Daily Living, Budget Advice, and How to Get Things DoneBuying A Car

11. How to Buy A Vehicle

Buying a New Car:

There is little real competition in new car sales. In America, car dealers often give their customers deals for new car purchases like 0% interest, or other super-promotional offers. Folks there compete for your business. Here in the Philippines, there are no incredible deals; in fact, the opposite is usually true. The price of the car is the price of the car, with standard discounts if one pays in cash. Unless you are in one of the big cities, you will probably only have the choice of one car dealer nearby.

While it can be relatively easy for an expat to get a car loan, loans have a high interest rate and are only offered short –term. Things are evolving in regards to the term and interest rate on car loans. Recently banks started to do deals with specific car dealerships and interest rates have started to come way down, so things are changing.

There are several advantages to buying a new car. Primarily, you are pretty well assured of getting a good product plus you have access to reliable, pretty good quality factory authorized service at the dealership.

Car dealers, however, are very territorial. Although they are required by the factory to actually work on any car, bought from any dealership within the brand, the reality of the situation is that if you buy your car in a different location from the dealership where you get your car serviced, you may very well become quickly frustrated. Any savings on price you think you might make by buying a car in Manila–and there will be at least some savings, due to competition there–has to be balanced against a possibly less-than-helpful service department from the dealership where you actually live, like, for example, in Baguio. Experience teaches us that it is better to buy locally, if you want good post- purchase attention and service for your vehicle. But things seem to be improving on this score as well.

Vehicles that are manufactured locally are generally jeep-like contraptions with very basic diesel-powered engines and little or no comfort or sophistication. The target market for these vehicles is those customers who cannot afford the luxury of a locally- assembled Japanese or Korean car.

The Filipino jeeps are fairly inexpensive, but usually have more mechanical problems than the locally assembled imported cars. They generally require a lot of maintenance. You may save some money initially by buying one of the generic Filipino vehicles, but you are trading a little bit of savings for a lot of down time and frustration in the long run.

It is best to purchase a car brand that is already very popular here, something user-friendly like a Toyota or a Kia. If not, finding service personnel, especially in the provinces, can be very difficult, and getting parts for the car can be hard and time consuming. If you get something exotic–like a Ford–you might sometimes have to wait a month or more for something like a timing belt, unless, maybe, if you live in Manila. While a Porsche is always cool and fun to drive, having it sit in a garage somewhere for a month or more while waiting for a part or a good mechanic isn’t cool at all– not to mention the fact that driving around in something that expensive makes you an immediate target, even if just for derision, in a country with as many poor people as there are here.

Some folks consider bringing their own car in from abroad. At first glance, it’s not that difficult–you just drive it into a “normal” forty foot container and put it on a ship. That’s the easy part. The difficult part is the enormous amount of paperwork that has to be accomplished, as well as the cost of the duties and taxes on the vehicle. Then of course, once your car is here, you have to add to that equation the difficulty of service, as well as the generally rough-on-cars roads your vehicle will not be used to, and at the end of the day, you will find it much wiser to sell your car in the First World, and buy yourself a good quality Third World car when you get here.

It is essential when buying your car that you keep in mind the climate (hot and tropical isn’t always good for machinery), the condition of the roads, and the habits of other drivers. An expensive, fancy vehicle is possibly not the best choice of vehicle for this country. Something sturdy and easy to repair, that doesn’t draw much attention, would be a better choice.

Buying a Secondhand Car:

If you don’t want to buy a new vehicle, you will find that used vehicles are plentiful, and can often be bought at pretty decent prices if you do your homework and negotiate well. If you don’t know anything about cars, bring a mechanic you trust with you to check out the vehicle before you buy it.

There are a few things to remember before putting down your money:

First, because of high import duties, many used vehicles are imported cheaply from Japan. The problem there is that they are right-hand drive, and must be converted. This often creates both safety and reliability questions, as the conversion may be done in a less-than-professional manner. Even though the prices appear cheap, probably best to avoid these.

Second, have an attorney check the documentation. It is not unusual to be offered a stolen car for sale, or one which has been cobbled together out of two sections, using a “title” for another car that was scrapped.

Third, not all is as it seems. Odometer readings should be taken with a grain of salt. Some parts of the car may be cannibalized, or simply welded into place, or cut down to fit. Use a magnet to go over the body to check for Bondo and other suspect repairs. Check that the tires are all the same. As I mentioned, it is essential to find a mechanic that other expats or Filipino friends you know trust, and have him look the car over.

Fourth, regular maintenance–such as oil changes–are often overlooked. Even on newer or “low-mileage” cars, there may be a lot of unseen wear and tear. This is difficult to avoid, but asking the owner about fluid cleanliness and the condition of the vehicle is a good start.

It is not that easy to get comparable prices or values for used cars. You might compare the prices here with those in your home country, but that will give you only a rough guideline. Insurance agents have sources that provide a range of re-sale values for different models, so it would be wise to check with them.

Negotiation can be a bit tricky sometimes. After the vehicle passes your inspection, consider asking a Filipino friend or a trusted Filipino employee to accompany you to make the deal. Outline your parameters very clearly with your friend, agree on tactics, and then let the negotiation begin.

It might be a good idea to buy a used vehicle from a person you know to be reliable as there is a better chance that basic maintenance and repairs have been done regularly. You also might have better luck finding out about any problems the vehicle may have (squeaky door, window gets stuck, radio doesn’t work, etc.) this way. You will likely encounter fewer difficulties with transferring titles and other paperwork as well.

The best way of finding a used car is often through word of mouth. Look at ads posted where other expats gather, ask your Filipino friends, check local computer bulletin boards, and put up your own “car wanted” advertisements. There is a liability policy required when you register a car, but it really covers almost nothing, and it literally costs pennies. This is the “bare bones” insurance coverage required by law.

I highly recommend that you buy good car insurance from a well-known, reputable insurance company. For a good insurance broker, recommended by other ELRAP members, please take a look at the ELRAP Index of Professionals on this web page. Keep the phone number of your broker in your cell phone. Bear in mind that many people here, for whatever reason, do not buy car insurance. This seems to be especially true of those who drive really old, beat-up cars. If there is an accident that is your fault, it may indeed be costly. It is best to have the insurance company act on your behalf. If you are involved in an accident of any sort, immediately call your insurance broker and your lawyer, no matter what time of day or night it may be, and let them guide you through the correct process of handling the situation.

How to Register Your Car

Car registration is another procedure much better handled by someone other than yourself, although, of course, there is no reason why you should not do it on your own. It’s a time consuming process though, and you can easily hire or delegate someone else to handle the matter for you. Just make sure that you get the paperwork, make a copy for your file and keep the original in the glove box of the vehicle. Usually your driver, or possibly your insurance company, can handle this chore for you.

Because of the often chaotic and confusing driving styles prevalent in the Philippines, some expats find it wise to hire their own personal driver. Doing this would be prohibitively expensive in any western country, but in the Philippines, a good “live in” driver who is always on call will cost about US$200.00 a month or so. Because he is “live in”, you would have to have a room in the staff quarters to house him, which is a normal part of most houses here, and you would have to provide him with SSS (Social Security) and PhilHealth (national health), meals, and some personal supplies as well, which would amount to about another US$150.00 per month. You can also hire a “live out” driver for slightly more, maybe around US$250.00 per month, but he would probably still be eating his meals on your tab.

Either way, this is a tremendous bargain for you as an expat, as having a driver eliminates the stress, and in some cases, outright fright, of driving in this country. Driving here takes some getting used to! In addition, having a driver is a good idea in case of liability from an accident or other sort of fender-bender, which is a fairly common occurrence around here, given the way people drive.

As an expat, at least for the first year or two, if it is economically feasible, maintaining a driver is something you should seriously consider.

“ More and more folks are retiring at an earlier age, while they are still healthy enough to enjoy their lives. The problem is, in the First World, even a couple in their late fifties that have a $500,000 investment portfolio, which includes their home equity and other investments, won’t have enough retirement income to take advantage of their hard-won freedom. ”

The FREEDOM HANDBOOK
By Bruce Silverman
http://funphilippinesretirement.com
“ELRAP is a friendly website! On our pages please--no vulgarity, and no politics or religion discussed!”