Our good friend Dennis Fronda, the senior vice president for Retail Lending Group of Bank of Philippine Islands (BPI), gave a detailed interview with our colleague Ron de los Reyes recently on the bank requirement needed in financing a new or used car through their bank. It was aired on Ron’s Auto Review being telecast every Saturday on PTV-4.
Dennis said one can have his “dream car” in just one day if he/she submits all the needed documents that can show he/she has the capability to pay for it. Among them are proof of income (if he/she is employed or has own business), income tax return, and other things that can satisfy the bank that you are capable of paying for your soon-to-be financed “dream car.”
One additional good proof is your current bank book with BPI – whether it is “bulging” or “bursting” is a big plus factor of course! Dennis said that this is one plus point for any applicant since the bank can easily see his/her financial capability to pay.
Before the pandemic, the sudden boom in car-buying, especially through bank financing, was brought about by the influx of many international call centers and, later on, POGO centers. Those locals that were employed by these centers whose salaries were bigger than those employed locally in private or government agencies started the craze to get their own brand-new cars.
Local car dealers, sensing a bigger client base on these “call-center guys,” started to outdo each other with various marketing strategies. Low down payment on brand-new cars attracted those guys with their new-found sources of income. That’s why banks were overwhelmed with car-financing applicants that came in droves. Approval was so easy and you can easily get the car that you reserved as soon as bank approval comes overnight.
But it didn’t take too long before the so-called “bubble” burst. Many of those who availed of the easy car financing suddenly found a problem in having to meet their monthly payments or obligations after only 3 months of enjoying driving their “dream cars.”
Then, the pandemic struck and many were forced to cede their “dream cars” to the “repossession army” of the banks. Almost brand-new cars started streaming into the various “car barracks” of different banks as they were either re-possessed or simply handed back by their respective owners who could no longer afford to pay the monthly amortization.
The banks learned their lessons well. Approval of car financing went back to old, hard times as banks started strictly scrutinizing the applicants. But not that very strict as they need to do business with their client car dealers who need to sell their products (which came in trickle during and after the pandemic) and recover whatever losses they encountered earlier.
But there is also a need for the prospective buyers to learn, just what Dennis had told Ron during that same interview. Applicants need to learn of their capability to pay their monthly obligations and, yes, to also submit all the required documents as well.
As an added tip from this corner, first-time brand new car buyers must also know how to compute things before splurging on car financing. One should always know the various bank rates on car financing and compute how you can save. Next is to look for the best insurance company that you can rely on since you would be the one shouldering the next year’s insurance payment after your chosen dealer had given you the first insurance payment for free. Many car dealers usually ask their clients to come up with post-dated checks for the next succeeding two years under their chosen insurance company. But just before the first year would end, try asking the insurance company how much it would cost to insure your car if you go straight to them. If it’s much less, you have the right to withdraw your post-dated checks from your car dealer and go straight to that insurance company.
There are various other things where you can cut corners, so to speak, but we shall discuss them later. You need not splurge in order to get your “dream car” anyway.