Buying your First Car? Read this.

One of the major milestones of #adulting is purchasing your first car.  The thought of owning and driving home your first set of wheels is very exciting, right?  Needless to say, once you go through the process of choosing a car make and model and determining the right financing option, things can also get downright confusing and overwhelming.  Do not panic!  Keep a level head because making a mistake in this situation can be more costly down the line.  To help you get started on the right path, let us help you get the step-by-step basics down.

First Things First – the Budget
It is important to be realistic about what you are willing to and able to spend for your first car.  The expenses do not stop once you get your keys and drive off from a dealership.  In fact, it has only begun.  Aside from the car price, there are documentation, transportation, dealer warranty fees and sales taxes charged upon purchase.  Moreover, you have to consider the cost of gasoline, parking, maintenance, parts, repairs, and insurance for the next few years.  Including monthly loan amortization payments, these could easily add up to at least P 25,000/month for the first five years, depending on your loan terms and car usage.  Now it is your turn to do some pencil pushing – can your monthly income keep up with all these costs to owning a car?

Choose the Right Car
Determining the right kind of car for your needs can be tricky.  There is a wide array of choices from different dealers that could fit your budget.  The real challenge is to figure out which car features you really need vs. want.  Using the car to make deliveries for your side hustle? Perhaps you could benefit from a car with a spacious trunk. Will you take the car for road trips to the province? Get one with ample legroom. Do you really need automatic sliding doors? Probably not.

Cover the essentials – How many people will be regularly riding the car? Depending on your daily travel routine, are you better off with a diesel or a gasoline-powered engine?

Shop for the Best Financing Deal
Car loans are being offered by most banks and dealerships, so the choice in the end would fall on which option serves your needs the best.  In-house dealership financing typically offers faster processing and lots of freebies, but comes at a more expensive price tag.  Banks provide lower interest rates but requires a bit more work.  They have eligibility, pre-qualification, and documentary requirements, plus having a good credit score is a must!

For first-timers, if getting a car at the lowest upfront cost possible is your main concern, there are car loans offering features that minimize your initial cash out to help you save on costs.  For example, with EON’s Auto Loan, you can take home your car only with a downpayment of at least 20%.  It also allows you to amortize the payment of loan fees such as chattel mortgage and car insurance premiums, so you can save that money in the meantime for your other expenses.  You can visit www.eonbankph.com/autoloan to have a quick estimate of your monthly amortization payments and to learn more. 

Register and Insure your Car
You cannot legally drive your car around the city without registering it annually with the LTO and getting compulsory third-party liability (CTPL).  Proceed to the LTO branch nearest you to register your car, while a CTPL insurance can be easily purchased online.  Save as much as 50% on CTPL insurance if you purchase a MAPFRE CTPL voucher online from EON’s website or app.  Visit www.eonbankph.com/topups/insurance to learn more.

Meanwhile, a comprehensive car insurance policy is not mandatory, but driving in the crazy Metro Manila traffic almost makes it essential to a car owner’s bucket list.  It is always better to be safe than sorry.  On the other hand, banks require car insurance policies as pre-requisite and typically offer it in conjunction with their loans.  Car insurance policies can cost from P8,000 up to P 30,000+ per year, depending on car type, insurance coverage, and premiums.

Other Tips
Purchasing a brand-new car is not your only option.  A car is a highly depreciating asset.  It loses majority of its value in the first two to three years; approximately 30% of it is gone once it is driven off the dealership. Thus, buying a second hand car may suit your needs better.  Lastly, if you feel like you cannot afford owning and maintaining a car just yet, there is no rush.  You may be able to get by a few more years joining a carpool or taking a shuttle service in your area while you save up more money to buy your own car.  This is better than being impulsive about the purchase and end up missing out on loan payments – which will eventually turn out to be more costly for you.

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