Author: Chris Dominguez

As you may have already realized, if you want to be a part of the growing number of car owners in the country, you have two choices available; pay in full or avail car financing. If you are one of the many though, the latter seem to be the only possible choice especially if you are considering owning your own ride within the next few weeks or months and your budget is not up for it. Knowing this is the program you are likely going to avail in the near future, you have probably asked yourself…

What exactly is car financing?

Since you are with GoDrive, it’s used car financing to be precise. For sure, you already have a general idea of what it is about because of a previous loan from banks, private companies, or individuals. But when it comes to information beyond the basic definition? Maybe you are not as familiar as desired and when it comes to buying one of the things that will have a great impact with your life, it never hurts to know more before taking the next steps.

“Car financing” is often interchangeably used with “Car loan”. Although the term is mainly used to describe the process of taking out a loan to get a car, there are also other forms of car financing. These forms include:

 – Car Financing directly from Dealership
 – Car Leasing
 – Cash Financing from Banks/Private Loan Companies for a Car Purchase; Car Takeout
 – Car Loan Takeout

With GoDrive, all of these are available except for leasing. When someone offers or if you see an advertisement that offers you a “car financing”, it is important that you know exactly what they are referring to. Of course, it’s also important you know what exactly each form of car financing means. Let’s discuss and compare them one by one.

Dealership Financing

This is a program where you form a contract with a lender that your dealer is in partnership with – banks for example. The dealership itself can also play the role of the lender.

In this program, you are basically just buying a car but with the agreement of paying the total price over a period of time plus interest. Usual payment term is 1 to 5 years.

This program might be the best for you if you are looking specifically for a less hassle process. The office where the car is at and the office where you are going to apply for a loan are located at one place and you will likely be designated with one contact person you can discuss the entire process with. All you have to do is browse, choose a car that is available for financing and the dealer will take care of the rest.

Car Leasing

Yes, car leasing is a form of car financing.

When you lease a car unit, you will only be paying a portion of that unit’s cost. In short, you are paying for your use of the car and not the car itself. Naturally, this means that your monthly payment for the car and the downpayment for it (if there’s any, that is) will be substantially lower since you are not really going to “buy” the car. A good consideration if your savings can’t quite cover the usual 10-30% deposit and your monthly budget is not up to the task of paying for a higher monthly amortization for a car loan.

At the end of the leasing term, there’s usually an option for the lessee to buy the car. This however, is not a very good financial decision, generally speaking as this is ultimately going to cost you more than if you decided to apply for a loan for the car to begin with.

If you want a car financing that will enable you to own a ride you can reliably use and has the potential to give you an early return of investment in the future, this is probably not the best choice for you.

Car Takeout

This is where a bank or a private financing institution of your choice buys your car for you, or rather buy a car that you can use but is technically theirs until you pay the loan in full with interest. This is very similar with applying for any loan like say, a personal loan. The clear distinctions however are;

 – First, you have full control of the amount being leased as you are in control of which car you are going to avail. You will only get what you need.


 – You will not have access to the money that will be financed by the loan company. Good for the client really as this removes the chance, no matter how small, for him to use the funds in things that are not for its intended purpose.


 – You will have to spend some of your money for the downpayment of 10-30% of the total car cost. Money that was not financed by the loan company.

The advantage of going directly to a lender instead of availing the loan options from the dealer? For one, if you have a good relationship and credit record with your bank or a private financing company, you can easily avail for any of their special promos that are associated with car financing. Your approval is also easier since you are a trusted customer and they already have a lot of the needed documents and client details for the loan. This makes it a less time-consuming and a potentially cheaper option for you.

Car Loan Takeout

There is car take out, then there is car loan takeout. Also known as car refinancing

Car takeout is the process by which a new lender pays for everything that a client owes to his initial lender — the principal amount, the interest, the processing fees, everything. This, in a sense, transfers the loan to a new lender and will effectively extend the overall payment term which will also decrease your monthly amortization.

More about car financing

Interest rates for car financing vary widely from the range of 5.5% to above 30% depending upon the loan term. Be mindful of the often ignored processing fees, though. Some companies may display low interest rates to hook people only to surprise them with hidden charges and processing fees later.

Overall, car financing increases the total cost of the car and that is the glaring downside to it. But if you think about it, as opposed to saving for a few months or years so you can pay it in full, availing a car financing will enable you to get the car earlier. In a year, just how much would you be saving in cost if you are currently using the services of Transport Network Services (TNC)? In time and convenience if you are using mass transport? If you look at this way, car financing is essentially the same as saving but with the extra advantage of getting the car by next week, or days with GoDrive, if you decide to apply now.

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What Is A Used Car Financing

In a 2019 research conducted by AA Cars, a prominent car company in the US, it was observed that 74% of people who bought cars opted to get a used car compared to the mere 26% who bought brand new ones. Even in the Philippines, the significant increase in used car sales has been noticed in spite of the fact that the overall car sales have dropped due to the pandemic – about 50.9% as reported by Association of Vehicle Importers and Distributors (AVID). So why are more and more people going for pre-loved? Well, considering the many perks that we’re about to list down for you, the better question to ask yourself is, why shouldn’t they? And why shouldn’t YOU?

Budget-Friendly

Using the aforementioned research from AA cars as reference, the demographic that patronizes used cars more appears to be the younger buyers (18-24 years old). Above half of them, 59%, opted to buy a car that is more than 5 years old, 24% bought ones that are 3-5 years old, and 7% bought used cars that are less than 3 years old. This means that in this demographic, only 6% chose to buy a brand new car.

The obvious reason for this is that the age group of 18-24 years old is not really the most stable when it comes to finance. Most of them have only started their careers and are at entry-level job positions. With having less disposable income, comes the need to make sure you are budget efficient and that is exactly the trait that used cars are most known for.

Upon the signing of the paperwork at the dealership, a car is already considered to be technically “used”. At that point, a whole lot of depreciation is already needed to take into consideration when computing for that car’s fair market value. It’s a bit comical really that a mere signature can turn an 800K, brand new 2020 Toyota Vios to a 700K, used 2020 Toyota Vios. It’s even more fun though if you are the second buyer of the car. A huge portion of depreciation has already happened on the car so as a second prospecting buyer, you are already about to save a hundred thousand for buying a car that is still at the prime of its entire lifespan.

Naturally, the older the car, the cheaper it becomes. Be wary though as going for the older models also means that finding one with a good quality, history and mileage will also become trickier. Finding the right balance between affordability and quality is the key.

Favorable Selling Price

Perhaps you’re planning to sell your first car so you can upgrade once you manage to save more? That’s a good consideration too if said car is pre-loved. You won’t be hit hard by the depreciation rate as much as the first owner was and if the car itself was never actually physically hit hard as well, chances are, you would be recouping (via its mileage) a lot of the cash you expended for buying the car and then some more once you get to sell it at the price that’s close to when you bought it. There’s also the fact that you’re basically passing on the perks that you got your used onto another used car buyer. That should make you feel good, right?

Repair and Customization Freedom

As most used cars no longer have warranties, you will be able to bring your car to a repair shop that you trust and perhaps avail the same (if not higher) level of quality in terms of service that a dealership provides, for lower rates. This even applies to customizations. You want some suspension upgrades? Perhaps some underbody neon lights for a cooler night ride? You won’t have to pay a premium for these anymore. Just be sure though, to do these customizations before you get insurance coverage and  inform your insurance agent about them. You wouldn’t want to have claim issues just because of an unreported modification whether intentional or not.

Eco-friendly

If you are one of the people who are conscious about the environment and try to reduce their share of carbon-footprint, then buying a used car just got more promising for you.

But they also spew out fumes from burning fuel and even electric cars contribute to this as power stations burn coals to generate electricity, so how come, right? Well you see, there’s a significant environmental cost when manufacturing a new car.

According to a 2004 study of Toyota (yep, we love our research and studies), about 28% of the carbon dioxide emissions generated during the lifecycle of a typical gasoline-powered car can occur during its manufacture and its transportation to the dealer. A used car of course has already gone through all these processes and you buying one means you are not going to avail and thus increase the demand of one additional brand new car that’s going to add onto the overall junk pile and pollution from car manufacturing and transport.

28% is a LOT. Considering an average lifespan of cars is 8 years and the yearly average carbon emission of a car is 4.6 metric tons, you will be saving our lungs and the environment from about 10.3 metric tons of carbon dioxide just by you buying a secondhand car while saving yourself some cash in the process.

In conclusion…

There’s a whole lot of reason as to why people buy a pre-loved car. Not only does it benefit the buyers themselves but also the people around them and the environment as an extension. Of course there are some disadvantages like being uncertain of the real history and quality of a used car and there’s the negative social stigma from some people when they learn that your ride’s a second hand, but even these disadvantages can easily be solved; the former by buying from a car financing company that does thorough inspections of every car that they are going to market and the latter by not giving a damn. So why not take part of the growing number of patrons of pre-loved cars?

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Benefits of a preloved car

Aiming to grab a preloved car, eh? Whether you are someone on a budget who is looking for his first car or someone looking for an additional car for his growing family… who is also on a budget, we got you covered. Where to get yours, you ask? No worries, friend. The options are many and we have listed here 5 of the best and well-known 2nd hand car dealers in the Philippines that can hook you up with a certified quality used car without burning through your available cash.

Banks and Private Car Financing Companies

But first, it’s best that you decide first whether you’re going to apply at a bank or a private car financing company. Which is better? Obviously the huge similarity is that you can get the “financing” option unlike with individual sellers where you have got to have the cash upfront. About the differences though:

Banks
– Generally offer lower Interest rates and are considered to be less expensive overall
– Usually offer longer payment terms that reach up to 5 years. On the other hand;

Private Car Financing Companies
– Are well-reputed to be faster in terms of processing. You need the car by next week? You got it.
– Have less strict qualifications and thus have a higher approval rate
– Also requires less documents

Looking at this makes banks look like they don’t have that much of an edge – which is a sensible inference but you have to keep in mind that to many people, the interest rate is a really huge deal. If you want to save the most, you may want to consider banks but if you think that the speed and higher chance for approval are worth the few extra decimals of interest rate, then private companies are the best choice. It’s still a matter of individual preference after all.

Now onto our list, let’s start it off with a well-know bank;:

BPI

Bank of the Philippines has the title of being the first bank in South East Asia. Since 1851 (their founding year) their business, products and services have played a significant role in many Filipino’s daily life, as well as in the country’s increasingly expanding and evolving economy and yes that includes their role as one of the leading banks in car financing both for brand new automobiles and secondhand ones.

Auto Loan Details:
 – 20% to 50% Down Payment
 – Maximum unit age is 5 years
 – Minimum Loan amount of PHP 200,000
 – Interest rate in arrears is 8.87% to 10.43% and with one-month advance 9.21%          to 10.45%
 – Payment term is 12-60 Months

Eligibility:
 – Must be a Filipino Citizen
 – Between 21-65 years old
 – Must be Employed Full-Time or an owner of a DTI-registered business
 – Income is above PHP 40,000


TFSPH

Toyota Financial Services Philippines. Being one of the most prominent manufacturers in the country, it has established a strong base of loyal customers. Known for their 211-point inspection system where they evaluate a vehicle through rigorous examination using their tech and certified assessors, they promise that each sale, each car which they call Toyota Certified Used Vehicle (TCUV, or simply, Toyota Certified) is an extension of their gratitude towards the loyalty of their customers for many years.

Auto Loan Details:
 – 20% to 35% Down Payment
 – Maximum unit age is 10 years
 – Payment term is 12-60 Months


Eligibility:
 – Must be a Filipino Citizen
 – Between 21-65 years old
 – Must be Employed Full-Time for 2 years or an owner of a DTI-registered business
 – Minimum income of PHP 30,000 to PHP 40,000

Security bank

Next on our list is Security Bank. With customer-centricity at the forefront, the new Security Bank promises to put customers first and craft personalized solutions for their needs. Underlining its value to the Philippine market, Security Bank is an independent bank with a solid niche among the mass affluent Filipino-Chinese community. The Bank’s three core businesses are managed separately to focus on their respective markets and they operate with a high degree of synergy among each other; Wholesale Banking, Financial Markets, and Retail Banking which includes their car financing services.

 

Auto Loan Details:
 – 20% to 50% Down Payment
 – Maximum unit age is 11 years
 – Standard interest rate is 6.77% to 37.63% and with one-month advance 6.02% to 36.38%
 – Payment term is 12-48 Months


Eligibility:
 – Must be a Filipino Citizen
 – Between 21-65 years old
 – Minimum joint monthly gross income with spouse of PHP 20,000
 – If Employed, must be a regular employee for 2 years or a permanent officer-rank employee
 – For Corporations, must be duly registered to operate as a legal entity in the Philippines and the business must be in operation for at least three (3) years.
 – If owner of a start-up business, co-makers / sureties will be required and the business must have strong prospects/potential based on evaluation.

GoDrive

 

One of the leaders in terms of being a pre-Loved cars online marketplace in the Philippines. GoDrive is the Philippines’ authority in online marketplace for matching interested and responsible buyers to quality pre-loved car units. The team offers second-hand units which are being sold by dealers and private sellers, as well as repossessed units from the financing company Global Dominion Financing Inc., its mother institution. Through this platform, Filipinos are empowered to pick the best units at their fingertips, without the need to leave their houses. And with brand new vehicles which are going to be available in their market soon, their services can only continue to grow and expand.

Auto Loan Details:
 – 30% Minimum Down Payment
 – Maximum unit age is 10 years
 – Interest rate is as low as 1.3% plus a processing fee of 5.5%
 – Payment term is 12-36 Months

Eligibility:
 – Must be a Filipino Citizen
 – Between 21-65 years old
 – Must be Employed Full-Time for a year or an owner of a DTI-registered business
 – Minimum income of PHP 30,000


PSBank

PSBank has gone a long way from its humble beginnings as a neighborhood bank since it first opened its doors to its clients in1960. It was the very first bank that offered Monday to Saturday banking with no noon break, extended banking hours, online electronic data system, and banking-by-mail.

PSBank was recognized as the 2nd strongest bank in the Philippines by The Asian Banker, in its AB500 annual ranking 2016-2017 edition. The ranking is based on a financial scorecard that ranks the 500 largest Asian banks according to their financial and business performance. A reassuring fact to consider should you decide to have a bank process your car financing needs.

Auto Loan Details:

– Minimum of 20% Down Payment

– Minimum Loan amount of PHP 100,000

– Standard Interest rate is  5.58% to 28.76% and with one-month advance 4.85% to 27.70%

– Payment term is 12-60 Months


Eligibility:
 – Filipinos or foreigners holding permanent resident / immigrant visas (permanent residents) and certain non-immigrants and embassy officials (temporary residents)
 – Between 21-65 years old
 – If employed, must have a tenure of at least two years
 – If engaged in business, must be operating profitably for the last two years
 – Gross monthly family income of at least PhP30,000

Which should I pick?

We can only guide you and introduce you into the most basic details and qualifications of some of the best car dealers in the Philippines. At the end of the day, you are still going to make the decision for yourself and you may even want to check other dealers that are not on this list. If you want to have an idea where to start though, your best bet is to directly engage with the listed dealers and let their agents facilitate your inquiries. You can try visiting their website or their facebook page. Why don’t you try and send them a message now?

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Used Car Dealers to Consider for Your Car Financing Needs

Travelling, whether for work or trips, can sure be taxing both physically and mentally, and while you can always opt to use taxis or the more convenient mobility service providers to alleviate this, using these services can become “taxing” in a whole different aspect that you and your budget knows all too well.

Well, there’s an obvious solution. A solution that has always been available. A solution that’s going to keep you less drained and it’s only going to cost you initially. Yes, you can always buy a car.

Easy for us to say? You may be right but that’s only because we know the WHAT’s and the HOW’s when it comes to these things and so should you.

Go for Second Hand

You want to save, don’t you? Now when it comes to saving, there’s nothing more thrifty than opting to buy a second hand unit instead of a brand new one. The depreciation rate is in your favor, the insurance premium would be cheaper as well and if you do it right, the car is going to be able to pay for itself in no time. Now the question is;

What am I going to buy?

If your sole focus is to simply get a reliable ride that will get you from point A to point B, with an affordable rate and is within 3 years of model year, consider getting a 2017 Hyundai Eon.
 – Smallest unit by far by Hyundai but don’t let that distract you as its interior dimensions are completely optimized for space and comfort.
 – Rear windscreen is really large which makes parking and reversing easy.
 – 800cc engine and 1.0-liter engines, mated to a 5-speed manual transmission.
 – You can buy a used unit for the low price of PHP 300,000

Want something that has a sleeker design? How about a 2014 Mazda 3?
 – Exceptional in terms of style and design. The  long hood and ‘cab-back’ design makes it stand out from all other cars of the same variety
 – Offers two engine variants; A 2.0-liter version which has 155 horsepower and 150 lb-ft of torque, and a more powerful 2.5-liter version which has 184 hp and 185 lb-ft of torque.
 – Available at about PHP 500,000 


Perhaps you’re a family person  and you want to get a unit with family vacations and road trips in mind? You might want to consider a 2014 Toyota Innova E, then!
 –  Strong and robust exterior. Large front grille with dynamic bumpers.
 – Offers 7 seats in 2-3-2 format
 –  2.5 Liter Diesel Engine dishing out 100.6 bhp at 3600rpm with Max Torque of 200Nm at 1200-3600rpm
 – Prices at about PHP 700,00. Fairly cheap considering its performance and design.

As you can see, your purpose as to why you’re buying a car must always be taken into consideration. Cars are long-term partners. Always make sure that it’s a perfect match.

How and where do I buy one?

Good question! Here’s the general rule, as much as possible, refrain from buying from shady individual sellers that plague your newsfeed regardless of how persuasive their posts are and how cheap are the rates that they are offering. You are already saving a lot from choosing to buy a used car. Don’t take the risk of buying uninspected units just so you can save even more. Going the unnecessary extra mile to save a few more bucks has a huge chance of, in turn, lessening the mileage that you should have gotten from the money you expended. The wise choice, then?

Pre-loved Car Companies

Why not? You can pay in cash or choose financing and aside from the relatively more  trustworthy description that companies like GoDrive label their units, another good benefit from buying from them is the safety that they offer. Not only in terms of the car condition and the deal that you’re getting but also your physical safety. Individual sellers will have you meet-up in just about any location, and while you can always set the meeting in a public area, there’s no beating the safety of going to the office of a well-reputed and reviewed company that has a good history of matching great units with hundreds of buyers such as yourself.

As for the process, it’s easy. Car companies are certain to have social media pages you can conveniently message. You can shop around from the comfort of your home, even now. Send them a message and their sales people will be more than willing to walk you through the process.

Once all the necessary details are discussed and a meeting scheduled, upon choosing a car, just make sure that you inspect every nook and cranny. Inspect the papers, even.  If possible, bring an experienced mechanic with you, that is if you yourself are not already the experienced mechanic that you need. Test drive the car for as long as the agent will allow. Long-term partnership, remember? You don’t marry someone at first sight even when there’s an entire reputable company that’s backing the marriage. It never hurts to be too sure.

Now if all things look okay, it’s time to talk about the payment. You can choose to go for car financing but the company will surely require more than an ID for your application. Proof of income and proof of billing are some of the most basic requirements they’re going to have to request from you. A very minor hassle really considering you can drive the car home after sending a few papers and a very small down payment.

Final words

And that’s basically it. Your problem is solved without being required to pay hundreds of thousands upfront.

You deserve every bit of convenience that you can have. Your daily transport  should not be as dreadful or costly as it is. Spend now to save more in the long run but always remember to never compromise quality and safety for the price.

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The Best Second Hand Car To Get

You finally got the cash and you are now walking through this ever familiar avenue lined with car shops left and right. The same avenue you used to just pass-by as you commute from home to work and back. This time however is different. This time, you’re going to buy your dream car. After this day, you will be passing this street not as a passenger but as a driver chilling inside his own personal ride.

A few paces and there you see the car you have been dreaming of these past few years. The sleek design made you gulp. Only after a few seconds did you realize the awestruck face that you’re making. Something that the salesman noticed earlier than you did. And here he comes. As expected, he starts waterboarding you with information which you already know and thus bores you… until he gets to the one bit of detail that made you pause. The car right in front of you is actually secondhand.

You gave it a more thorough view. Burgundy red. You prefer it scarlet but it’s acceptable. Looks quite nice for a preloved unit. Considering it’s only a few years old, as the sales guy said, it’s performance most probably is still great. But likely the most appealing feature? The price. Two-thirds the price of the same brand and model that’s brand new.

Now comes the dilemma. Your very first car: Is it a good idea for it to be preloved? Time slowed and your mind went back to this one GoDrive article that you have read a day ago. The Pro’s and Con’s of getting a preloved car were already known to you and you start to mentally enumerate them one by one:

Pros


– Not steering away from the obvious; the Price.

On the way home, after someone purchases a brand-new car, its  value already depreciates at an instant 91%. It further depreciates to 81% after a year, then 69%, until it reaches its 10th year when it’s no longer going to have any market value. Pre-loved units’ value even further depreciates depending upon its condition and mileage. With all these in consideration, it shouldn’t be shocking to find vehicles released 2-3 years ago to be on sale for about half the price of their original value during their first year. Very good news for a prospecting buyer of secondhand, right? After all, paying tens of thousands of pesos less just because a car is a year old is a huge plus. You also won’t be paying for exaggerated charges like shipping charge, the “Dealer Preparation” charge, sleazy hidden fees, etc.

In addition, this means that the return of investment could be faster and if you decide to sell the car in the future, you will be able to mark the selling price closer to its previous price when you bought it than the previous owner did when he sold it to you.

– Not that far off from the advantage of a cheaper car is the advantage of cheaper Insurance premiums.

You can be a damn good driver who has no chance of crashing… or you can be honest. Either way, your car would need insurance. But because with bigger depreciation comes smaller insurance premiums, you’d be paying way less than what you would be paying if you go for brand new.

– Want to customize your ride? Go for it. It’s guilt-free

 

Also, it costs much less since you can now do your own customization or you can have it done  cheap by a car shop that you trust. With a brand new car, you wouldn’t even be thinking of customization unless you want one from your dealer and you have lots of spare money to throw at them.

But it can’t be all good now does it? What should you be worried about when getting a pre-loved unit?

Cons


– The glaring problem, ironically, are the potentially Hidden Problems.

Especially if you’re buying from an individual seller. You can never be so sure whether the car is in tiptop shape and has never been in any accident as the seller would surely claim. You would have to take the seller’s words for it. Fortunately, you surely are buying from a company like GoDrive where vehicles are certified and thoroughly-inspected to make sure quality isn’t compromised for the price.

– Cheap customization means that your car no longer has warranty.

If there are problems that you failed to notice before the sale, you would have to fork out some of the money you saved from NOT buying a brand new car – unless of course you’re buying from a company that offers one for used-cars.

–  The older the model, the more car innovations that you’re going to miss out on.

With the current trend in technology that even the pandemic can barely slow down, new features for safety and convenience are and will keep on being released year after year. The new ones will always have the newest tech.

– Color
One of the most overlooked disadvantages is that you’re most likely gonna have to settle with whatever color that the “perfect” secondhand car is. If you’re looking for a specific brand and model and you found one that’s in good condition and has good mileage, the stars have probably lined-up just for you if the car is also in a color that you prefer. Sure, a paint job is a minor hassle but some of the cash that you saved from going preloved will have to go. Not a very comfortable thought, but that’s still a lot more acceptable compared to just sucking it up and seeing your dream car everyday in a color that’s not quite dreamy.

Have you decided yet?


Now that you have remembered the things that you need to consider, time returns to its normal pace. You start to hear the salesman’s voice as it turns from muffled background noise into clear incessant hard-selling. Is it okay for your dream car to be preloved? It certainly can be. It can even be great! Now whether you decide to go for it or not, we sure know it’s from a guided decision, from knowing the pros and cons, weighing the benefits and risks and not from mere impulse.

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Can Your First Car be Preloved?