Our first-time car buying experience


As you know, for frugal husband and me, buying a car was supposed to come after we purchased our third parcel of land. But after the failure of negotiations after several months, we opted to get the car instead.

Before getting married, our buying experience was limited to real estate. This is our first time buying a car. We sought for advice from frugal mom. If you’re considering getting your first car, some of these things may help! TLDR: car buying is similar in that it involves a lot of negotiation on the price, interest rate and inclusions.

Check your budget and set your maximum gross selling price at which you’ll buy


The rule of thumb is that mortgages must not comprise more than 25% of your monthly take home pay. Once you go higher than that, the budget becomes stifling! Check. I opted for a 36 month /3 year loan term instead of a one or two year term as I was advised that we need to account for sudden job loss or sickness. Due to a substantial down-payment, our monthly amortization is below the 25% threshold as I wanted some leeway for investments, which make me more money.

Window-shopping for cars is one of the fun parts! Frugal husband and I checked some showrooms (without revealing our real names) to get a feel of the various vehicle models. Did we need a sedan, a wagon, etc? We eventually settled on a wagon type AUV /MPV. If you follow us on Facebook, we got a gold-ish avanza 2017 automatic model. It’s priced at around PhP 852,000.00/ USD 17,040. We checked out competing models at the same price range.


Before stepping foot in the car showroom, negotiate your interest rate directly with the bank’s loan department and NOT with the branch managers


If you can’t avoid stepping in a showroom, at least hide your real name from the agent. I was advised by a bank branch manager that sales agents tag your name i.e. call the various bank loan departments and check whether you’ve inquired for a loan. And then tag you as their client, giving you less room to get a low interest rate.

Personally , we just called some banks’ loan departments and asked them to quote their rates. We then leveraged their offers against each other, and voila we got a pretty good rate at 14.7% or a total interest of PhP 64,974.00/ USD 1,300. We also negotiated the charge for chattel mortgage registration (leveraged the offers of banks and the car dealers). This won’t take up much of your time. It only takes a few minutes to pick up the phone to call.


Do your own legwork and get yourself approved for a loan


Your sales agent would offer to facilitate your loan application. In return, he gets you a high interest rate at a huge commission, at your cost. However, this assistance is indeed convenient. It really depends on what you value. I wanted to avoid exorbitant interest rates and surprise fees at closing. For me, I made just one personal visit to meet the bank loan manager. I was interviewed regarding my loanable amount, my work, source of funds etc. I wasn’t asked for much documents except for my bir form 2316 as proof of source of funds, which I merely sent via email. After that the loan was approved.

The bank loan doesn’t have to be such a hassle as long as you transact with a bank where you have existing relations with (have a bank account with them). The KYC know your customer part is already done the moment you opened your bank account so once you apply for a loan, there won’t be much hassle.

Avoid face-to-face negotiation with agents

On the gross selling price of the car and inclusions, we merely texted/emailed a bunch of sales agents and asked for a quote. Time is precious and I didn’t want to spend my time going around the dealerships in the area. I also wasn’t in the mood to play hardball with the sales agents. I wanted a floor price. The agents could give me their best price and I would pay down within the week. It got really interesting as agents offered different quotes and inclusions. They all tried to compete for my business. Some were persistent and kept calling. Naturally, I leveraged their offers against each other. This process only took a few minutes of my time.

Had I done this face-to-face, I would have to sacrifice an afternoon of my workday, or a vacation leave. It would be ineffective to do negotiations in person with sales agents who are trained to judge you by appearance. I didn’t want to get the “lawyer price” or the overpriced version of their quote.

Pay a large down-payment.

A lot of car dealers advertise a low down-payment of only PhP 5,000.00 / USD 100 or maybe “promos” of low monthly amortization of only PhP 6,000 / USD 120. If you are financially prepared to buy a car, try not to fall for these. Pay a large down-payment upfront and opt for a term of up to three years only. It has its perks such as: 1) lower interest rate 2) car value is aligned with selling price plus interest expense / you won’t be upside down on your mortgage.

To illustrate, we paid a 50% down-payment and would be paying a total interest expense of about PhP 65,000.00 for the entire loan term. Had we gone for less down or low monthly amortization, our interest expense would’ve gone up to the high PhP 100,000.00 or more, without even noticing, as we get too enamored with easy monthly payments. Ask for a real discount instead, on the gross selling price.


Don’t drive short distances


Lastly, frugal husband and I only use the car for inter-city travel to visit family and properties. We moderately use it for grocery shopping too. We don’t drive on a daily basis as there’s shortage of office parking anyway. The net effect is less dependency on the car and less hedonic adaptation. The car always feels novel to use and we hardly rack up the miles.

How was your first car-buying experience?



7 thoughts on “Our first-time car buying experience

  1. Fantastic tips! I’ve never bought a car since the car I have now was partially paid for by my parents and I just continued the amortization. But your insights are so useful, specially now that we’re thinking of getting a new car by the latter part of next year.

    I never knew that you could deal directly with the bank and just how much “convenience” will end up costing me. Super thanks for this 🙂


    1. Glad that it helps Jill. as long as you have a job, you won’t need much agent assistance on your loan application


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