Obtaining a car loan in Nigeria is no longer a hard task. We are no longer in the era where car loans and other financial services are designed for the privileged. Currently in Nigeria, anybody can access a car loan.
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There are some financial institutions here in Nigeria that focused more on providing car loans to individuals.
These financial institutions, sometimes take full/part-finance the purchase of the vehicle for the personal use of some organization’s staff.
The staff here can be a private or public organization staff whose monthly salary and allowances are domiciled with them.
List of commercial banks that provide car loans in Nigeria.
- Access Bank Plc.
- First Bank of Nigeria Ltd.
- Stanbic IBTC Bank.
- Skye Bank Plc.
- Diamond Bank Plc.
- Guaranty Trusted Bank Plc.
Who is eligible for a car loan in Nigeria?
They are two main categories of people who are eligible for a car loan in Nigeria; they are salary earners and self-employed/Entrepreneurs.
The salary earners are the main people who are privileged to access a car loan in Nigeria because most Nigerian banks only grant salary earners sometimes, those that fall under a certain bracket.
Most of these commercial banks do offer business owners/self-employed car loans with a very good interest rate.
Note that your business must be registered with the CAC (Corporate Affairs Commission), with some necessary documents.
Type of car
Most commercial banks only offer car loan for a brand new car while some finance fairly used or second-hand cars.
Worth of the car
Most commercial banks do not have limits on car financing. They provide from 1million naira and above, thou different banks have their specific offer.
Note that no commercial bank will offer you a 100% car financing they will expect you to come up with a certain percentage like Guaranty Trusted Bank will demand 20% from you, unlike Access Bank that will only demand 10% from you for the vehicle finance.
You are expected to provide the bank with some necessary documents which will be used in processing the loan. Some of these documents are;
- An application letter
- Duly completed Auto Loan application form
- Proforma Invoice from the bank list of approved car dealers
- More payslip for the last 3 months
- A current statement of account stamped by your bank
- A letter of total emolument
- Other KYC (Know your customers) if necessary
Virtually all the commercial banks in Nigeria have their different loan processes and they are as followed.
- Get a proforma invoice from an approved car dealer of the bank of the car you want
- Duly fill an application form in any branch of the bank
- Wait for the bank to make their decision i.e. they will run due diligence on you and your company and if they find you worthy, your car loan will be approved.
- If your application is successful, the bank will automatically credit the car dealers account and the dealer will deliver the car to the bank and you to come and pick it from there.
Steps involved in getting a car loan in Nigeria
There are several steps you should take before you can access a car loan from any commercial bank or car loan companies in Nigeria, they are as followed;
- Be sure of the car you want to purchase. It’s important when you come to banks or car loan companies in Nigeria. Banks are always ready to fund your purchase but they want to know exactly what you want to buy. Sometimes, some banks may refuse to give loans to certain brands or fairly used cars.
- Find out how much the car will cost you. In general, no car loan in Nigeria will ever fund your purchase wholly. It will make about 60 to 70% of the price while you pay the rest of the balance. As well, you need to remember that you are the one who covers the cost of the insurance. In most cases, it’s about 5% of the car value.
- Find out, in which bank you can get the best auto loan in Nigeria. The plans they all offer are quite similar but you would definitely prefer something that is better for you. Choose the bank that specializes in auto loans. The main difference in the plans all the banks offer is, probably, the way they are going to process your loan application and the time it will take them. You are not obliged to get the loan from the bank where you have an account. If another bank offers something that sounds better for you, feel free to start working with them concerning the matter of your car loan.
- Find out, if the car dealer has already made an agreement with a certain bank. It can make your life much easier, in fact. The dealer and the bank will process the loan themselves and you will only need to sign the contract and pay the remaining amount.
- Now, when you have already decided where you are going to take the loan, you need to complete the formal procedures. There’s nothing complicated in the process. They will want you to prepare an official letter in accordance with an existing template. Attach a copy of the payslip, a car invoice, and a paper that confirms your employment and regular income. All this should be given to the bank for processing.
- This done, the bank will ask you to provide some of your personal information. You will most likely fill out a special form, which is quite easy. Then, you will receive a paper from the bank that will explain the details of your loan: its amount, interest rates, and so on.
- After all, this is agreed and signed, the bank will issue the loan. This will be done no sooner than they issue a draft meant for the car dealer. This draft will give you the right to purchase and own the car. The dealer, in its turn, will release the vehicle for your usage. Now, the car is yours, even though half of it belongs to the bank up to the moment you pay the loan back.