Applying for a car loan in Nigeria is not as complicated as it may seem. The process is seamless once you are eligible.
In this article, we discuss all the steps involved in successfully getting your car loan.
Requirements for a car loan
First, identify the car you intend to buy and how much it cost. It is easier if the car dealer you find already has car loan options. Some loan companies in Nigeria already have car loan options available and also have an arrangement with car dealers. It makes the process easier.
Also, find out how and when it will be delivered after you’ve successfully paid for it. Do this with a proforma invoice. It is a draft invoice. Remember financial institutions won’t finance the entire purchase of the car. They finance around 60% or 70% of it. For example, if your car cost 3m and the bank funds 60% of that, that’s 1.8m while you offset the remaining balance.
The financial institution would be interested in determining your credit rating before you’re qualified for a car loan. The following will determine:
Your monthly income
Your income will determine your financial strength. It is how financing institutions ensure you can pay back the car loan you intend to get. If you fall short of the required range, you may not get a car loan.
The consistent inflow of funds.
Usually, a period of three months to one year or two is the duration to check the overall inflow of your account, especially for salary earners to confirm how steady the inflow of funds is. So, to increase your chances of getting the car loan ensure you have a consistent State of account. You’ll be required to provide all of these, and it’s part of the process required to verify your credit rating.
After this verification, your loan tenure is next. The loan tenure is the duration which the car loan will run for. Most car loans run for a term of four to five years. That is you have that long for repayment. You also have the option to pay off the amount before the stipulated period on the car loan agreement.
Considerations before a car loan
After you have observed all your options, consider the following factors before you proceed with the car loan.
- Interest rates of the car loan
Make sure the interest rates on loans are favourable. Paying for a loan with high-interest rates is a disadvantage.
2. How affordable are the monthly payments for the car loan?
The affordability of the monthly payments should interest you because you don’t want changes that would cause a strain on your finances. Settle for charges that are within your income bracket. That way, you won’t feel the stress of repaying your car loan.
3. Upfront deposit required.
The upfront deposit required helps you determine the percentage of your car loan that will cover you.
Where can I get a car loan in Nigeria?
A few banks and institutions offer car loans, and other car financing options in Nigeria are:
- Stanbic bank