Beyond Downpayment: Are You Ready to Buy A Car?

The traffic of Metro Manila does not deter the commuting public from getting a car, at least for those who can afford it. Just this January, members of the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) recorded a 3.5-percent increase in sales for 2019, up from a double-digit decline in 2018. It’s an inevitable trend, given that commuting in the Philippines makes you leave the house a human being and arrive at your office a warrior. 

With attractive promos everywhere and new brands entering the country with competitively priced cars, it makes you wonder if you’re ripe enough to get your first car. However, brochures and promos are just appetizers of car ownership. Some people dive in and sign the contract only to realize that they bit off more than they could chew. It leads to repossessed cars or those posting ‘pasalo’ in FB car classifieds groups. I’m here to help you avoid that.

If you’re not buying in cash, the first thing to consider is the down payment (DP) and monthly payment. Rule of thumb is a bigger down payment would lessen your monthly fee and vice versa. It depends if you’re willing to get a car now and pay more in the long run or save up a bit for a higher DP and pay less per month. Banks are also included in this equation because they’ll check if you can afford the monthly fee depending on your income.

Lots of people stop their budgeting after computing their salary against the monthly amortization. They’d think they’re good to go — not knowing there are a few bills coming their way. 

If you’re in the city, you know how harsh traffic is, and it’s the same for the car and its fuel consumption. I travel 18 kilometers per day from my place in QC to Legazpi Village, Makati via EDSA. My car has a 1.0L engine and 35L fuel tank but can only last me four days (or five days if I stay late and avoid the traffic). That full tank costs me around P1,800 or almost P13,500 per month. 

Another daily expense that hurts the wallet is the parking fees. You’re lucky if you have a free or designated parking slot available but for the rest of us, that’s an easy P200 per day in BGC or Makati which is P4,000 per month.

Then there’s the often overlooked factors like insurance and Preventive Maintenance Service (PMS). An insurance starts at around P15,000 per year, depending on the inclusion. Car promos usually have a 1-year Comprehensive insurance, with some including acts of nature. A number of people do not renew this coverage thinking it’s just added weight on their budget, not knowing it will save them from bigger expenses should they get into an accident.

PMS is the routine checkup of your car and is required to maintain the warranty. PMS fees depend on your car and how often it needs to be serviced per year. Most cars need four visits, while other brands are progressing into two, and some only need one visit per year. If your car is beyond warranty already, it’s advisable to follow the schedule to prevent any parts from totally breaking down leaving you helpless in the middle of the road. 

Add to this other consumables like registration, tires, carwash, wipers, and you’ll realize having a car is like having a child. It’s not that I’m discouraging you to buy a car, I just want you to be prepared with the responsibilities attached to it.

If you’re set on getting a car, I’ll share with you what I did. I saved up for a 20% downpayment (usually that’s the upper limit of dealership promos) to make the monthly payments lower, which was a good margin below half of my salary. Then I saved up for the first amortization, just so I have a buffer in my budget. If you’re a bit nervous, you can do with 2 months amortization as a buffer. I also saved up for essential accessories like tint, dashcam, and seat cover so when I finally get the car, I won’t have to stress myself where to get the money for them. All that’s left were gas, parking, insurance, and PMS — all of which were accommodated by the space in my budget.

Despite the traffic, stress, and fees associated with it, having a car is very liberating. You can go visit your relatives anytime you want, go to the mall without thinking of the heat, buy stuff without thinking how you can get it home, fetch your parents so they can see their grandkids — the benefits are too many to mention. That’s why as much as possible, once you decide on the car, be prepared for the financial responsibility.

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