Before our big move, my wife mentioned her desire to buy a car in the Philippines once we were settled. As for myself, I was on the fence about owning a car. Knowing my wife would probably get her way, I went online to check out the prices and payment plans of the major Cebu dealerships. Thru my research, I learned that the finance/interest charges in the Philippines were significantly higher when compared to the United States. At first glance, it seemed like a ripoff, but once I sat down and thought about it, I changed my mind. In America, I worked many years as a credit card analyst, where I was somewhat involved in fine tuning the offers extended to potential card members. The company maintained a massive amount of data from various sources. It fed that data into computer models to determine risk scores. As you are aware, high risk = high interest rates. Now, imagine you were a Philippine finance company (or bank) and a Filipino citizen came to you for an auto loan. How would you determine his risk score? I’m sure the amount of data that exists about your typical Filipino is far less than your typical American, therefore, less data = higher risk = high interest rates. My wife and I transferred $20,000 from our U.S. bank account to our Philippine bank account, glad we would not need to deal with financing a car.
A few months after our arrival in the Philippines, we again discussed buying a car. I was leaning towards purchasing a Toyota Avanza, since it seemed to be the largest vehicle that fit our budget. During this decision making period, my wife and I made multiple trips to Cebu City and Dumaguete using public transportation. (We live in a small town / province.) We decided neither of us had any desire to take on the stress of driving in city traffic. That meant we only needed a vehicle for local, province travel. Suddenly, paying $20,000 for a new Toyota so we could drive short distances a couple times a week didn’t seem a wise decision. It occurred to me that I was thinking like a foreigner, only considering familiar vehicles brands. Maybe the solution to my situation was to think more like a local Filipino. Instead of typing ‘Toyota’ or ‘Honda’ into google, I typed ‘multicab’.
“These multicab prices aren’t bad.”, I mentioned to my wife. “The only problem is we need an automatic, unless we both want to learn how to use a manual transmission”. I continued my research and did manage to find a few automatics online, however they were too small for our needs.
“Hmm”, I thought. “This may be a crazy idea. What if we bought 2 multicabs? One automatic for ourselves and one manual (big) jeepney style that your brother in law can drive when we have a lot of people.” My wife liked the idea of having 2 cars, as did the brother in law. I liked the fact that the total cost of the 2 vehicles would be around $11,000, much less than what we budgeted for one Toyota.
Today, parked outside sit 2 vehicles, neither of which you would find in America. Now my only problem is what to do with the $9,000 I still have in the bank. Oh… wait… my wife says she will handle that problem.