Go! Motorsiklo Loan

A motorcycle loan is a type of loan that allows a borrower to finance a two- or three-wheeled motor vehicle, either for personal travel or for business. In a country like the Philippines, where the number of motorcycles annually registered to the Land Transportation Office (LTO) has reached 2 million, there’s no doubt that motorcycles are very much in demand and that there are many Filipinos who would like a bike of their own to circumvent traffic jams, to ferry passengers or get their business deliveries done, or just have an alternative means of getting around in the metro. But a one-time purchase of a motorcycle unit can put as much financial strain on the average Filipino as buying a car—it will be heavy on one’s pocket and may take years to save up for.

With a program like Robinsons Bank’s Go! Motorsiklo Motorcycle Loan, however, having your own motorbike will no longer be a distant dream. You can now apply for a loan to finance either a brand-new vehicle or a secondhand unit, depending on which of the two is better for your circumstances. Robinsons Bank’s easy and streamlined loan application process, flexible payment schemes, and wide range of choices for vehicles to finance make it a motorcycle loan Philippines motorcyclists will truly benefit from.

Some applicants of a motorcycle loan in the Philippines may be intimidated to borrow money from the bank. Bbut the truth is, it may be the most practical way to acquire your own motor vehicle. You will be able to hit the road right away, make a return of investment from business activities that require efficient transport, and you will be able to pay off the full purchase at a convenient space.

The first step to truly benefiting from your motorcycle loan is to understand how it works. If you want to prepare for a motorcycle loan in the Philippines, here’s a list of terms that will give you an idea on what to expect.

• Loan Amount

  The loan amount  (principal amount plus loan interest plus other charges)  in your motorcycle loan is the total amount that you promise to pay back to the bank over the duration of the loan period. This loan amount is determined after you have made your down payment on your chosen vehicle. For example, if your new motorcycle costs a total of PHP35,000 and you have already made a down payment to the bank of 10% (PHP3,500), then your loan amount consists of the remaining PHP31,500 to be paid back in the succeeding months.

• Down Payment

  Down payment consists of the initial payment you make when you enter your motorcycle loan program. For motorcycle loans in the Philippines, the minimum required amount for a down payment will depend on the model of motorcycle and its suggested retail price (SRP). In Robinsons Bank, for example, the minimum down payment for a regular solo bike is 10% of the vehicle’s SRP, while a bigger bike model (200 cc and above) will demand a higher down payment of at least 30% of SRP.

• Payment Terms

  The payment terms in your motorcycle loan are the terms you and your bank agreed on regarding when you will pay back the borrowed money in full. This includes the number of months that you will be paying installments to the bank (from between 6 and 48 months), how much money you will be paying back each month, and the amount of interest you will be paying on top of that monthly amount.

• Interest

  The motorcycle loan’s interest rate is a calculated percentage that you will need to pay the bank on top of the loan amount. Simply put, it is the additional cost that you will be paying the bank as compensation for lending you money, and helping you manage the borrowed money that you used to finance your motorcycle. If you do not want to worry about high interest rates on top of your installments every month, make a substantial down payment to the bank, in that way, you will be charged less for a lower loan amount.

The benefits of applying for a motorcycle loan in the Philippines can last both for short-term and long-term. Right off the bat, you’ll be able to start using a new motorcycle much earlier than if you spent years (maybe even decades!) saving up for a big one-time purchase. But there are other good things that can come out from applying for a motorcycle loan like greater financial responsibility and more financial privileges. Here are some examples of things that can go right if you apply for a motorcycle loan.

• Convenience and Faster Return of Investment

  If your loan is approved, then you can already start using your motorcycle. For instance, you can use it to speed up the efficiency of your product deliveries, thus making your business’s customers happier with your service. You can also depend on it for consistent income, especially if your work pertains to taking passengers from one point to another. Otherwise, it could simply be your ticket to saving on fuel prices and making sure you get to work on time despite the Philippines’ infamous traffic jams. In other words, getting your own motorcycle through a loan could grant you some valuable peace of mind—and that, in turn, could translate into better work attendance, more efficient services for your business, and better control over your time.

• A More Affordable Alternative to Auto Loans

  Although there are separate benefits to getting an auto loan, some will still shy away from the idea because the down payment alone can be quite expensive. If you still want a means of getting around through private transport—or a way to get passengers, products, and services moving—but you don’t think you can afford to take out an auto loan, then getting a motorcycle is certainly a more viable option.

  Indeed, with increasing traffic in metropolitan areas and rising fuel prices, motorcycles are becoming highly attractive modes of transportation in the Philippines. With affordable motorcycle models from trustworthy brands coming in at around the PHP 50,000 range, paying for a motorcycle in full is much more possible than with a car, truck, or van. Still, getting your new motorcycle with the help of a motorcycle loan presents a few key benefits. These includes the following:

  • Flexible Payment Terms

    It won’t be hard to reach an agreement with your bank about how big your down payment will be, how long you’ll be paying your debt, and how much money you’ll pay per installment on your motorcycle. You can make choices that will work to your convenience, as well as ease your financial burdens at any time

    Financing your payment through a third party will let you maintain a degree of liquidity and free up your cash reserves for other potential uses. This is especially helpful if you do not have a lot of money saved up to for possible emergencies. Alternatively, this could also allow you to spend your cash on more pressing needs, such as a child’s tuition fees.

  • You Won’t Need to Save Up and Wait

    For one reason or another, you may find it difficult to save up to make a major purchases. And if this happens to coincide with a sudden need to acquire a motorcycle, then securing a loan can help you get a motorcycle in a few weeks or even days.

  • The Motorcycle Itself Will Be the Collateral

    Similar to car and housing loans, motorcycle loans are classified as secure loans because the vehicle itself acts as the collateral. This is an important point in the event of a default (or failure to pay the loaned amount). In this situation, the lender can minimize any losses by repossessing the motorcycle. At the same time, the borrower can rest assured that their assets will remain untouched.

• Opportunity to Build a Good Credit History and Earn More Financial Privileges

  A motorcycle loan will ensure you access to your own motor vehicle—but going through the motions of repaying the loan might also teach you some valuable lessons about managing borrowed money in general. In the Philippines, financial institutions share information on individuals’ borrowing habits, making up for a lack of a centralized credit scoring system. This means that taking on a motorcycle loan and making sure to pay your monthly amortization bills on time can greatly influence how other lenders might assess you in the future.

  Once the payment terms have ended and you have proof that you made all your payments on time, you can build a better financial standing with your bank. This will better your chances of securing other financial privileges in the future, like benefitting from the bank’s other loan programs.

Compared with financing your payment directly through the dealership, seeking a loan from a bank has some key advantages that can potentially make it more attractive. The main benefit you will be enjoying is the lower possible interest rate. As a result of their bigger cash reserves, banks can offer highly competitive interest rates when compared to in-house loans you can get from any dealership. Though this may come at the expense of a bigger down payment, you will still end up having spent less once your contract is up.

Another key benefit is the possibility of a faster approval process. However, this will only usually apply if you have an account with the bank you’re borrowing from or if you have already done business with them through other means. As a best-case scenario, the bank may even declare your application as “pre-approved.” Functionally, this just means that you can proceed with finalizing the contract of your loan without having to submit all of the requirements.

Banks that issue motorcycle loans in the Philippines don’t advertise only one type of vehicle; in fact, a program like Robinsons Bank’s Go! Motorsiklo enables two types of financing scheme. They are:

• Purchase of a Brand-New Vehicle

  This is the type of loan that will enable you to buy brand-new and top-of-the-line motor vehicles. If you’re after the pride of owning a mint motorcycle, then you can apply for a model offered in the bank’s loan program.

• Purchase of Secondhand Unit

  For some riders, having a trusty secondhand motorcycle is enough. By acquiring a secondhand unit through your motorcycle loan, you may be able to save a significant amount of money while still enjoying the mobility of your own vehicle. If you don’t mind getting a pre-loved motorcycle, you can have one financed by the bank.

  Nevertheless, it’s best to remember that despite a lower overall unit price, a loan on a used motorcycle may come with a higher interest rate. This is due to the higher perceived risks as a result of the mileage it has accrued.

There’s a wide variety of motorcycles that can be financed under a motorcycle loan in the Philippines—from regular-sized bikes that can carry one to two passengers, to tricycles, and even what are considered “non-conventional” vehicles. Here is a brief rundown of the vehicle sizes and models that are eligible for a motorcycle loan like Robinsons Bank’s.

• Regular-Sized Motorbike

  Regular-sized motorbikes are motor vehicles whose cubic centimeter capacity of combustion cylinder (cc for short) is under 200. These bikes, which range from the solo-ride to the Vespa-style scooter variety, are among the most commonly driven in Metro Manila—and the most in demand for motorcycle loans.

• Big Bike

  Motorcycles in the range of “big bikes” are bikes whose cc ranges from 200 and up. In the Philippines, popular brands of big bike include Yamaha, Kawasaki, and Suzuki. Certain big bike varieties are also up for financing through Robinsons Bank’s Go! Motorsiklo program, although down payment is more costly than that of regular-sized motorbikes.

• Tricycle Operators and Drivers Association (TODA) Vehicle

  It is also possible to get a loan for a tricycle that is registered in your local community’s Tricycle Operators and Drivers Association, or TODA. It will be good to include your copy of your Motorized Tricycle Operators Permit (MTOP) from the LTO in your application for a motorcycle loan.

• Non-Conventional Vehicles (3-Wheelers, etc.)

  Even non-conventional vehicles—like the motorized three-wheelers resembling the Southeast Asian auto rickshaw (tuk-tuk or bajaj) may be considered for a motorcycle loan. Ask your bank which vehicles under this category are eligible.

Applicants from many walks of life are encouraged to take out a motorcycle loan. The following persons can apply for a motorcycle loan in the Philippines in order to improve their quality of life:

1. Locally Employed Persons– employees of companies registered for business in the Philippines;
2. Self-Employed Persons– persons registered to the Department of Trade and Industry (DTI) as having their own business;
3. Overseas Filipino Workers (OFWs)– OFWs with their own employment contract and proof of remittance to the Philippines;
4. Partnerships or Corporations– business entities registered to the Securities Exchange Commission (SEC) of the Philippines.

All banks with motorcycle loan programs in the Philippines have their own sets of requirements, but the most common ones for applicants are the following:

Qualifications to Apply for a Motorcycle Loan

1. Age.Most banks require the motorcycle loan applicant to be at least 21 years old, but not any older than 65 years old upon the loan’s maturity, or final payment date.
2. Stable income.The bank will require you to show proof of stable income, which you will use to fund your monthly motorcycle payments. It may also demand that you be a regular employee to your company for at least one year, or registered as self-employed for two years.
3. Proof of residence.Lastly, your bank will need proof of your residence. It will use your address to send bills for your monthly amortization. Robinsons Bank’s Go! Motorsiklo program requires applicants to be homeowners of at least one year, or home renters of at least two years.

Typical Requirements for a Motorcycle Loan Application

1. The filled out application form for a motorcycle loan with your issuing bank;
2. Government-issued IDs for proof of identity– driver’s license (with LTO restriction code certifying that you can drive a motorcycle), passport, TIN ID, SSS ID, PRC ID, postal ID, or others;
3. Proof of employment– Certificate of Employment from your company, DTI Business Name Registration, or OFW employment contract;
4. Proof of stable income– pay slips, Bureau of Internal Revenue (BIR) Form 2316 or Annual Income Tax Return (ITR), or proof of remittance;
5. Audited financial statements (for companies).

Up to How Many Years Can I Pay for My Motorcycle?

Motorcycle loans can have terms as short as 6 months and can be as long as 36 months or 3 years in total. This includes smaller scooters and bikes, as well as more powerful big bikes. Meanwhile, what can be considered as “non-conventional vehicles,” can have payment terms of 12 to 48 months. For all of these situations, remember that longer-term loans will come with higher interest rates to compensate for the lower monthly amortization.

How Much Can I Borrow for My Motorcycle Loan?

The amount you can borrow depends on the type of motorcycle you will be purchasing. Loans for smaller bikes and scooters can range from PHP 35,000 to PHP 500,000. Meanwhile, loans for big bikes and other non-conventional vehicles can range from PHP 100,000 to PHP 1.0 million (or only up to PHP 500,00 for what can be considered “non-conventional vehicles”).

How Long Does the Loan Application Process Take?

If everything is in order, your loan application process can take as short as 3-5 days the bank has received the required documents. However, keep in mind that this is usually extended due to a variety of factors. In particular, banks might take longer to process applications during busy months. Alternatively, there could be additional delays if you maintain accounts in multiple banks. As a result, a more realistic estimate could be around 2 weeks between the submission of your requirements and the conclusion of the bank’s processing of your application.

How Is My Motorcycle Loan Interest Computed?

In the Philippines, loan interest rates are indicated on a per annum basis, instead of factoring in the entire duration of your contract. This means that you will have to multiply the quoted interest rate for every year that covers the duration of your loan.

As an example, a hypothetical amount of PHP 60,000 from a bank with an interest rate of 8% per annum over 3 years, we will get this computation:

Interest Rate: 8% per annum

Term Duration: 3 years

Total interest: 8% x 3 = 24%

In this situation, the original amount of PHP 60,000.00 will be multiplied by 124% (1.24), resulting in a total amount of PHP 74,400.00. The total debt will then be split into 36 months, making the monthly amortization PHP 2,066.67.

Tips on Getting Your Motorcycle Loan Approved

Applying for a loan may seem daunting at first, let alone one for a motor vehicle of your own. But it may be easier than you think to get your motorcycle loan approved in as little as 4-5 business days—as long as you do your homework and prepare for your application in advance. Here are three simple tips that you can keep in mind to up your chances of getting your motorcycle loan approved.

• Determine the most affordable motorcycle option

  The bike loan arrangement that would be ideal for your friend, colleague, or fellow cooperative member may not necessarily be the ideal one for you. You will need to think about the best type of motorcycle loan—whether it is for a brand-new or secondhand vehicle, for a small bike or for a big one—based on your own personal circumstances. Before you even apply, compare bike models, loan types, and available loan payment schemes with your bank; choose loan terms that have a reasonable debt-to-service ratio, or that will enable you to allot a reasonable percentage of your income to monthly motorcycle payments without you falling into a mountain of debt.

• Have all your documents ready

  Take the advice of experts and don’t cram your motorcycle loan application; set aside a month or two to request all the documents you need, wait for them to be processed, and make copies for the bank. Having all the necessary documents with you before you fill out the bank’s application form will greatly increase your chances of quick approval.

• Be in good financial standing

  Before approving your loan application, your lender will look into your history of managing money, paying back prior debts, and generating enough income to sustain a big purchase like a motorcycle. That’s why it’s important to show your bank that you have a clean slate: that you make enough money to pay them back for your bike, and that all outstanding debts you have are accounted for.

  Maintaining a healthy bank account is ideal. From a bank’s point of view, a healthy bank account is not just one that has money. After all, cash can be deposited and withdrawn at any time. Ideally, banks prefer accounts that have been grown through natural activity (through periodic debits and credits) over the years over those that have been built up through a handful of big deposits.

• Have a stable and legitimate income source

  Any borrower needs to prove that their income is stable enough to cover their living expenses, in addition to the loaned amount’s monthly amortization. Ideally, you should at least have stayed in your current job for one year. But aside from proving a substantial and verifiable source of income, other helpful factors include: a lengthy tenure with a reputable employer, working for the government, or being a highly paid professional.

• Avoid having multiple loans

  Because banks will compare your declared income against your current loans’ monthly dues and likely living expenses, having too many loans will definitely hurt your application’s chances. Keep this in mind before taking on multiple loans.

• Come ready to pay a down payment that exceeds the minimum

  You will only need to have enough money for your motorbike model’s down payment, depending on the minimum amount required by the bank. However, your chances of getting approved for the motorcycle loan may increase significantly if you pledge a down payment higher than the minimum. As stated above, it will also lower the interest that you will have to pay each month.

• Be truthful with any requested information

  Any discrepancies between information gathered by the creditor through their investigations and from what you’ve provided can put your integrity into question. This highlights the importance of answering every question and filling out all the necessary forms honestly.

What Are the Common Motorcycle Loan Payment Methods?

In the Philippines, the following are the most common ways of making payments for motorcycle loans:

• Over-the-Counter Payments. This is the most common mode of payment and involves going to a bank or certified payment center to transact cash payments with a human teller.
• Check Deposits. For those with checking accounts, banks also accept payments through check deposits. However, the check you use should preferably be from the same bank to minimize the risk of late payments. Otherwise, you will have to issue your checks 3 days in advance to account for the clearing period from interbank transactions.
• Direct Debit. This method is only possible if you have a savings or checking account with the same bank where you borrowed your motorcycle loan from. In this method, you can authorize your bank to automatically debit from your account on each due date. This will require a personal visit to the bank, as well as written authorization.

Whichever method you prefer, always remember to pay your monthly amortization on or before the monthly due date to avoid penalties and other possible issues.

What Happens If I miss my Motorcycle Loan Payments?

Depending on the details of your contract with the bank, missing a certain number of payments may cause you to default on your loan. As a result, the following series of events will likely occur:

1. Your creditor will remind you to settle your payment by either sending you a text message or having a representative call you in person. This may happen as early as the first missed payment.
2. A penalty will be levied as a result of the missed payment. The amount will depend on your signed contract with the bank. The total computation is usually compounded by the total days by which you’ve missed your payment—which is justified as a form of compensation for legal damages to your creditor.
3. A final grace period of 2 to 3 months will be given to help you settle your dues. Ideally, this is done to help you get back to your regular payment schedule.
4. If no further payments are made in spite of the grace period, the bank will repossess the motorcycle. The bank may employ private agents to undertake the tasks. However, in certain cases, an officer of the law may also be requested to ensure the successful repossession of the motorcycle.
5. To make up for the losses from the missed payments, the bank will then attempt to sell the motorcycle. This can be done either through public auction or through listings on their website.

In the event of a repossession, both your previous payments and your missed payments will be forfeited. However, remember that defaulting on your motorcycle loan can negatively affect your credit standing with other banks and reputable financial institutions. As a result, you will find it harder to get access to other financial services or secure any future loans.

How Will a Motorcycle Loan Improve Your Quality of Life?

To recap all that’s listed above, it might serve you well to apply for a motorcycle loan with a top banking institution in the Philippines. Acquiring your own motor vehicle with borrowed money, then gradually paying the debt back, may be better for you than spending your own cash for it all in one go.

If you already depend on a motorbike for your livelihood, there’s a great chance your new vehicle will help you earn it back. And even if you don’t, quick access to a reliable mode of transportation will improve your mobility, cut down your fuel expenses—and in general, make things easier for you on the city’s roads.

Consider partnering with Robinsons Bank and enrolling in the Go! Motorsiklo motorcycle loan program. Find your dream bike among the models listed in Go! Motorsiklo’s repertoire!