Auto loans up 22% in 2017

Motor vehicle loans jumped 22.2 percent last year as buyers opted to acquire new units ahead of the effectivity of the higher excise tax imposed by the government.

Data from the Bangko Sentral ng Pilipinas (BSP) showed that motor vehicle loans reached P474.77 billion last year or P86.41 billion higher than the P388.36 billion disbursed in 2016.

This translated to a higher motor vehicle loan to total loan portfolio ratio of 5.6 percent from 5.38 percent.

Auto loans went up 21.6 percent to P457.74 billion, while motorcycle loans zoomed 42.7 percent to P17.03 billion.

“Consumers’ strong demand for passenger cars and commercial vehicles, the introduction of new and refreshed models, appropriate product mix, as well as flexible financing schemes from banks and other car financing firms helped sustain the rise in vehicle purchases,” the BSP said.

Buyers opted to purchase units ahead of the effectivity of the tax reform law that lowered personal income tax rates, but raised the excise tax on fuel, motor vehicles, and sweetened beverages, the central bank said.

President Duterte signed Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law last Dec. 19, representing the first package of the government’s comprehensive Tax Reform Program.

“In addition, anticipation of the approval of the TRAIN Act which imposes higher consumption taxes on goods such as cars likewise pushed the demand for motor vehicles,” the central bank said.

In September 2015, the BSP imposed stricter reporting requirement for auto loans extended by banks to monitor and identify possible risks in the financial system.