What to look for when you take on a car finance loan

Millions of Filipinos take out car bank loans every year, but few take the time to understand what they're actually signing up for. A little homework upfront can save you hundreds of thousands in the long run.

Traffic in Metro Manila is among the worst in the world, but this isn’t stopping go-getters from achieving their dreams of owning a car. While a car provides real-world value in more ways than one, you'll need a substantial amount of money for one of your biggest investments ever. Even the cheapest brand new sedan can cost over half a million pesos.

Fortunately, there will always be a car finance loan available that suits your needs and budget. In this article, we highlight the top three things you should look for in an auto loan to ensure a smooth journey.

Make your car loan monthly payments manageable

Before getting a car loan, it is essential to know the factors that influence your monthly car loan payments. These include your loan amount, interest rate, and the loan term.

If you're curious how much a car will cost you on auto loan rates, the Metrobank car loan calculator can help.

The average loan term for a new car varies per lender. While a short loan term will pay off your auto loan faster, your monthly payments will generally be higher. On the other hand, a longer loan term will help you secure lower monthly payments, but you may pay a higher auto loan interest amount over time.

Shop around for the best rates

As in any investment, you need to set yourself up for success. Even small changes can help you save on your car bank loan.

For instance, let’s say you are planning to buy a 2026 Toyota Altis 1.8 E CVT which is valued at PHP 1,489,000.00. You need to pay 20% of the car’s value as a down payment, which is PHP 297,800. You want to take out a car loan for the remaining PHP 1,191,200.

If you plan to pay over 5 years (or 60 months), you’ll be given a car loan at an annual interest rate of 10.56% (29.13% add-on rate). This means your monthly amortization will come out to PHP 25,637.00.

If you decide to pay for it over 2 years (24 months) instead of 5, your annual interest rate will be 9.25% (9.92% add-on rate). This will change your monthly amortization to PHP 54,557.

At the end of your payment periods, you would have paid PHP 1,538,220.00 for a car loan at 29.13% add-on rate and 1,309,368.00 for a car loan at 9.92% add-on rate. That’s a PHP 228,582 difference just by changing the length of your loan. To get the best auto loan rates, you shop around for a low interest car loan. If you have a good relationship with your current bank, they're a great option to start shopping for credit.

*The above computation is based on a one-month advance (OMA) payment scheme.

Go for lenders who put you first

Banks provide you with personalized services that fit your goals, budget, and preferences. They will even tell you if you're paying too much for a car finance loan and other factors that seem off from a financial perspective.

While a bank’s eligibility requirements for car loan amortization are generally stricter compared to in-house financing with dealers and credit unions, you get solid payment terms with auto loan interest rates spread evenly throughout the term. Understanding what goes into car loan approval ahead of time, such as income requirements, valid IDs, and employment documents, can help you prepare a stronger application.

Get the best deal with Metrobank

Getting a car loan requires planning, research, computations, and of course, saving up. Ready to take on bigger things and make meaningful journeys on the road? Metrobank is the right partner for you. We're here to help you upgrade the way you travel with a Metrobank Car Loan.