How much salary should you make to be able to afford a brand new car?

While having a vehicle in other countries, like the United States of America, is more of a necessity than a status symbol, it seems like the other way around in the Philippines, as not all could afford one without applying for a car loan. However, that doesn't mean that Filipinos don't need their car as their primary means of transportation every day. We felt the importance of having one during the pandemic. But how much salary should you make to be able to afford a brand-new car?

Car loans and qualifiers

According to digital marketing officer Shiela Marie Torres of the Bank of the Philippine Islands, 80% of car loan applicants are rejected. While there are various reasons behind this, the main point is that most aren't qualified for the loan. To get considered by financing institutions, applicants must prove they have the capacity and the means to pay. Aside from that, of course, they are reliable enough as individuals.

Going for a cheap option

The reality is that — if we consider the most in acquiring a car is the budget (which most of us do), choosing amongst the cheapest options in the market is not just our fate but our "should do." For instance, the Toyota Vios has born the crown for several years as the best-selling vehicle in the Philippines. Primarily, behind its success is that Japanese automaker Toyota drew a reliable reputation internationally, not just in the country. Aside from that, the Vios offers functionality and good value for money, which is essential when the decision lies in budget.

How about the Toyota Vios?

According to the official website of Toyota Motor Philippines, the base variant Vios comes with a price tag of PHP 686,000. If you wish to acquire a unit through a car loan, you will need to shed PHP 12,257 monthly for at least five years. If you are to shoulder the full monthly amortization, you will need more or less a PHP 40,000 monthly salary, considering the tax deductions, monthly contributions, bills, and personal expenses. Not to mention the down payment for the car loan, which mostly comes from our savings.

Average monthly salary

This gives an insight into how difficult it is to have a brand-new car in the Philippines, not just because the figures are based on an entry-level variant of an entry-level car model but also because of the reality that the average monthly salary in the country isn't enough. According to the Philippine news website Inquirer, the average monthly salary in the Philippines is PHP15,200, and among 110 countries, the Philippines is 95th on the list. That is why lending institutions in the country allow the co-borrowing system. Because if not, it would be impossible for the majority to get accepted for financing programs.

Alternatives

Even though the co-borrowing system exists in the country, it is still not the answer to many — a sad reality. That is why others think of ways to ease their daily commute burden. Some consider getting a motorcycle for themselves, and evidently, the number of motorcycle owners are multiplying, especially inside the Metro. Aside from motorcycles, electric scooters and bicycles also grow in count as others are also choosing them as an alternative to cars for everyday use.

Conclusion

In summary, acquiring a car in the Philippines requires a handsome resource, and not everyone can afford one anytime they want. However, it doesn't mean that a minimum-wage earner can't have one for himself. It depends on many factors — lifestyle, needs, wants, resources, and, believe it or not, determination. But in the end, you must ask yourself why, "Why do I need a car?".