How to buy a used car in the Philippines

When it comes to buying a second-hand vehicle in the Philippines it can be a daunting task. It is always a risk when buying a used vehicle as there are many factors that you need to take into account. However, we have created a guide to help you understand what you need to prepare and the signs that you need to look out for to get the best deal possible on your second-hand vehicle. 

The first step into buying a second-hand vehicle is to determine what kind of vehicle you want and what your budget is. This will help you, later on, narrow down your choices to make the process of acquiring the vehicle go much easier. 

First things first, determine what kind of body type you want for your second-hand vehicle. Different vehicle body types excel at different roles, so if you want a cargo-hauling vehicle then you might want to consider pickup trucks or commercial vehicles. Once you have decided, determine what year model you would like to get. This will help determine the price range as well as the availability of spare parts. Older models may often no longer have parts readily available compared to that of newer models but that depends on the brand and the model. So, take that into consideration when buying a vehicle. 

Once you have determined what kind of vehicle you want, the next step is to look where it is available. There are typically three general sources where you can find a second-hand vehicle.

Private sellers 

First among the typical sources of second-hand vehicles is the private sellers. These are individuals who are opting to sell their vehicles themselves hoping to get a higher price for it rather than selling it to a second-hand dealership. You will often find private sellers advertising their vehicles online and on social media sites. They will often have photos of their vehicle posted with a couple of key information also added to it. 

One advantage of this kind of seller is that you have the option to negotiate with them when it comes to the price of the vehicle. However, it is important to note that you visit the seller and the vehicle’s location so that you can strike a better deal with them in person. From there you can test drive the vehicle and choose if you want to buy it or not.

Second-hand dealers

The next source of second-hand vehicles works in a similar manner to brand new car dealerships. These will often have their inventory on display with the prices and with the milage showcased on the vehicle. One advantage of second-hand dealerships is that certain units might be available for financing giving a few more options if you really want to maximize your budget.

One downside to this is the pricing will be higher than that of a private seller. However, it is important to note that some dealerships will often fix up their inventory and may even add a limited warranty to it. This gives a bit more peace of mind when considering purchasing a second-hand vehicle from a dealership. That being said another advantage is that some dealerships may even often have units available for financing, which could open your budget up to higher variants if you choose to do so.

Certified Pre-owned 

Second-hand dealerships can also come from automotive brands themselves as certified pre-owned models. While these models are used and already have some kilometers on them, they have been reconditioned and inspected to the manufacturer’s specifications and standards. This means that you can get a used vehicle in nearly the same condition as a brand new one. A good option to consider if you want an OEM warranty also added to your vehicle. Just like in other second-hand dealerships, some units may come with financing options as well and may even come with negotiable terms and conditions depending on the unit.

Repossessed vehicles

Another source of second-hand vehicles is from banks in the form of repossessed vehicles. These are vehicles that have been taken away from someone who has defaulted on their loan. It is important to note that these vehicles are only a few years old and come with low mileage on them. Some may even be under warranty. However, keep in mind that what you see is what you get when it comes to repossessed vehicles.

In order to find the unit you are looking for you can head over to a bank’s website and look for their list of repossessed vehicles. These are often updated monthly, as such, the availability of the unit you want might not be there when you decide to buy. Something to take note of is that these vehicles are often stored in warehouses. This means that their exteriors might not look the best when you come to inspect the unit. Some warehouses may not even let you open up the vehicle, start it, or test drive it, so keep that in mind when deciding on your purchase.

Keep in mind that the process for acquiring a repossessed vehicle varies from bank to bank so be ready to fill out a lot of paperwork. Since these units come with attractive prices other people might also want to get the same unit. Because of that, you will need to be prepared to bid for it. Once your bid has been approved, you also might need to jump from office to office to fill out the necessary paperwork. Similar to the other two sources, financing options are available with repossessed vehicles. 

Company vehicles 

Oftentimes, big companies will have a fleet of vehicles for their employees to use or for their operations. These vehicles are named to the corporation or firm that purchased them. After a given number of years, the company will likely liquidate its assets in order to make room for new units or to trim down its fleet for more money. It is likely that you will find these cars in second-hand dealers, or listed online, or even offered directly. It is also possible that the company will sell these cars to employees at a reduced or more desirable price. If you do go down this route there are a multitude of payment schemes and options available to you if you do get to.

Inspect the vehicle you want to buy

Once you have gone to your chosen seller, make sure to visually inspect the vehicle with a trusted mechanic. While the vehicle may look pristine in its photos, nothing beats physically visiting and inspecting the unit. Seeing the vehicle will also give you a general idea of what to expect with the vehicle in terms of repairs and its general condition. As you are eyeing to buy the vehicle don’t be afraid to open up the compartments and look under the vehicle. If the seller permits ask if the vehicle can be taken to a lift so that you can inspect the underside of it. You can also use the opportunity to see if the seller has indeed replaced any of the parts of the vehicle and see the health of the under chassis. 

Make sure to also inspect the tires to see if they are still in good condition, make sure that the tires currently on the vehicle are no older than 5 years as stipulated guidelines in the new Motor Vehicle Inspection System (MVIS) by the Department of Transportation. If the tires are older than 5 years, then these could lead to a costly replacement later on that you will need to factor into your budget.

Check the vehicle’s paperwork

After you have done the visual inspection of your chosen vehicle, it’s now time to check if its paperwork is in order. In doing this you can get a clearer picture of the vehicle’s condition and service history. You can also see how the vehicle was taken care of and what other parts you might need to replace during your time owning the vehicle. Check if the vehicle still comes with its original CR and with an updated OR. If the CR is lost and only a photocopy is available then you might have to do additional work in getting the registered under your name. Make sure to also check with the PNP and Highway Patrol Group to see if the vehicle has been carnapped or has been flagged as part of a crime. Verify as well with the LTO to see if the vehicle has a clean record or if it has anything else that needs to be fixed.

As much as possible only consider vehicles that have updated registration or at the very least has registration that has been expired for no more than a year. This will help lower the cost to put the vehicle under your name later on. 

Test drive

Now that you have checked the documents and visually inspected the vehicle you are interested in, it is now time for the test drive. Just like with buying a new vehicle, the test drive is one of the most important parts of the car buying process. This will let you see how the vehicle handles and will give you a general indication of its roadworthiness. 

During this time make sure to also check on the milage of the vehicle. When considering the price, sometimes the more affordable vehicle isn’t always the best one to buy. When it comes to millage the usual case is that the higher the number the older the vehicle, while it may not always be the case it is something to take note of. Either way, mileage serves as a good general indicator of how “used” the vehicle is. Make sure to also ask the seller if the vehicle was primarily used in traffic or on the highway, as predominantly highway driven vehicles will be in better shape. As a general rule of thumb in the Philippines, cars with a mileage that of 60,000 km or higher are not as desirable as these will be likely worn out unless you are specifically looking for an older model. 

While you are test driving the vehicle make sure to check if the suspension is in order. Take the vehicle, on uneven segments of the road to see how the suspension is doing. If you notice any weird noises or hear any clunking noises then it could be a sign that an under chassis part is in need of attention or replacement. Something to consider if you are on a tight budget as these could be costly repairs. 

After you have brought the vehicle around, make sure to check under the vehicle to see if there are any leaks. If there are, then you might want to pass on it as these could lead to costly repairs and long downtimes for the vehicle.

Allocate a budget for repair and insurance

Now that you have gotten a general idea of what condition the vehicle you want to buy is in, it is now time to budget for possible repairs and for insurance. This is something especially important to do if you are buying from a private seller. More often than not something will be in need of repair or replacement, so make sure to set aside some money for this eventuality. A general rule to follow is to set aside about 20% of the vehicle’s total price for repairs. Even if you won’t need the funds immediately it’s still handy to have them in case the vehicle will need emergency repairs. 

As part of getting a second-hand vehicle, you will need to request and provide the following documents from the seller.

Deed of sale

This can be an open deed of sale or a closed one that is specially addressed to you. It will also layout the foundations of the sale and serve as a legal document for it.

Photocopy of at least 3 IDs and your signature

Another needed document is a photocopy of at least three different official IDs. It is best if these are government-issued IDs to better add credibility. Three photocopies of your signature will also be needed as part of the sale process.

It is important to remember that second-hand vehicles are sold on an as-is-where-is basis and will often not come with a warranty. That is why it is important to make sure to thoroughly inspect the vehicle you want to buy mechanically to further avoid extra repair bills down the line.

Notarization 

Now that you have completed your transaction, it’s time to bring your documents over to a public notary. Getting your documents notarized will allow you to proceed to take full and legal ownership of your vehicle. The deed of sale needs to be notarized with multiple copies just in case and for the LTO. The fee for notarization will depend on the notary, but if you’re in a pinch and you don’t know where usually LTO offices will have a public notary on standby ready to look at and notarize any documents if needed. 

Motor vehicle clearance certificate from PNP-HPG

After the above documents are taken care of, you must secure clearance from the Philippine National Police - Highway Patrol Group. To get this clearance certificate, you can head to Camp Crame directly, or you can use any of the satellite stations near the LTO offices for convenience.

To get the clearance, you need to make sure that you have these documents in order.

• Deed of sale with assumption of mortgage car
• Vehicle’s OR/CR
• Cancellation/Release/Assumption of Mortgage (For mortgaged vehicles) 
• Secretary's Certificate (If the vehicle was a company-owned vehicle)
• Special Power of Attorney (if the vehicle was sold through another person)
• Duly accomplished MVIR (To be done by the inspectors) 
• Cir-91-137: Confirmation of CR/OR (if issued by other LTO Agency)
• Endorsement from the Insurance Company to the New Owner
• Your Taxpayer's Identification Number (TIN)

Once you have all your documents in order, it’s time to transfer the ownership of your vehicle. You must apply for this at the LTO. 

• PNP-HPG Clearance Certificate 
• Original Certificate of Registration (CR)
• Latest original Official Receipt (OR) 
• The Original Deed of Sale 
• Appropriate insurance cover (CTPL)
• Taxpayer's Identification Number (TIN)
• Accomplished and approved Motor Vehicle Inspection Report or MVIR

After all of this is said and done, go to the nearest or preferred LTO office, and head over to the appropriate transaction counter. 

After everything, you need to photocopy all your new documents once again. Get your photocopied documents and keep the original copies in a safe place. Keep a copy of your documents in the car at all times and you're good to go with your newly purchased vehicle.