Choosing a car requires enough preparation and careful research, and so does applying for a car loan.
Most banks in the Philippines offer auto loans with low interest rates. While it is up to you to pin down the one that offers the best deal and payment terms, in the end it will be up to them to grant your application the final approval.
But before you try your luck, you need to make sure that you have calculated your expenses and are able to meet the requirements. Whether you’re a first-time applicant or are planning to sign up for another loan, following these guidelines will help speed up your application and get you your dream car.
1. Secure good credit.
Prior to your car loan application, go through your credit records for any discrepancies. The most important criteria for bank loans is your capability to pay back. If your current financial status is not mired by lapses in your bank credit records, there’s a good chance you’ll be pre-approved.
Settle your outstanding bank loan or delinquent credit card bill before you apply for a loan. Obtain a Certificate of Full Payment when you have completed paying for your credit card bill. If you haven’t cleared your records yet and are planning to apply in another bank, know that financial institutions in the country are connected to credit databases such as Credit Card Association of the Philippines (CCAP), LIS (Loan Information System), and NFIS (Negative File Information System). You will not be approved for any bank loan until you settle your accountability.
2. Open a bank account.
Having an active deposit or credit card account with the bank you’re applying for shows that you have sufficient income and are able to manage your finances.
If you do not have a bank account, the next step is to provide your most recent credit card bills. Showing proof that you are able to pay your bills on time will also help build your credibility as a borrower.
3. Make sure your work tenure and income meet bank qualifications.
You must be working in your current employer for at least two years. If you are self-employed, your business must be earning for at least two years in order to be qualified for a bank loan.
You have a bigger chance of getting approved if your net income is more than enough to cover your monthly amortization. You must meet the minimum income requirement of the bank.
Banks also consider employees who are currently employed at top corporations. If you don’t have a bank account or a credit card, your employment status and income will be the next important factors in your loan application.
4. Submit complete document requirements.
Prepare the document requirements such as the Certificate of Employment, Bureau of Internal Revenue (BIR) Forms, and valid government identification. Being proactive in submitting the documents relevant to your loan application is also important so you not only save time, you also expedite your loan processing. —Kristel Serran