car has enough legroom for you to be comfortable on long drives.
Having a few friends or family along your test drive should also get a passenger’s perspective on the car—extremely useful if you plan on using the car regularly with other people.
Step 6: Iron out the financing details
If all goes well with your test drive, it’s time to start thinking about financing.
Because buying a brand new car is expensive, the most common way for Filipinos to afford it is through a car loan.
You have three main options for a car loan:
- A bank loan
- A bank loan secured through a car dealership
- In-house financing from a car dealership
Interest rates and payment terms can vary wildly provider from lender to lender, so it is best to research which option aligns best with your particular financial situation.
Most providers can offer payment terms of up to five years. Because this is much longer than the average payment term, you can get away with paying less each month.
However, we strongly recommend you go with the shortest possible payment term you can afford. Compound interest can be a tricky thing for many people to grasp—especially if you’re raring to drive off with your new car as soon as possible.
Compound interest is interest paid not only on the original amount of the loan but also on any accumulated interest that has accrued since the previous payment. If you do not pay off your loan and allow it to accumulate, compound interest will keep growing exponentially.
One extra year of paying for compound interest might not seem like much at first glance, but you might be shocked to see how pricey that little bit of time can get if you do the math—money you could have used to invest or save for other key purchases in your life.
You might also want to look into getting pre-approval for your car loan to help cut down on interest rates.
As for the required documents, you would also need to prepare the following:
- Filled-out application form (from your preferred bank)
- Identification document(s):
- At least 1 government-issued valid ID (ie: passport, driver’s license, etc…)
- Alien Certificate of Registration with Work Permit for Foreigners
- Income documents:
- For Employed – any of the following:
- Latest income tax return (ITR) or BIR form 2316
- Latest pay slip
- Certificate of Employment (COE) with salary details
- For Self-employed:
- Copy of Audited Financial Statements (last 2 years) with latest income tax return (ITR)
- Bank statements or photocopy of passbook (last 3 months)
- Certificate of Business Registration (DTI or SEC)
- For OFWs – any of the following:
- Proof of remittance (last 3 months)
- Latest Crew Contract (if sea-based)
- Consularized Certificate of Employment with Income (COEI) or latest 3 months payslips
- For Employed – any of the following:
Step 7: Read the paperwork before signing
Once you’ve ironed out the financing details, the last step is to sign on the dotted line and pick up your brand new ride!
Before doing that, we recommend making sure you carefully read all documents before signing. Watch out for any extra fees or hidden costs that come with your car purchase.
Read and understand every document before putting your signature on it. Double-check and clarify your car’s insurance, warranty, and financing terms. If you do not understand the documents, seek guidance from someone who has expertise in these kinds of matters.
Don’t be afraid to voice any concerns you might have at your dealership. If you don’t feel confident about making a purchase, walking away and coming back another day is better than buying something you’ll end up regretting.
It’s easy to get swept up in excitement when buying a car and forget to take a look at the fine print, but we’ve all heard horror stories about how that can turn out. Doing your due diligence now can save you a whole lot of trouble down the road.
Only when you are fully content with the terms of your purchase should you proceed to finalize your paperwork.
Congratulations, and don’t forget always to drive safe!
How to Buy Used Cars in the Philippines
As we’ve noted a few times above, buying a used car is generally a tad more challenging than buying a brand new one.
If you thought the process of buying a brand new car is more complex than you initially assumed, going with a second-hand car can be maddening—especially if you aren’t well-versed with all the ins and outs of car deals.
Because the sea of options for used cars in the Philippines is much larger than for brand new cars, it is easy to get lost in the weeds if you’re relatively new to the scene.
Getting a brand new Honda Civic, for example, is easy because it is the same anywhere you go. But two second-hand Civics—even if they are the same model—can be two entirely different cars in terms of age, mileage, and condition.
But don’t let that spook you. If you’re willing to put in a little bit of time and effort, it shouldn’t be much trouble at all to find a deal on the secondary market that ticks all the right boxes.
Much of what we discussed about buying a brand new car also applies here. Make sure you do your research, have a good idea of what you are looking for before you set out, and make sure you stick to your budget.
There are a few things specific to buying a second-hand car that you should know before you start your search. We lay them out below:
Step 1: Dig deeper than you normally would with a brand new car
Second-hand car ads have their own jargon. It is easy to be drawn in by vague and ultimately meaningless descriptions such as “lady-owned” or “weekend car”. In reality, those terms can mean entirely different things from one seller to the next.
To make sure you don’t get lost in a web of meaningless buzzwords, try asking your seller questions that draw out information about the car’s real condition.
What was the car mainly used for? A car used by someone with a 9 to 5 desk job will typically have much less wear and tear on it than if it was used as a Grab taxi or by a sales agent on the road every day.
Did the previous owner have kids or pets? If so, make a thorough inspection of the vehicle for weird smells or stains, from the nooks and crannies of the trunk to hidden spots under the seat.
If your seller wasn’t able to remove them before selling the car, your chances of doing so are even slimmer.
Asking such questions might feel awkward at first, but they will help you suss out what lies beneath the surface. You will ultimately come away with a much better idea of what you are getting for your money than if you relied on the seller’s description alone.
Step 2: Decide where you want to buy
You have four choices when it comes to buying a second-hand car. You can buy from:
- A private seller
- A second-hand car dealer
- A bank (in the form of repossessed vehicles)
- Directly from the car manufacturer (in the form of a certified pre-owned vehicle).
Private sellers are generally the most affordable option. Skipping the middleman can save you a decent chunk, with more room to negotiate.
However, you will have less legal recourse if the car turns out to have problems. If you don’t know a lot about cars, you should bring along a mechanic you know and trust to check the car out in detail before you sign any papers.
If you can’t be bothered to do the tedious but necessary work of inspecting a private seller’s car, you can always go with a second-hand dealer. Buying a car from them will give you a sense of security that the car has been vetted by certified professionals. They can also offer limited warranties or financing options private sellers won’t be able to.
Of course, you can forget all about talking your way into an amazing bargain with a second-hand dealer. They will normally know more about the car’s value than you, which means your leverage over them will pretty much be nil.
You can also try looking into certified pre-owned vehicles. These vehicles have been inspected and reconditioned according to the manufacturer’s specifications before they are put on the market. They can be a little more expensive than other second-hand cars, but it is the safest bet if you want to get as close as possible to brand new for cheap.
The final option you can consider are repossessed vehicles from banks. These are cars that have been repossessed by banks because of unpaid auto loans—which means they are relatively new—and can be bought for cheaper than similar second-hand cars.
If finding bargains is your main priority, repossessed cars might just be the goldmine you are looking for.
Don’t get too excited, however. The main catch here is that most banks won’t bother with making sure with all the small technical details that ensure a car’s roadworthiness.
You will have to buy a repossessed car “as is where is”, which means you will get the vehicle in the same condition it arrived in its warehouse—whatever, or wherever, that might be.
Step 3: Inspect the car in person
Inspecting your target car before committing any further is essential whether you’re looking for a brand new or a second-hand car.
However, this step is even more crucial if you’re buying a second-hand car since there the chances of getting saddled with a complete lemon are much higher here.
This is why we generally recommend second-hand cars to buyers who know their way around a car engine and have the time to go through all the small details. Having a good mechanic you trust would be a good substitute if you’re not much of a car person.
But what if neither option works for you? You can still inspect the car yourself and do a decent job by paying close attention to a few critical things.
Check the car’s interior and exterior, looking for any cracks, dents, or stains on the car’s surface.
Check the engine compartment even if you’re not sure what you’re looking for. Rust, dirt, and fluid leaks are all signs of problems that you can spot easily, even as a complete novice.
Check the car’s tires for wear and tear, paying extra attention to the sidewalls. Trust us: you can scrimp on a lot of things with a car, but tires should never be one of them. Make sure that your car’s tires aren’t older than five years. On top of needlessly upping your risk for an accident, you cannot avoid buying new tires in the near future.
Don’t forget to look at the car’s undercarriage, checking for rust and other signs of damage. A thick coating of dust on the frame could be a sign that it hasn’t been used too much or has sat in one place for too long.
Anything that gives you pause while you’re inspecting the car is a good enough reason to move on.
Step 4: Be meticulous about the car’s history and paperwork
Once you’re fully satisfied with your visual inspection, it’s time to take a very close look at the car’s paper trail.
Like we’ve said before, buying a second-hand car is always a bit of a gamble. You can reduce that risk to some extent by knowing the history and condition of the car you’re planning to buy.
Your purchase will be much smoother if your target car comes with the original Certification of Registration (CR) as well as an updated Official Receipt (OR).
If the car comes with only a photocopy of the CR, it could lead to extra work for you to register it under your own name.
Always ask for a car’s service records and any receipts from parts that have been replaced. This will give you a good idea of how well the car has been treated by its previous owners, and what kind of problems it might be hiding.
It is also important to verify that the car has no legal issues attached to it. Check with the Philippine National Police (PNP) and its Highway Patrol Group (HGP) for any red flags, as well as the LTO.
Step 5: Test drive
Once all these steps are done, it’s time for the final test drive. Never, ever skip this step, especially for a second-hand car.
Watch out for the same things you would with a brand new car when test driving, including weird sounds from the engine, driving characteristics, and brake responsiveness.
Step 6: Sign the necessary papers
If you feel it’s a match made in vehicular heaven, congratulations! All that’s left for you to do is sign the papers.
We recommend staying away from any “as is” agreements if your car comes from a second-hand dealer. If things don’t work out because of an undisclosed issue that rears its head later, you want to have the option of taking it back.
Before you drive off with your new car, make sure that all the paperwork is complete and accurate. And remember never to do so without having the vehicle’s title in your hands.
Tips for Buying Pre-Owned Cars
We already laid out all of what you must know about getting a great second-hand car in the section above.
But what if you want to get the absolute best deal? Here are a few more pointers to watch out for:
Keep realistic expectations
You obviously don’t want to sell yourself short, but expecting brand new quality from a second-hand car will usually lead to disappointment.
You’ll need to compromise on a few issues and accept the small problems that come with owning an older car.
Sure, second-hand cars that are virtually impossible to distinguish from brand new ones exist. But with many used car buyers competing for those unicorns, the chancing of snagging one for yourself is quite low.
At some point, the value you get from chasing after that dream car will be less than the time and effort you end up putting into it. Everything degrades over time. That’s just a fact. Get the best deal you can get, but don’t forget to value your time in doing so.
Compare your target car’s prices
There are hundreds of ways for you to check the prices of the used cars you are thinking of buying.
However, for pre-owned vehicles, it can be quite difficult to find out how much they should cost. That is why we recommend getting your initial price estimates from online sources.
Visiting online platforms such as AutoDeal or Automart is a super convenient way for you to gauge the prices of cars you’re eyeing without leaving the comfort of your home.
Make sure you don’t stick to just one source, however! Have a look at a few different ones to ensure you have an even better idea of what the car should cost.
Don’t be afraid to haggle
Haggling is a polarizing issue. Some buyers love to haggle; others can’t stand it. But if you’re buying a second-hand car, haggling is probably something you’ll have to do at some point, so it’s best to know a little bit about how it can work for you.
Remember that, the more you know about cars, the stronger your bargaining power is. This is where your research comes in!
Be prepared for inevitable repairs down the line
Second-hand cars are likelier to have some problems with them since they have been on the road for a while. These can include minor things such as dents or scratches, as well as more serious issues like engine malfunctions and transmission trouble.
Most used cars from dealerships come with limited warranties, though most of those cover only technical issues that arise during the first few years or so.
We suggest preparing at least 20% of a second-hand car’s price for any repairs you might need.
Don’t skip the insurance
In the same vein, you might want to consider spending a little extra to get insurance for your second-hand car. Dealerships typically offer some insurance; other kinds of sellers don’t.
If you are buying from a private party or a bank, it might be prudent to take out your own insurance.
Whatever you do, don’t just assume what your insurance policies will cover. Read the fine print, or get someone knowledgeable to do it on your behalf.
Your new car should be something you take pride in owning. We hope the tips above have helped you on your way to finding your dream car at the perfect price!
How to Buy Repossessed Cars from Banks in the Philippines
Repossessed cars are vehicles that have been repossessed by a bank or lending institution due to the owner’s failure to keep up with payments. Repossessed cars from banks are typically sold at auctions or through online platforms.
Related: Complete Guide to Buying Repossessed Cars in the Philippines
We describe some of the pros and cons of going with a repossessed car below:
Pros & Cons of Buying a Repossessed Car
The clearest pro of buying a repossessed car is its low price. Banks aren’t really in the car selling business.
They would rather recoup a portion of the money they lent to clients—as well as the money they spend on storing and maintaining them—by selling off repossessed cars for a price well below market value.
Because repossessed cars are sold simply because their previous owners weren’t able to keep up with their payments, it is easier to find an affordable car that is in excellent condition.
Repossessed cars are also at a much lower risk of having been involved in crimes, flooding, or an accident. Their newness might also mean the manufacturer’s warranty is still in effect, which is a massive advantage.
One more thing you won’t have to worry about with repossessed cars is legitimacy. Unlike private sellers and some used car dealers, it would make terrible financial sense for a bank to jeopardize its reputation “just” for the price of a car.
By dealing with a bank, you’ll also have a wider range of financing options, with much less paperwork than if you were buying a brand new car.
As we noted earlier, repossessed cars are generally sold on an “as is” basis, which leaves you holding the bag should any problems arise.
Repossessed cars are ordinarily sold by banks through bidding. Banks will generally state a minimum bid and a deadline for the bidding, which means you’ll need to act quickly if you spot a car you want.
Bidding can be a tricky business. You can underbid and lose out on your car or you can bid too much and end up wasting money. As a buyer, you will also be competing with other people who are looking for repossessed cars in the same price range—all of whom are looking to make a good deal for themselves.
You also won’t be able to take a test drive before committing to your purchase. The most you can do in most cases is start the car just to make sure the engine and other major parts are in working condition.
Because repossessed cars are usually stored in a large warehouse for extended periods, you will likely have to clean the one you purchase thoroughly for dust and gunk buildup before driving it home. This will matter more to neat freaks, but it is extra work just the same.
Steps for Buying a Repossessed Car
If you’re dead-set on buying a repossessed car but don’t know the first thing about it, we have a handy list of steps below that will take you through the general process of doing so:
- Find lists of repossessed cars from reputable banks.
- Visit where the cars are stored to see the units you are interested in.
- Once you decide on a target car, decide on the bid you want to make. Note that repossessed cars have a minimum bid amount.
- Next, you will have to visit the bank’s head office, where you will have to drop a sealed bid envelope in one of its drop boxes.
- Wait for the bank to call you. Don’t get too attached—the bank doesn’t call you to reject your bid. Give it a few days, and if the call doesn’t come, let it go and try again.
- If the bank does call, you will have to visit the bank’s head office again, this time to seal the deal.
- Get your deed of sale and all other essential documents.
- You are now the proud owner of a repossessed car!
Where to Find Repossessed Cars
A few examples of where you can buy a repossessed car in the Philippines are as follows:
Security Bank updates its list of repossessed cars weekly. You can download a PDF file of all the cars they have available if you want to browse at your leisure. The bank also has a multiple offer form for bulk buyers.
You’ll be able to sort through Security Bank’s selection by car maker, car model, mileage (in kilometers), by car year, or by minimum bid price.
You’ll also be able to download a PDF list of repossessed cars at PSBank, as well as a list of accredited insurance companies. You can also download forms for your bids and an application form for an auto loan here.
The selection is sorted by brand, model, mileage, selling price, car year, and where it was registered.
You can visit PSBank’s Pre-Owned Auto Mart to see the units for yourself in Taguig. They are open from Monday to Saturday, 8:00 AM to 4:00 PM.
BDO allows you to search for cars based on brand, model, price, mileage, and the unit’s current location. They also offer a way to compare up to three units with each other side by side.
You will also find a tab for inquiring about an auto loan here.
EastWest Bank offers separate PDF lists for auctioned cars and price tag sale cars.
Contact details for the bank’s representatives can also be found here, as well as its auto warehouse map.
Forms for auction bids and price tag sales are available under the “Useful Tools & Info” section on the right side of the screen. EastWest Bank also has an auto loan calculator to help you figure out if you can afford your target cars.
Robinsons Bank does not offer any PDF downloads.
Instead, you will have to look at a spreadsheet containing the following information: make and model, year, mileage, color, plate number/conduction sticker, transmission type, fuel type, place of registration, unit location, selling price, and mode of sale (whether bidding or negotiated sale).
You can find a tab for an inquiry form for repossessed cars in the banner image.
United Coconut Planters Bank (UCPB)
You will have to scroll a bit before seeing the section dedicated to repossessed cars. The bank doesn’t update its list as much as the other banks we mentioned, so take that into account.
UCPB presents the current selection by brand. Click the brand you want to see which units are available. Aside from the unit name, you’ll only be able to see the selling price and year/model.
A PDF list is available for download as well.
UCPB has two Pre-Owned Auto Warehouses you can visit if you want to get a closer look at the cars: one in Roosevelt QC and one in Oyster Plaza, Paranaque.
If you are used to all of the conveniences of the internet, AutoDeal should be a great choice to check out repossessed cars without having to deal with the staid website design choices of banks.
This online platform can filter for repossessed cars and allows you to sift through the list by make, model, year, location, minimum and price, body type, minimum and maximum mileage, fuel type, transmission, engine, number of seats, seller type, and even color.
AutoDeal also has a “Car Advisor” resource that can help narrow down your choices.
Factors to Consider when Choosing a Car
Your car is an extension of yourself. While it is important that you buy something that reflects who you are and speaks to you on a deeper level, there are a few factors that remain constant whatever your choice might be.
These things can make or break your next car purchase, so be assiduous about making sure your target car fits your specific needs in the following aspects:
Many people choose cars that are either too powerful or not powerful enough to suit their driving needs. If you’re buying a car for commuting purposes only, then choosing something with power limitations is okay, provided that you know you can rely on it in case of emergencies.
On the other hand, you might live somewhere that has a lot of hills and inclines. In this case, choosing something with not enough power will be a constant source of frustration for you. So before buying that car you’ve been eyeing, figure out your driving needs first.
The more budget-conscious you are, the more important it is to choose the most fuel-efficient car you can afford—without compromising on the required power for your driving needs.
Several additional factors influence fuel efficiency, such as your driving style, the amount of power your car needs to maintain in going uphill or downhill, and the quality of the engine, but buying a fuel-efficient car is the first and most important step to take.
The brand of your car is also something that can affect how much money you’ll end up spending on maintenance fees, repairs, and even replacement parts. Some brands are notoriously difficult to maintain, with difficult to source spare parts.
This isn’t the be-all and end-all deciding factor, but it is a useful indication of what you can expect from your chosen car.
This is also an important factor for some people, but not so much for others.
On one hand, reselling your car after years of usage could be a very smart thing to do if it’s still in good condition and you’re looking for another car. If your chosen brand has a high resale value, then you can get more money out of it later on.
Security features likely won’t be a deciding factor in your search as pretty much every new car comes with standard safety features such as antilock brakes (ABS), tire-pressure monitors, and airbags, but this is still something worth considering.
Look into extra safety features like backup cameras and blind-spot monitors if you want more peace of mind.
Other security features such as parking sensors, rain-sensing wipers, electric sunroofs, and memory settings for your car door locks and mirrors might also be good additions to your car.
Most new cars have a manufacturer’s warranty included in the price. Depending on the brand, some offer extended warranties for up to four years, which can protect your car from any unexpected issues.
So before buying, check if your car comes with an extended warranty and also see exactly what is covered under it.
Important Documents Needed when Buying a Car
There are seven key documents you’ll have to have before buying a car in the Philippines:
To start with the obvious, a driver’s license is mandatory if you want to drive your new car around.
You’ll need to have this with you so the seller can use it for the legal documents required for your transaction. Private sellers likely won’t ask you for your license, but if you plan on buying a car from a dealership, having your driver’s license with you is a must.
Bring all your payment methods so you can pay for your car as soon as possible. The specific documents vary based on whether you’re paying for the car in full or through a loan.
Examples of payment documents you will have to provide to the seller are:
- A cashier’s check
- A check from a pre-approved loan
- A check from the bank
- A personal check
The car title is one of the most important things to secure when buying a car, as it establishes your ownership of the vehicle.
Some of the key pieces of information to look for in a car title are:
- The price of the vehicle in numbers as well as words
- The odometer reading showing the car’s mileage
- The date of purchase
- Signatures from both the buyer and seller indicating they have agreed to all the terms in the title
Proof of insurance
It really is up to you whether you’ll buy additional insurance when buying a car. But even if you’re on the lower end of the spectrum on risk-aversion, insurance might be a good bet, especially once your car is past its warranty period.
Not all dealerships will hard-sell you on this, so be sure to bring it up if it’s something you are interested in.
Deed of sale
A deed of sale is the official document that gives evidence of the transfer of ownership between seller and buyer. It contains all the same details included in the car title such as price, odometer reading, and so on.
Here’s a handy checklist for the information you want to be included in your deed of sale:
- Body type
- Motor number
- Plate number
- Vehicle identification number
- Official receipt number
- Car registration number
- Purchase price
- Date of sale
- The buyer and the seller’s personal information
A registration certificate is given to all vehicles by the LTO after it has passed tests for roadworthiness.
It should have the same details as included in the title of your vehicle, so make sure these are accurate before getting it.
Remember that you are obliged to register your car to the region you plan to use it the most.
Upon closing the deal, the seller will give you the official purchase receipt in most cases. Private sellers may not always give you this, but dealerships always will.
Make sure that the following is present on your receipt:
- The buyer and the seller’s full names
- The date of your purchase
- The name of the car purchased
- How much it cost
Where to Buy a Car Online in the Philippines
Buying a car is one of the biggest investments you can make and it’s understandable if you want to touch and see your potential purchase before committing.
So why would anyone want to buy them online? There are multiple reasons, but three compelling ones are:
- You’ll save time.
- It’s easier to compare units online compared to physical stores.
- It’s convenient, flexible, and you can do it from the comfort of your own home or wherever you have an internet connection.
We would like to highlight three of the most popular online platforms in the Philippines that you can use to buy your next vehicle:
AutoDeal contains a vast selection of new and second-hand vehicles you can browse through or filter using several specifications like price range, year model, brand, and so on. It also has a section highlighting popular cars across several body types like sedans, hatchbacks, pickup trucks, and more.
Going through the full list on your own can involve time you may not have, so AutoDeal offers a Car Comparison tool you can use to compare up to three cars at a time. That way, you can see which units fit your budget and requirements the most.
Once you’ve decided on the best car for you, AutoDeal will be able to connect you with official manufacturer-approved dealers. These dealers will be able to answer any questions in detail, help you secure financing, and arrange for services like test drives and home deliveries.
AutoDeal also helps its users keep up-to-date with the car world with news as well as reviews of the latest car models.
Although Carmudi also lists brand new vehicles, what distinguishes it from other online platforms is its second-hand market. The platform’s multi-point inspection system means that you can find very affordable, pre-loved units that still have a lot of life in them.
To make it easier to wade through the sea of choices, Carmudi offers an exhaustive set of filters to narrow down the options you have until you find the car that best matches your preferences.
You can sort by price, location of the unit, brand, body type, fuel type, mileage, year, transmission type, seller type, color, fuel efficiency, number of seats, and engine. You will also be able to view lists for daily commute cars, family cars, business cars, luxury cars, sports cars, and more.
There is also a list of certified inspected cars, each of which comes with a full inspection report you can peruse at your own pace.
You’ll also be able to find motorcycles and trucks at Carmudi.
If you plan on securing an auto loan to purchase your car, Carmudi can also help you compare interest rates, down payments, and loan terms. They can also help you calculate how much you can expect from your monthly payments.
Philkotse has deep lists for both new and second-hand cars. We especially like this platform’s focus on providing you an exhaustive list of details about the car you’re eyeing.
As is standard, you’ll be able to sort through the listings by brand model, price range, date, location, mileage, transmission, color, and car type.
This platform also provides you with extensive details about the car’s condition and history as well as its mileage, service history, and registration status to give you a better understanding of what sort of unit it is.
There is also a price drop alert to let you know when the car you’re looking at is discounted.
If you need help making your decision, you can arrange for a call-back with Philkotse’s support team.
They can also connect you with a reputable insurance agent who can help you secure a car insurance policy for your new car.
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