Philippine auto loans up as Pinoy car buyers prefer financing

CEBU, Philippines - Demand for auto loans in the Philippines continues to increase as buyers look at car financing as a better option for a vehicle purchase, online car seller Carmudi said.

In its report on the growth of car financing, Carmudi Philippines noted the attractive consumer loan programs of banks have boosted demand for passenger and commercial vehicles.

In the first quarter of 2015, Carmudi said "the growth in consumer loans was driven by a 26% increase in auto loans which translated to P244.61 billion."

As consumer loans continue to grow, local lenders are coming up with various strategies such as lower interest rates, attractive product offerings and freebies to raise their share in the industry and give them a competitive edge, Carmudi said.

Kris Lim, the firm's marketing head, told The FREEMAN yesterday that interest rate for a car loan generally depends on the bank but would usually range from 8.93% to 12.60% per year.

Lim said that aside from banks, car dealers also offer in-house car financing.

Managing Director Subir Lohani also said: "Car financing has always been an option that consumers in the Philippines look at when buying a car."

Lohani explained that as demand for cars increases, he expects that more Filipino customers will seek help on financing options.

"As more banks and financial institutions offer attractive loan programs and require low down payments, we expect auto purchases through financing will continue to flourish in the country," the official said.

Carmudi also predicted that consumer lending in the country will increase at a double-digit rate.

The Bangko Sentral ng Pilipinas earlier reported that loans granted to households increased by 27% in the first quarter this year as consumers continued to borrow money from banks to buy houses and cars.

Consumer loans reached P932.8 billion from P735.1 billion in same period a year ago.

"Consumer lending during the first quarter was lifted by an increase in residential real estate loans and continued growth in auto loans," the BSP said.

In the first three months of 2015, loans to buy motor vehicles rose 26% to P244.61 billion from P194.4 billion year-on-year.

Carmudi said: "As more banks invest in consumer loans, consumer credit is also expected to increase and become more widely accessible to all Filipinos."

A research done by the online car dealer also revealed that 76% of Filipinos are planning to buy a car in the next two years. — (FREEMAN)