Buying a car in Nigeria right now has become very expensive and many Nigerians cannot pull out that kind of money from their savings to buy a car.
This is where car loans come in. Many Nigerians who can’t not afford to purchase a car are now turning patronising loaned cars.
A car loan in Nigeria is a kind of financing that gives people access to purchase a car without paying the full money upfront.
In this case, the lender pays for the car on your behalf, under the loan agreement that you will repay the money on either weekly, monthly or annual instalments over a specific period.
Car loans are like “Pay small small” kind of credit purchase. In this case, the beneficiary which is you, will have to pay with interest.
This article covers everything you need to know about car loans in Nigeria and where to get them and how to apply step by step so that by the time you finish reading this you’ll know exactly what to do.
How Car Loans Work in Nigeria
Before you start approaching any lender there are a few things worth understanding so you don’t go in blind and end up committing to something you didn’t fully expect.
There are some important things to take not of when approaching a car loan. Some of them include the following:
- Collateral: for some loan, the purchased car will act as a collateral for the loan until you have completed the repayment of the loan.
- Equity: You will be expected to make a commitment which is usually a 10% to 40% down payment of the total value of the car.
- Repayment Period: the repayment period for this kind of loans usually spans from 12 to 48 months (1 – 4 years).
- Interest: car loans attract interest just as cash loans. The typical interest rate for a car loan in Nigeria ranges from 5% to 8% for new cars and 7% to 12% for used cars, but the best rate you should look out for is 4%. But these rates are usually influenced by different factors.
- Default: when you default in payments the lender can legally seize the car from you and sell it to recover their money.
Types of Car Loans in Nigeria
The common types of car loans available in Nigeria include:
1. Salary-Based Loans
This loan is available for people whose salary accounts are domiciled with the bank providing the loan. In this case, the bank pays for the car, and the repayment will be deducted monthly from your salary account. But you will still be required to make a down payment.
2. Conventional Auto Loan
This is a standard loan, where the lender purchase a car for you and also use the car as the collateral.
3. Leasing
This kind of car purchase financing is available for those who want to start paying small small for their cars on monthly basis, but you may not own the car until end. FirstBank offers options like the “Finance My Car” + “Lease”
4. Rent-to-Own
This is commonly known as “hire purchase” where someone or an organization buys the car for you under the agreement that the full ownership will only be transferred to you after you have paid a larger part of the money.
Types of Vehicles Covered
- Brand New Vehicles: this loan is available for the purchase of brand new cars direct from the dealers. But it usually attract a higher interest.
- Foreign Used (Tokunbo): this loan is available for imported used cars usually known as Tokunbo. The interest is lower than that of brand new cars.
- Locally Used Vehicles: this loan is available for Nigerian used cars. The interest is always low.
Important Requirements
- Valid Means of Identity (any of International passport, driver’s license, national ID, or voter’s card)
- BVN + NIN
- Passport photographs (mostly 2 recent passport)
- Proof of address (you can use utility bill, tenancy agreement, or letter from landlord/CDC but it must not be older than 3 months)
- Income Proof for the last 6-12 months through your bank statements.
- Letter of employment (only for employed workers)
- Guarantors (1-2 guarantors with verifiable income or properties.)
- Age range of 18-65 years. Most lenders request that you must be able to repay before age 70
- Ability to make a Down payment/Equity
For Self-employed or Business owners, you’ll need:
- CAC certificate and other business documents
- 6-12 months income Proof and cash flow
- Tax clearance certificate for 2-3 years
- Proof of Business address
Where to Get a Car Loan in Nigeria
1. Access Bank
Access Bank has a comprehensive auto loan that can help you acquire brand new or pre-owned cars. Their loan package is very flexible. Access bank only requires a 10% equity contribution with a rate of 22% per annum.
Access Bank has two car loan options:
- Access More Mileage: this allows you to get a brand new car from as low as ₦170,000 monthly.
- Easy Buy Finance with GAC Motors: this allows you to get a brand new GAC GS3 or GAC GA4 at lower interest.
How to apply for Access Bank car loan:
- Visit the Access More Mileage portal online or go to any Access Bank branch near you
- Fill the interest form with the required details
- Obtain a proforma invoice from an approved vendor addressed to “Access Bank/your name”
- Submit your valid ID, bank statement, BVN, and employment letter
- Wait for assessment and approval
- Once approved, you’ll be required to sign the offer letter.
2. GTBank
GTBank has a car loan service known as MaxPlus. This service is available for GTBank salary account holders. According to reports, their loan service has the highest loan ceiling in Nigeria.
How to apply for GTBank car loan:
- Log into the GTBank app or visit any GTBank physical branch (physical office is preferred)
- Pick up their auto loan or MaxPlus form and fill it with the required details
- Submit the requested documents
- Get a proforma invoice from the car seller addressed to GTBank
- Submit your application and await approval
- Once your application is approved, GTBank will pay the car vendor and you take delivery
3. First Bank
The First Bank auto loan scheme offers up to ₦20 million car purchase.
How to apply for First Bank car loan:
- Download the auto loan application form from the First Bank website
- Fill the form with the required details
- Submit the form at the nearest First Bank branch
- Attach your letter of total emolument
- Attach your valid ID, documents and bank statement
- Provide a proforma invoice from an approved car vendor
- Wait for assessment and feedback
- If approved, First bank will pay the dealer and you take delivery of your car
4. Stanbic IBTC
Stanbic IBTC auto loan requires a 10% down payment of the total car’s value. They give a repayment tenor of up to 5 years.
How to apply for Stanbic IBTC car loan:
- Get a proforma invoice for your vehicle of choice preferably from a Stanbic IBTC partner dealer
- Submit your application via email to StanbicNigeria-VAF@stanbicibtc.com or at any Stanbic IBTC branch closer to you
- Attach all necessary documents
- Wait for the Stanbic IBTC VAF team to review your application
- If approved, the bank will pay for the car, then you can repay on monthly basis.
5. FCMB
FCMB offers car loans which you can pay back within 12 to 60 months with about 33.5% interest per year. They also ask for a 20% down payment. They also offer a comprehensive insurance.
How to apply for FCMB car loan
- Visit any FCMB branch near you closer to you
- Get their loan application form and complete it
- Attach required documents and submit for assessment
- Pay the required 20% down payment
- Wait for assessment and approval
- If approved, you’ll sign the loan agreement and take delivery of your car
6. Autochek
Autochek partners with top car loan companies in Nigeria and offer auto financing for both new and used car.
How to apply on Autochek:
- Visit autochek.africa/ng
- Use the search filter to search for the car you want.
- If you find any car you like, tap on the “Apply For Loan” button beside it
- You’ll be required to create an account
- Fill in your details accurately and upload the required documents
- Autochek will then connect you with a lender who will process the paperwork
- Once approved, the car will be delivered to you and you begin monthly instalmental repayments
7. BetaCar.NG
BetaCar.NG is an e-commerce automobile platform that offers the privilege to purchase certified Tokunbo cars and pay over a period of 12 to 24 months.
How to apply on BetaCar:
- Visit betacar.ng
- Search available cars and select your preferred car
- Use the car loan Calculator to check the upfront deposit required, the monthly repayment, and the period of payment for the car you selected
- Click on “Apply for Loan” button
- Fill the pre-approval assessment form.
- You will get an approval or rejection email within 10 minutes.
- If approved, you will get an email listing the documents needed
- You’ll then visit the Betacar HQ office for inspection and testing
- You’ll scan and submit all required documents
- Their team will review your details and let you know once your application package is completed
FAQs About Car Loans in Nigeria
Can I get a car loan in Nigeria without collateral?
Yes! Most Banks do give car loans without collateral because the car itself is usually treated as the collateral.
How much down payment do I need for a car loan in Nigeria?
Most car lenders in Nigeria require a down payment ranging from 10% to 30% of the total value of the car.
Which bank gives car loans in Nigeria?
Access Bank, Stanbic IBTC, GTBank, FirstBank and many other banks in Nigeria give car loans. Each of them have their own requirements and terms.
Can a self-employed person get a car loan in Nigeria?
Yes! Banks like FCMB and platforms like Autochek and BetaCar.NG offer auto financing to self-employed applicants as long they have strong financial capacity to repay.
What happens if I can’t repay my car loan in Nigeria?
When you default in the payment, the best legal action is for the bank to seize the car from you and sell it to recover their money.
See Also: 500k Loan in Nigeria: Where to Get It and How to Apply
Conclusion
Before you take a car loan in Nigeria, ensure you have what it takes to repay, also do well to check for the best option to avoid overpaying. Avoid loans with higher interest and short repayment period.
Remember, when you default in payments the lender can legally seize the car from you and sell it to recover their money irrespective of how much you have repaid already.
