Take Out Car Loan

If you previously got a bad deal with your car loan, you might be now thinking about availing a new take out car loan.


  1. “But what is it?”
  2. “How does it work?”
  3. “And will you really save money if you go through with this?”

These are all good questions to ask before jumping into a take out loan, for your existing car loan.

How Car Loans Work

A very quick and simple explanation is…

The bank gives you Php1,000,000 to buy a new car. And they give you six years to repay that Php1,000,000.

There is 72 months in six years. So your Php1,000,000 will be divided by 72. This comes to: Php13,888 per month.

But the bank does not just want their original Php1,000,000 back for your car loan. They want a incentive to loan you the money for your new car in the first place. So the bank will charge you interest on top of your loan.

If your annual interest on your loan is 15%, the bank is charging you an extra 15% on top of your monthly loan amount.

This works out to be approx Php21,145 (for example only).

Your total monthly payment for your car loan is Php21,145 every month for six years.

Time for a Take Out Car Loan?

Now imagine that 18 months has passed, and you have been paying your Php21,145 every month. And remember that the car loan you were provided through your bank, was 15% per year.

But today you are driving to work in your new car, and you see an advertisement for a car loan, and the advertisement said “guaranteed interest rate for all customers =12.75% per year.”

What does this mean for you?

Every Pinoy who will get this car loan, will only be paying 12.75% interest on top of their loan…but you are stuck paying 15% because you already got a car loan 18 months ago!

Why are you paying more? And do you have to keep paying more? Or can you switch car loan providers?

If you do switch car loan providers, that is called a ‘take out car loan’.

Take Out Loan

If you were to get a new car loan at a cheaper rate from a new bank or a new lending company, this bank would do the following.

  1. They would provide all the money to your existing bank. So that your existing car loan is completed, and finished. There would be no more to pay for your original/existing car loan.
  1. Your new bank will provide you with new loan terms, based on the new deal you were able to get with them. You will now continue to make monthly car loan repayments, but your monthly repayments will now be paid to the new bank.

The new bank or car loan lending companies ‘takes out’ your old loan, and gives you a new loan.

Is a Take Out Loan Right For You?

This is a individual situation for you, but the answer should be fairly obvious if you just stick to the black and white facts.

We are unable to provide you with financial advice of course, because this is an article on our website , and we have never personally met you…

BUT! Here are some points for you to consider.

  • At the end of your new loan, how much more money would you have spent paying for your car? Including all the interest, and all the months you will make the repayments.
  • Is there any other fees you need to pay? Would this fee make it “not worth it?”
  • If the take out car loan will not in fact ‘save’ you money over the life of your car, can you afford to repay the car if you cut back in other areas?

Your decision will likely come down to money, do you need to reduce your monthly payments right now to afford your car? Even if that means making these monthly repayments for an extra 2 or 3 years?

Or does your take out car loan simply provide you with a better deal and you will save money both now, and over the remaining life of your loan?

To find out if you can get a better deal on your car loan, or if you are applying for a new car loan, just click the APPLY button on this page now and enter your details. You’ll get a quick answer and response to your car loan application.

Want to Know More About Car Loans?

Read all the articles here..

If you previously got a bad deal with your car loan, you might be now thinking about availing a new take out car loan. Questions “But what is it?”“How does it work?”“A...