You’re ready to get the car of your dreams, or you want to replace your old reliable ride that’s ready for retirement, but you need a bit of financial help. Getting a loan to make a big purchase is likewise tempting, but before you make that big decision, mull over these tips from BPI Family Savings Bank (BFSB) to guide you first in mindfully handling your finances.

1. Carefully assess if you’re ready to avail of a loan.

While this seems like common sense, some clients still fail to completely pay their loans. For those with car loans, this may result in car repossession. The first thing to do is consider your projected cash flow. Don’t be lured by low-down payment promos. Car loans can be as short as 12 months to as long as 60 months. Make sure you will be able to diligently pay your monthly payments until the end of the loan without undue difficulty.

You can check out BPI Family Auto Loan’s Self-Assessment Tool and Loan Calculator at to help you asses your finances before applying for a loan. Even at BPI and BPI Family Savings Bank branches, prospective borrowers are guided by the branch personnel on what maximum loan amount would be appropriate to avoid financial burden. The Bank also conducts financial wellness seminars and posts articles on its social media pages as part of efforts to educate the public about financing.

2. Your monthly income should be more than enough to pay the monthly amortization.

Want to know the ideal car/home financing package in relation to your income? Just see to it that your monthly income is more than enough to pay for the monthly amortization of the loan. You should consider your monthly expenses for food, rent, and other needs. Normally, banks require at least 20 percent down payment and would finance the remaining balance of the car or home’s appraised value.

Generally, banks allow clients to borrow if the monthly amortization is within the vicinity of 30 to 40 percent of one’s monthly income. It is assumed that the borrower also needs to allot for living expenses aside from the monthly amortization.

3. Think first before purchasing pre-owned cars via financing.

The higher prices of brand-new cars may drive you to go for pre-owned cars, but consider your overall budget first. A pre-owned car can be an option because of lower prices. However, in that case, you would need to consider possible higher maintenance costs as well as higher interest rates.

Quick facts:

· For car loans, the minimum term is one year while the maximum is five years.

· For housing loans, the minimum term is one year while the maximum is 20 years.

· The minimum down payment for a car loan or housing loan is 20 percent.