Can You Afford a Brand-New Car? This Is How Much Your Salary Should Be
The past year has been challenging: Lives were lost, companies shut down, unemployment went up. Most people have tightened their purse strings during this time of uncertainty, but even those willing to make big-ticket purchases like cars now find new roadblocks on their way. In September last year, during a virtual press conference, Kia Philippines’ president shared that banks are clamping down on auto-loan approvals.
We reached out to the Bank of the Philippine Islands (BPI) to ask about car loans during the time of the pandemic. Dennis Fronda, head of BPI Retail Loans, shares that while the basic requirements have not changed, “we have aligned our loan evaluation processes based on the current environment. We took into consideration the jobs, businesses, and industries that were greatly impacted by the pandemic.”
The COVID-19 pandemic has taught us to take care not only of our health, but also of our financial health. So, with the majority of the country still under some form of quarantine, and with mass transportation still limited, it seems like a good time for the average Filipino salaryman to consider getting a vehicle, right? But how much should you be earning in order to afford a brand-new vehicle?
“A gross monthly income of around P40,000 will be enough to sustain the amortization payments on a starter car,” says Fronda. “Buyers must note that the stability and reliability of their income sources are just as important as the amount when they’re assessing their readiness to buy a car.”
So, if you are nowhere near that bracket, step back and assess your financial situation and maybe wait till the economic situation is better or your financial health improves. Or maybe try considering purchasing an alternative mode of transport like city bikes that cost less than P10,000 or even electric kick scooters. You wouldn’t want your brand-new car towed by the bank if you end up defaulting on your loan, right?
This story originally appeared on Topgear.com.ph. Minor edits have been made by the Esquiremag.ph editors.