Second-hand car loans in the Philippines: what banks and lenders ask for

How a used car loan differs from a new one

Financing a second-hand car works much like a new car loan, with tighter rules. The bank appraises the car instead of trusting the seller's price, lends a smaller share of it, limits how old the car can be when the loan ends, and charges more interest. BPI's published terms show the gap: up to 85% of the price for a brand-new car, but up to 70% for a second-hand one.

The car itself is the collateral. The lender registers a chattel mortgage, your CR is annotated as encumbered, and you get a clean CR only after the last payment and the mortgage cancellation at the LTO.

What the big banks publish (November 2026)

Banks change terms and often quote case by case, so treat this table as a starting point. These are the rules we could find on the banks' own pages.

Why the age rule matters

Under BDO's rule, a 2022 model has to be paid off by 2028, so someone buying it in late 2026 could borrow for only about two years. Security Bank's formula would allow up to seven years on the same four-year-old car, but its second-hand loans top out at 48 months anyway. Metrobank currently says on its car loan FAQ that it does not accept pre-used vehicles as collateral.

Interest: compare the effective rate

Many Philippine lenders quote an add-on rate, a flat percentage of the original loan charged once for the whole term. It looks small because it's charged on the full amount even as your balance goes down. The effective interest rate is the fair way to compare offers.

BPI publishes both. For a second-hand car, its add-on rates run from 7.89% for 12 months to 44.32% for 60 months, which works out to effective rates of about 14.26% to 15.50% a year. For brand-new cars, the same page lists effective rates of about 9.88% to 11.19%.

In pesos: borrow ₱500,000 for 60 months at BPI's second-hand rate and you pay about ₱221,600 in interest, or roughly ₱12,030 a month. The same loan at its brand-new rate (31.01% add-on) costs about ₱155,000 in interest, around ₱10,920 a month.

The Truth in Lending Act (RA 3765) requires lenders to give you a written statement of the finance charge and the simple annual rate before you sign. Ask for it and compare lenders on that number, not on the monthly amortization alone.

Who qualifies, and what to bring

Published minimums give a sense of the bar. BPI asks for a household income of at least ₱30,000 a month and accepts borrowers aged 18 to 70 at loan maturity. Metrobank, for its new-car loans, asks for ₱40,000 monthly gross income and an age of 21 to 65 at maturity. A clean credit record matters at every lender. If your own salary falls short, ask whether the bank counts household income, as BPI's minimum does, or accepts a spouse as co-borrower. Expect to submit roughly the following, though each bank has its own list.

• Employed: government-issued ID, certificate of employment with compensation, recent payslips and your latest income tax return (BIR Form 2316).
• Self-employed: ID, DTI or SEC registration, audited financial statements, your latest income tax return and about six months of bank statements.
• OFWs: ID, employment contract and proof of remittances or bank statements.
• For the car: copies of the OR/CR, the seller's ID and the deed of sale or purchase agreement. The bank will inspect and appraise the unit before approving.

Banks, financing companies and other routes

Banks usually have the lowest rates but are strict about vehicle age and paperwork. Financing companies, which are registered with the Securities and Exchange Commission rather than supervised by the BSP, tend to accept older cars and approve faster. You pay for that flexibility with a higher rate. Check a lender's SEC registration before signing anything.

Two more options are worth a look. Banks sell cars they have repossessed, often with their own financing attached and simpler approval. Some used car dealers arrange loans through partner lenders, which saves legwork but can bury a higher rate inside a friendly monthly figure. Also, don't confuse a purchase loan with a 'sangla OR/CR' title loan: that product lends money against a car you already own.

Cash-out beyond the down payment

The down payment isn't the only money you need on release day. Ask the lender or dealer for an all-in cash-out figure that covers:

• Chattel mortgage registration and notarial fees
• The first year of comprehensive insurance, which lenders require with the bank named as mortgagee
• LTO transfer of ownership and the PNP-HPG clearance
• Any repairs the pre-purchase inspection turned up

Before you apply

Get pre-approved before you negotiate, so you know your ceiling and the seller knows you're serious. Pick the shortest term you can comfortably pay. On BPI's table, stretching from 36 to 60 months nudges the effective rate only from 15.00% to 15.50%, but total interest on ₱500,000 rises from about ₱124,000 to ₱221,600 because you borrow for two more years. Ask whether paying early carries a penalty.

Be realistic about age, too. A five-year loan on a car that is already seven years old means paying installments on a twelve-year-old car, and the bigger repair bills tend to arrive before the last payment does.