This is a detailed guide on a Car Loan in Nigeria: Everything you need to know.
Car loan in Nigeria has helped many Nigerians purchase cars of their own. Nowadays, you do not need to save for years to own your dream car.
However, some people are still ignorant of this fact while some people are willing to get a car loan but do not know how to go about it.
Whatever the case may be, this article on Car loans in Nigeria-Everything You need to know, will help you out.
It is a well-researched article that tells you everything you need to know about a car loan and how to secure it.
What Is A Car Loan?
A car loan, also known as an automobile loan is the money an individual borrows to purchase a car.
An individual borrows this money to purchase a car if he or she lacks the financial strength to purchase a car alone.
Car loans are simple interest loans, the borrower is expected to repay the loan in monthly installments including the interest.
However, an auto loan is often got from financial institutions or an auto financing company on a long-term or short-term base depending on the lender.
When you secure a car loan, you do not have full right to your newly purchased car until you repay your debt.
However, your vehicle serves as the collateral for the loan, and If you default on your repayments, the lender can seize the car.
Additionally, before you secure a car loan make your findings and ask questions so you don’t fall into the wrong hands.
Also see: 15 Best Platforms To Get Instant Loan Without Collateral In Nigeria
Advantages Of A Car Loan In Nigeria
There are many benefits of securing a car loan, below are some of the advantages of a car loan in Nigeria.
1. A car loan enables you to purchase your dream car even when you are financially incapacitated.
2. When you secure a car loan and pay it back on the agreed date, your credit profile will be increased and next time you request a loan from the financial institution, your request would be granted almost immediately.
3. Instead of using your whole savings to buy a car, a car loan enables you to use the money on other things or invest it to get more money.
4. After paying your loan, you can sell the vehicle to buy a new one.
5. When you secure a car loan, your car insurance rate may be lower.
Disadvantages Of A Car Loan In Nigeria
The following are the disadvantages of a car loan in Nigeria.
1. When you secure a car loan, you are not the eligible owner of the vehicle until you have completed your loan payment.
2. Many auto-financing institutions that give out loans charge outrageous interest fees, and sometimes the fee becomes almost impossible to pay back.
3. If you are incapable of repaying your car loan, your vehicle might be taken from you.
4. When you secure a car loan, you earn up paying more than you borrowed because of the interest added to it.
Things To Know Before Applying For A Car Loan In Nigeria
Before applying for a car loan in Nigeria, below are some things you should know to quicken your application process.
1. Know The Car You Want To Buy
It is very important to know the car you want to buy before approaching any financial institution to request a car loan.
2. Know the Eligibility Requirements
It is important to know the eligibility requirements for applying for a car loan in the financial institution of your choice.
Knowing the eligibility requirement will help you get everything ready before commencing the application.
However, all financial institutions have one matching requirement for applying for a car loan which is the borrower’s ability to pay back but requirements such as age, minimum salary requirements, employment type, and means of identification may differ.
3. Do Not Request More Than You Can Pay
The loan amount you apply for is determined by the type of car you want to buy. However, you might not be given the exact amount because the financial institution will consider your age and your income.
Your monthly income determines your financial strength, so it is advisable to borrow what you can comfortably pay, so you do not get overwhelmed with debts.
4. Know the Interest Rate
Knowing the interest rate of a car loan you want to apply for is very important. A high-interest rate can prevent you from completing your loan payment.
Make sure the interest rates on loans are favorable because once the car loan is authorized, the interest rate is fixed and cannot be changed.
However, you can opt for a floating interest rate if you think interest rates will be down in the future because paying for a loan with high-interest rates is of disadvantage.
5. Know the Repayment Plan
Paying back your loan is very important and it is the most reason you should know the loan repayment plan.
However, banks usually offer flexible repayment plans on a car loan, so choose the one that suits your financial power.
6. Have A consistent inflow of funds
Financial institutions will not issue out a car loan without being sure that the borrower is financially stable and capable of paying back the loan.
They usually check the frequency at which money enters the borrower’s account, this can take six months to one year to verify.
So, to increase your odds of getting a car loan, endeavor to have a steady inflow of funds in your account.
Guide On How To Get A Car Loan In Nigeria
Getting a car loan in Nigeria is not as hard as you think. Below is the step-by-step guide on how to get a car loan in Nigeria.
Step One
It is important to, first of all, know the car you want to buy before approaching any financial institution for a car loan in Nigeria; find out the car price and when it will be delivered after you have made payment.
To make this easier for you, approach a car dealer, select your choice car, and request a proforma invoice.
A Proforma invoice is an initial bill used to request payment from clients before the goods or services are supplied. It makes the client know the requirement of the goods or services he or she requests.
Moreover, also find out if the car dealer has a collaboration with any financial institution to offer loans to car buyers who are incapable of purchasing a car.
If there is such a collaboration, then the process of getting a car loan will be easy.
However, if they don’t, then take the proforma invoice to any financial institution of your choice and meet with the customer service for directions on how to go about it.
If you are getting a loan from a bank, you would have to open an account with that bank if you do not have one with them.
Step Two
After that, you would be asked to submit a formal application letter requesting a car loan.
You would submit the application letter with a copy of your payslip, the car invoice, and your employment letter.
After your application letter is processed, the bank will give you forms to fill, the form will capture your personal details and other formal information.
Step Three
After submitting the form, if your request is considered, the bank will give you an offer letter.
The offer letter is a document showing you the amount of money to be given to you by the bank, the interest rate, repayment plan, fees, security, etc.
However, know that the bank will not issue the loan if you have not deposited your part of the money.
However, once you accept the offer and meet all the requirements of the bank, the loan will be paid to your account.
Note, however, that the bank will not disburse the money to you until they are about to issue a bank draft to the car dealer for the purchase of the car.
Step Four
When the car is released to you, the bank will be with one of the keys and the bank will be the co-owner of the car.
However, financial institutions do not ask for collateral before issuing a car loan, but when you default in payments, the bank can seize the car and sell it to recover their money.
Also see: Top 10 Websites To Buy And Sell Cars In Nigeria
Where To Get A Car Loan In Nigeria
Below are the best places to get a car loan in Nigeria.
1. BetaCar.NG Car Loan
BetaCar.NG is an e-commerce automobile platform that offers salary earners and structured business owners in Nigeria the privilege to purchase certified tokunbo cars and pay over a period of 12-24 months.
This platform ensures Nigerians have access to both quality and affordable cars.
Moreover, you can follow the following simple steps to purchase a car from BetaCar.NG
1. Search available cars to select your preferred car.
2. Use the simple car loan calculator on your selected car to check the upfront deposit needed, the monthly repayment, and the period of payment.
3. Click the Apply for Loan button and fill out the pre-approval assessment form.
4. You will get an approval or rejection email within 10 minutes.
5. If accepted, you will get an email listing the documents needed.
6. Visit Betacar HQ office for inspection and test drive.
7. Scan all needed documents and submit them as a reply to the email address (betacarfinancing@betacar.ng).
9. Their team will examine and let you know once your application package is completed.
2. FirstBank Car Loan
FirstBank offers car loans to both individuals and organizations. To be eligible for the car loan, you must be an employee in paid employment and must have a salary account with FirstBank.
FirstBank gives a maximum loan amount of N15 million and the maximum loan tenure is four years with a 22% interest rate.
Moreover, to access the loan, applicants must contribute 20% of the entire loan, and FirstBank does not finance tokunbo cars, it must be brand new and from FirstBank-approved vendors.
Interestingly, securing a car loan with FirstBank comes with lots of benefits, you will be offered one year of free car servicing or car serviced at 15,000km mileage; free fuel card available for one year; free car registration; and a three-year manufacturer’s car warranty.
The required documents for FirstBank car loan include:
- Application letter
- Auto Loan application form
- Proforma Invoice from FirstBank-approved vendors
- Payslip for the last three months
- Statement of account
- Letter of total emolument.
Follow the steps below to apply for a car loan.
1. Download the Auto Loan Application Form
2. Complete the form and submit it at the nearest FirstBank branch
3. Stanbic IBTC Bank Car Loan
Stanbic IBTC Bank offers car loans to both their salaried and non-salaried customers to purchase their dream cars.
Their car loan is simple and flexible, they offer flexible payment terms with up to four years of repayment tenor.
They also offer competitive interest rates and allow their comprehensive dealer to help their customers in purchasing their cars.
However, the required documents for a car loan from Stanbic bank include:
1. A completed application form.
2. Proof of income/evidence of salary.
3. A proforma invoice for your vehicle preferably from a Stanbic IBTC partner dealer.
4. Wema Bank Car Loan
Wema Bank enables individuals to own a car for as low as N195,000 monthly payments.
Their “Easy Buy Finance” scheme helps people to buy GAC vehicles with ease and at affordable prices with a comfortable repayment plan.
The scheme is only for their salary savings or current account customers to buy motor vehicles.
Below are the benefits of the scheme.
1. The scheme helps individuals who meet the specified conditions to pay an equity contribution of 10% with 48 months tenor payment
2. Covers 3 ranges of Sport Utility Vehicles in the GAC fleet, GS3, GS4 and GS8
3. 15% discount off the current market cost of the vehicles
4. Suitable for customers’ needs with manageable monthly repayments.
5. Best for individuals, organizations, corporate bodies, and institutions as an easy and convenient way to own a brand new vehicle.
5. First City Monument Bank Car Loan
FCMB offers two types of car loans which are the FCMB auto loan alliance and standard auto loan.
FCMB auto loan alliance enables you to get your dream tokunbo car while standard auto loan enables customers to buy automobiles from auto dealers who have been prequalified and have agreed on an SLA with the bank.
Features of the FCMB auto loan alliance are:
1. Auto-loan amount up to ₦30 million.
2. Interest Rate as low as 20% per annum.
3. Equity Contribution as low as 30%.
4. Loan repayment tenure up to 36 months.
Features of the standard auto loan include:
1. Borrow N500,000.00 to N30,000,000.00
2. Payment over 12 to 60 months
3. Pay as low as 20% towards the purchase
4. Comprehensive Insurance on the car throughout the loan period
5. No security is needed
6. Competitive pricing and no hidden charge.
6. AutoCheck Car Loan
AutoCheck is an e-commerce car dealer that offers car loans to individuals in structured employment and Self-employed individuals with regular income.
However, the minimum equity contribution for this loan is 30% and, AutoCheck does not request collateral for this loan.
Visit their website to learn more about their application process.
7. Access Bank Car Loan
Access Bank offers car loans to eligible individuals with a very competitive interest rate and comprehensive motor insurance premium.
Features Of Access Bank Car loan include
1. Open to salaried income persons, SMEs, and Corporates.
2. Equity contribution as low as 10% of the invoice value.
3. Interest rate as low as 17% p.a.
4. Management fee at 1% (one-off).
5. Up to 48 months tenor.
6. Many varieties of vendors to choose from
General requirements for Access Bank car loan include:
1. Completed application form.
2. Pro forma invoice from any of the Bank’s approved vendors addressed “Access Bank/Customer’s name”.
3. Credit Checks.
4. Blank transfer of ownership Form.
5. Vehicle Inspection report & agreement (Pre-owned vehicles only).
4. Duly accepted offer letter & term sheet.
Also see: Current Prices of Innoson Motors
That’s all on a Car Loan in Nigeria: Everything you need to know, I hope it helps you get the right car loan.