Buying a new car in the Philippines can be very tempting nowadays, especially with all the promos and low downpayment schemes being offered left and right. Some Filipinos would opt to shell out a large downpayment to somehow minimize the exorbitant monthly payments, or pay in cash to avail of discounts – which both are smart moves, by the way. But not a lot of Filipinos know that there is another way of owning a car without actually breaking the bank! It’s called ‘buying a repossessed car”, and so in today’s post, we’ll talk about the advantages and disadvantages of buying a repossessed car in the Philippines.

What is a Repossessed Car?

Repossessed Cars are those that are seized by the bank or lending institution from a car owner who fails to pay back its loan. These institutions then sell it at a lower price to compensate for the loss. In the Philippines, there is a high number of vehicles being repossessed and so, these institutions have already set up a process to sell these vehicles by auctioning them off and selling it to the highest bidder. 

Advantages of Buying a Repossessed Car

You can buy an almost brand-new used car at a lower price.

Since a repossessed car, just like any other used car, has depreciated in value, the downpayment and monthly amortization for a repossessed car are significantly lower than a brand new car. And the good news is, there’s a chance that you can score an almost brand new car if you’re lucky!

Moreover, repossessed cars can even be significantly lower than the usual market value of a particular car model. The rationale behind this is that lending institutions keep prices low to attract buyers so they can easily recoup the money lost as a result of the car owner’s inability to pay.

You are dealing with trustworthy sellers

Getting a repossessed car in the Philippines from a reputable lending institution can provide you peace of mind as you have the assurance that every transaction you make with them is legitimate and secure. Furthermore, buying a vehicle from a trustworthy company guarantees that the car you are trying to purchase is not stolen and that you are transacting with a legit seller.

Disadvantages of Buying a Repossessed Car in the Philippines

While very much enticing, purchasing repossessed cars in the Philipines still has a set of cons that a buyer must consider.

Efforts to find and buy the best repossessed car

You will have to put in extra effort and patience into it as the process of buying one can be very tedious and time-consuming. You’re gonna have to visit more than one seller of repossessed cars so you have a wide selection of repos to choose from.

Adverse vehicle background and condition

If you think about it, it is very likely that the previous owner couldn’t afford its regular maintenance. That being said, they may not have spent money to care for their vehicles or bring it to a mechanic for regular maintenance. So if there are some issues with your purchased repossessed car, you will have to pay for these with your own money.

Test driving a repossessed car may not be allowed

Most banks or lending institutions will not allow a potential car buyer to test drive one though some may allow you to start the unit. This may hamper one’s careful assessment to thoroughly check the car’s condition. 

In some cases, institutions sell repossessed cars on an “as-is, where-is” basis. This means that you, as the buyer, will accept the vehicle in the condition that it is in, including any damages, flaws, or issues. This is why we highly recommend bringing your trusted mechanic to inspect some issues. 

I’ve chosen a Repossessed Car. What’s next?

After choosing a car model and inspecting it in person, it’s time to bid and make an offer. When bidding for a repossessed car, refrain from lowballing your offer as other interested buyers can easily outbid you. After you’ve won the bid, you’ll have to pay for the car. You can choose to pay in cash, or you can agree to monthly installments. Once the releasing and all the paperwork have been done, you can now enjoy driving your newly purchased wheels!  

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So is buying a repossessed car a good thing in the Philippines? Knowing the pros and cons of purchasing a repossessed vehicle before deciding to buy one is imperative. And if you do consider buying a repossessed car, you should be vigilant in choosing the financial institution you will buy from, as much as inspecting the condition of your chosen vehicle. You will have the assurance that you are getting a quality vehicle from a trusted seller and at a cheaper price.


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Is Buying A Repossessed Car A Good Thing in the Philippines?

By Ameena Rey-Franc

Recognized as one of the Top Finance Blogs in the PH. Ameena Rey-Franc (founder of TTP) is a former Banker and BS Accountancy graduate turned Blogger, Keynote Speaker, and entrepreneur. Currently an RFP delegate, she is also the Author of a book about Financial Resilience and has held seminars for reputable companies like GrabFoodPH, Pru Life UK, VISA, JPMorgan Chase& Co., Paypal, Fundline, Moneymax, and many more. The Thrifty Pinay's mission is to empower women to LEARN, EARN, and be FINANCIALLY-INDEPENDENT no matter what life stage they are in.