Car Loan Calculator (Philippines)

How car loans are quoted in the Philippines

Most Philippine car dealers quote financing using the add-on interest method. The interest is calculated once on the full amount financed for the whole term, added to the principal, and the total is divided evenly across the monthly payments. The formula is Interest = Amount financed × Add-on rate × Years, and the Monthly = (Amount financed + Interest) ÷ Number of months. This is why the monthly amortization stays the same every month.

Down payment and amount financed

Dealers typically require a down payment of around 20% of the vehicle price, though promos sometimes offer lower. The amount financed is the price minus your down payment — that's the figure interest is charged on. A larger down payment lowers both the loan and the total interest you pay.

Add-on rate vs. effective rate

An add-on rate looks low but costs more than it appears. Because you repay the loan gradually but pay interest on the full original amount for the entire term, the true (effective) interest rate is roughly 1.8 to 1.9 times the add-on rate. For example, an 8% add-on rate over several years works out to an effective rate closer to 14–15%. Keep this in mind when comparing a dealer's quote to a bank's diminishing-balance loan.

How to use this calculator

• Vehicle price — the cash price of the car.
• Down payment — entered as a percentage of the price.
• Add-on rate — the yearly rate the dealer quotes.
• Term — how many years to pay; longer terms lower the monthly but raise total interest.

FAQ

Does this include insurance and other fees?

No. Dealers usually add comprehensive insurance, chattel mortgage fees, and registration on top of the loan. Ask for the full breakdown — this calculator covers the loan principal and interest only.

Why is the monthly the same every month?

Because the add-on method spreads a fixed total evenly across all months. Unlike a bank's diminishing-balance loan, the payment doesn't change as the balance falls.

Can I pay off the loan early to save interest?

With add-on interest the full interest is baked in up front, so early payoff saves less than with a diminishing-balance loan — and some contracts charge pre-termination fees. Check your loan terms before paying ahead.