Purchasing a Car #2: From Showroom to Your Garage

July 16, 2022

After I finally made my decision to purchase a car, the search for my auto began. I was actually already looking at various car models for some time, but the process of canvassing really changed when I knew that I was serious about getting a car. For the longest time, I had my eye on this one car, but this time I decided to widen my choices based on the car model's competitors so I could really choose between the models that are available in the market. 

Online Research

AutoDeal proved to be one of the fundamental tools in my car-buying research because it was so easy to see the profile of each car and to compare it with other models under the same category. There were so many options, and it was actually hard for me to trim down my list. Thankfully in the end, I was able to identify my top 3 cars, and that's what I planned to see in-person in the car dealer.

Showroom Visit

Countless hours of online research (reading websites + watching YouTube video reviews) will never beat the actual experience of seeing the cars with your own eyes. A vehicle's look-and-feel might be totally different from what you were expecting, so it's really a best practice to see the car in a showroom before purchasing one.

Together with my siblings, we went to the three car dealers where my chosen models were present. Good thing they were located almost next to each other, so it was just one weekend trip.

This was my first-choice car. However, when we saw it in person,
it looked smaller than I expected.

This one was an "overqualified" candidate for me.
I was wary of the brand's aftersales so I did not go for it

Our third and last stop was where I met "the one" 🥰. I was pretty excited to see it in-person because the hype was high for this one because the model just got released that month. When I finally walked towards it in the showroom, I knew that this was it. This was the one.

I found it -- my car of choice (in the color that I wanted 😅)

A number of people were also checking out the car that day. It was so amazing to see it myself. We took our turns sitting on the driver's seat and checking out the controls that were available on the dashboard. After a few minutes of talking to an agent (who was offering in-house financing, which we subtly declined), we all went home satisfied knowing that we (or me?) already made the decision.

Applying For An Auto Loan

Now that I know what car I wanted to buy, I proceeded with completing my auto loan applications to various banks. It is important to know what car you intend to buy at this stage because this is where the amount that you will loan will depend. It's also part of the information you will provide on the forms. Well technically, you can just provide an estimated amount that you want to loan, based on the price range of the cars you are eyeing on, but I believe it's smoother if you have identified the specific car model before sending your application forms to various banks.

So again, the process of selection comes in again. To which bank do I apply my loan? Again, it pays to do your research. I collected auto loan details from various banks (the rates are available on their websites) and I trimmed down to those with the lowest rates. Of course the rate to be provided can still vary for specific applications, but at least you have a range in mind.

Some important things I learned during this process:
  • Choose banks that you are already a long-time client with. This was what I experienced-- I got approved faster and with a rate even lower than their published ones. 
  • It's okay to decline a pre-approved auto loan.
  • Most banks require a minimum down payment of 20% of the total loan amount (car's SRP). If you can afford, make a higher dp and a shorter term period to have optimal savings on the overall value that you will pay.

    Choosing a 20% down payment means that you will shoulder and pay 20% of the car unit price to the car dealer, and then 80% of the price will be paid by the bank to the car dealer. You will then pay back the bank the 80% amount through the monthly amortization of the auto loan.
  • If possible, choose to avail the auto loan and insurance from the same bank. Usually banks have promos for their insurance when you also avail the auto loan from them (I know this because I did get a promo for mine 😉).
Of course, I chose the best deal out of those that were offered to me. Now that I already have an approved bank loan, it's time to identify which specific car dealer I will buy my unit.

Finding a Car Agent

Searching for the best agent is crucial for your journey as a new car owner. Your agent will be your contact person before, during, and after the sale of the car unit. So choose your agent very carefully. 

It's the agents that have the full prerogative on the overall package that they will offer you for the purchase of the car.

To give more context on this, let's discuss first the ways you can pay for your car:
  1. Cash - if you have enough cash to pay the car's SRP in full, then good for you since you will pay the price as is, and save more actually because comparing it with a loan, you won't need to pay any interest rates.
  2. Bank PO (Purchase Order) - the buyer is the one that applies for an auto loan from a bank and once it gets approved, the buyer just forwards the Bank PO to the car agent. Loan interest rates are lower if you go this route compared to in-house financing.
  3. In-house Financing - it's technically still a bank loan but it's the car dealer that applies the auto loan to a bank. This is the route that some buyers use either because they have difficulty in being approved by their banks or they just don't want the hassle of applying for an auto loan themselves. This is the easiest fastest way to purchase a car because it is the agent who does all the job. You just need to give the agent some form of identification and they will do the rest. This option doesn't require a high cash out (I've seen offers that only require at least 15,000PHP cashout) but in the end you will pay a higher total value because of the high interest rate.
To entice potential buyers, car agents offer lots of freebies so they avail the in-house financing option. Well, with what I have learned in this car-buying process, those items are not really "freebies" because technically you pay a higher price for the over-all package because of the high loan interest rate. I went for the Bank PO payment option because it was the most practical one for me. 

Here are some tips I can give you for this stage in the process:
  • Finding a car agent can be done in parallel with applying for a bank loan since approval for the bank loan might take time. 
  • Joining car groups for a specific car model (i.e. on Facebook) proved to be very useful during this time. Car agents also join them to post their car quotations so they can make a sale. Because of this, it was very easy to contact car agents to inquire about quotations. I posted a "Looking for car quotations for this car model", and in less than an hour, I received tons of DMs of car quotations from agents. 
  • By default, car agents send you quotations for in-house financing. Their quotation usually includes:

    monthly amortization
    LTO registration (3 years)
    car insurance (comprehensive)
    TPL insurance
    other freebies

    The quotations vary from agent to agent because it's wholly up to them to design their quotation that would make their offer marketable. Make it clear to them from the very start that you are paying via cash or bank PO instead. Almost always when you mention that, they will say that the freebies listed are not applicable for bank PO or cash.
  • You can choose not to avail the insurance from the car dealer. I got mine from the same bank I got my auto loan from.
  • The agents' goal is to make you purchase the car from them so they will do their best to make their offer enticing. One way is to list lots of freebies. However it's a bit misleading because some of the items that they include in their "freebies" list are not really freebies but rather standard inclusions in the car purchase.

    Common examples that I saw in car quotations are:
    - FREE spare tire
    - FREE jack and tools
    - FREE seat cover and matting
    - FREE rust proofing
    - FREE warranty booklet

    Again, these are the standard inclusions. Legit freebies that an agent can give you are:

    - Free LTO registration 3 years
    - Free TPL
    - Free Tint
    - Free Umbrella
    - Free Rain Visors

    Since the agents have control to modify their quotations, you can negotiate with them on what freebies they can include for their offer.
  • Ask for a formal quotation. They will give you a PDF copy of their offer.
  • There are hoax car agents online, so be careful. One way to identify legit ones is when they use their company email address when sending the formal quotation to you.
  • As long as you have not closed the deal with the car agent (i.e. you have not paid for the downpayment), you can still transfer the approval to other agents. One reason why you would opt to do so is when your agent was not able to fulfill their assurance that they will be able to give you the unit within a certain period, or you just found a better offer from another agent.

    I learned this happened to other people as I read about their experience in the Facebook group: the agent assured the client that they will have a unit available in around two weeks, but client was already waiting for months (there was a high demand for this car unit, but not enough stocks being shipped to the country).

    I also did it myself. Initially I was in contact with this agent located at the nearest car dealer from us. I was ready to accept his offer because why would I bother to check other branches when this is already the nearest and most convenient location? Well the bank branch manager who was arranging my auto loan gave me this tip: canvass for other quotations from car agents so I could choose for the best deal. This was where the idea of posting on the Facebook group landed on me. And truly, I got a better deal. Although I had to travel a bit further to the location of my new car agent, I still got to save some money because I got the LTO registration, TPL, and tint for FREE. I had to pay all of that from my original agent. I think dealer branches have sales quotas to meet so the agents are really competitive with their offers to potential clients. Plus, my new agent was way better because he was so proactive and responded very promptly (even on weekends!). Compare that to my original agent who took 2 days to respond to my single inquiry. So yeah, thankfully, I found myself a great agent!

Coordinating Between the Bank and Agent

Once you've come to an agreement with your chosen car agent, it's time to formalize things. Normally, this process would take only days to finish. However, since I was dealing with a new car model that's still hot in the market, I had to wait for almost three weeks for an available unit. My agent promptly contacted me that there was a unit that came in and will be reserved under my name. The unit was not in my preferred color, but knowing the situation of the market, I had to take it or it would take months for me to get one specifically for my preferred variant (a decision I don't regret because as of this writing, people are still scrambling for available units for this car model).

Since I chose bank PO, I had to cover a % of the unit price. I coordinated with my agent and bank for the final amount that I will cash out, and went to the bank to do the transaction. Coordination between the bank (for your auto loan and insurance) and the agent is essential because:

bank - needs to get from agent the technical information about the specific car unit, where they will associate the loan and insurance

agent - needs to get the papers from the bank for insurance (if you availed the auto insurance from the same bank you got your auto loan

Car Unit Release

After doing the payment (which I did on the car dealer's bank account, not the car agent's, take note!), my agent informed me of the possible date of release of the unit. I'm so excited of course, but I had to delay it for a week because of conflicts in my schedule. My mom, brothers, and niece came with me when we got the new car.

When we got there, I signed some papers and asked my agent for a request on the plate number (so it won't coincide with the coding of the other car we were using). Then after a few more minutes, I met my new car! 💖

Hello, my Toyota Raize! 🥰

It was such a wonderful feeling to see the actual unit. Yup, the only available unit was in silver. I originally wanted gray, but this still best suited me (silver will make scratches less obvious and the car is more visible at night). I let my agent talk to my brothers during the car inspection because they're all experienced owners (LOL) I just looked and inspected the car itself and checked if the parts inside and outside didn't have damages.

The transaction was very smooth, and within just a few more minutes, we were on our way home with the brand new car! 🥰✨💖🚗

That was my journey in buying my car. It was a very thrilling, stressful experience, but I did learn a lot of things! I hope this guide helps other potential car owners in their journey of purchasing their cars. 

But the journey doesn't end here, it's just the start. One more post in this series is coming up. So what are the next steps that you should do now that you have the car? Also, what things should you be mindful of, now that you are driving a car? Stay tuned. 😄

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