So you’ve decided it’s time to finally buy that car you’ve always wanted. The only problem is that new cars don’t come cheap, and saving up enough to pay for one outright could take years. Fortunately, there are companies that specialize in providing auto loans to make your dream of owning a car a reality. But with so many options out there, how do you know which lenders offer the best car loans in Nigeria?
We’ve done the research for you and compiled a list of the top car loan companies in Nigeria in 2023 based on factors like low-interest rates, minimal fees, flexible repayment terms, and transparent processes. Whether you have a steady income and a high credit score or you’re just starting out, there are reputable lenders that can work with your unique situation. Keep reading to find a company that can get you behind the wheel of a new ride as soon as possible with an auto loan you can afford.
What is a Car Loan, and How Does it Work?
A Car loan is a form of loan that is aimed to assist individuals and corporations in purchasing a car. This type of loan is often provided by banks, financial organizations, and automobile dealerships. Car loans are typically repaid with interest over a set period of time, usually one to five years. The interest rate on a car loan might vary based on the lender, the loan size, and the borrower’s credit score.
Here’s how it works: you find the car you want, and a lender approves you for a loan to buy it. They’ll look at things like your income, credit score, and how much you can afford for payments. Once approved, the lender pays the dealer, and you get the keys! You then repay the lender in installments over 12-60 months. Interest is charged on the loan, so you’ll end up paying more than the vehicle’s selling price. But a car loan allows you to buy a car even if you can’t pay cash upfront. You get to drive your new wheels while paying it off bit by bit. Make sure you understand all the details before signing an agreement.
Reasons to get a car loan
Getting a car loan allows you to buy the wheels you want now and pay it off over time. Here are a few reasons to consider financing:
- You can buy a better vehicle: Putting down a large down payment isn’t realistic for most. A loan lets you buy a safer, more reliable car with the features you need.
- Build your credit: If you make on-time payments, you’ll build a good payment history, which makes up 35% of your score.
- Negotiate a better deal: Dealers often give the best price to those financing since they get a kickback.
- Drive now, pay over time: It can help you purchase a car that you may need help to afford upfront.
Getting an auto loan really comes down to your needs, financial situation, and how much you want that new set of wheels today. Shop around at different banks and credit unions for the best rates and terms to suit your needs. The open road awaits!
What to Consider When Taking Out a Car Loan in Nigeria
When taking out a car loan in Nigeria, consider the following:
- Interest Rate: The lower the interest rate, the less you’ll pay overall. Compare rates from different banks and lenders. Negotiate the best deal you can.
- Loan Term: A longer loan term means lower payments but higher interest paid. A shorter term means higher payments but less interest. Choose a term that fits your budget.
- Down Payment: Putting down 20% or more will get you a better interest rate. Save up and make as large a down payment as possible.
- Fees: Watch out for hidden fees like origination fees, documentation fees, or prepayment penalties. Make sure you understand all fees involved before signing the final paperwork.
- Credit Score: Check your credit report for any errors before applying. A higher score will qualify you for a lower interest rate. Pay down debts, and don’t apply for too many new loans at once.
- Dealership vs Bank: Dealerships often have promotional offers but typically charge higher interest rates. Banks usually have lower rates but fewer promotions or discounts. Compare both options.
- Vehicle: Consider a used vehicle, as the value depreciates less over time. New vehicles lose a big portion of their value as soon as you drive off the lot. Choose a reliable model known for holding its value over the years.
- Repayment Terms: It is essential to understand the repayment terms, including any fees and penalties for late or missed payments.
What Kind of Interest Rates Might Be Anticipated For A Car Loan?
When taking out a car loan in Nigeria, interest rates can vary depending on several factors. Rates are usually higher for used cars versus new cars, as used cars are seen as riskier collateral by lenders. Your credit score and credit history also impact your rate; the better your score and history, the lower your interest rate.
For new cars, interest rates in Nigeria currently average around 17-30%. Rates for used cars tend to be 2-5 percentage points higher. The actual rate you receive depends on several factors, including the loan term.
Factors that Affect Interest Rates on a Car Loan
When applying for a car loan, several factors determine the interest rate you’ll pay.
- Credit score: Your credit score is one of the most important factors. The higher your score, the lower your interest rate.
- Down payment: A large down payment, like 20% of the vehicle’s price, can lower your rate. It shows the lender you’re less risky. Save up and put down as much as possible.
- Loan term: A shorter loan term, like 3 years, means paying the loan off quicker, so you’re charged less interest. But shorter terms have higher payments. Find a balance that fits your budget.
- Vehicle: New, used, or certified pre-owned? New vehicles have lower rates since they’re less risky for the lender. Used vehicles are riskier, so expect a higher rate.
- Loan type: Rates for secured loans like car loans are usually lower than unsecured loans. Compare rates for direct lending, indirect lending through a dealership, and peer-to-peer lending.
- Current interest rates: Rates change based on the overall economy and inflation. Check the current average auto loan rates to make sure you’re offered a fair rate. Bargain with lenders and negotiate the best rate you can.
Top 7 Car Loan Companies in Nigeria
These top car loan companies in Nigeria offer competitive interest rates and high loan-to-value ratios so you can drive your dream car.
Some of the top car loan companies in Nigeria are:
Access Bank Group
The Access Bank Group provides auto financing. The corporation developed this system so that its clients could readily and economically purchase the cars they desired. The loan application process can be completed online at www.accessbankplc.com. Only cars purchased from Bank-approved dealers are eligible for financing. The Access Bank loan term is up to 48 months.
Benefits
- Vehicle re-financing for pre-owned cars
- Highly competitive interest rates
- You have access to a wide range of vehicle brands and models
- Pre-owned and brand-new vehicle purchase financing
Features
- There is a wide variety of vendors to choose from.
- Equity contribution as low as 10% of the invoice value
- Financing of the vehicle’s routine maintenance, Insurance, and registration
- This offer is open to salaried-income persons, SMEs, and corporations.
- Management fee @ 1% (one-off)
- Up to 48 months tenor
- Highly competitive interest rate.
To access a car loan from Access Bank, here are the basic requirements:
- Credit Checks
- Pro forma invoice from any of the Bank’s approved vendors addressed “Access Bank/Customer’s name.”
- Completed application form
- Blank transfer of ownership Form
- Vehicle Inspection Report & Agreement (Pre-owned vehicles only)
- Duly accepted offer letter & term sheet
Customer Care
Email:cc-ombudsman@accessbankplc.com
Telephone: 07003000000
Access Bank offers competitive interest rates and flexible repayment plans to suit your needs. Their experienced staff can advise you on the best options for your budget.
First Bank of Nigeria
First Bank of Nigeria is one of the largest and most prestigious banks in Nigeria. It offers attractive car loan deals with low-interest rates. This financing is offered to both individuals and businesses wishing to purchase automobiles for their daily operations.
This loan is customized to meet your needs, with a maximum loan amount of #20 million and a term of up to 48 months. The interest rate on the FBN Auto loan is 22%. Visit First Bank of Nigeria’s official website to learn more about this lending option.
Features:
- Access to a wide range of vehicle brands and models.
- Up to 48 months tenor (four years)
- Equity contribution is 30% of the invoice value.
- Finance is available only for brand-new vehicles.
- Maximum loan amount of N20 million.
- Open to salaried income individuals whose salary is domiciled in First Bank or who want to move their salary account to First Bank.
- Highly competitive interest rates.
- Flexible repayment structure.
Required Documents:
- Proforma Invoice
- Driver’s license, International Passport, or National Identity card.
- Auto Loan application form
- A valid copy of acceptable Identification, e.g., Letter of irrevocable domiciliation of salary for the duration of the facility.
Contact Details
Tel: 0708-062-5000.
Email: firstcontact@firstbanknigeria.com
First Bank offers flexible repayment tenors of up to 2 years. Their quick and easy digital loan application process ensures you get pre-approved within 48 hours.
With First Bank, purchasing your dream car has never been easier! Their friendly customer service and nationwide branch network provide all the support you need.
United Bank for Africa (UBA) Nigeria
UBA is one of the leading banks in Nigeria that offers car loans.
The UBA auto loan products allow users to borrow up to #15 million and repay it over up to 48 months with an interest rate of 22%. Customers can choose a repayment period that best meets their demands and financial situation.
Whether consumers want to upgrade to a higher model or buy a brand-new automobile, the UBA auto loan product provides a convenient and cost-effective financing option. The UBA auto loan product, with its affordable interest rates and flexible repayment terms, is designed to help clients realize their dream of purchasing a new car.
Features of Access Bank Auto Loan
- Convenient repayment terms; up to 48 months
- Access to reputable auto dealers/retailers
- Maximum loan amount of N15m
- Minimum equity contribution of 30%
- An interest rate of 22 percent. Note that (For the duration of the loan, the interest rate will be on a floating basis, subject to fluctuations in money market conditions)
- Mandatory comprehensive insurance and vehicle tracking
To Qualify for a UBA Car Loan, you must
- You must have an active savings or current salary account.
- You must provide a valid means of Identification (International Passport, National Driver’s License, National ID Card, and Voters’ Card).
- Duly completed loan application form
- The customer is required to contribute, at the minimum, 30% of the cost of the vehicle to be purchased.
- You must provide your Employer’s undertaking to domicile salary with UBA (this applies if you are a salaried employee).
- Duly accepted offer letter or employee inquiry form (The offer letter should have the Employee’s Name, Job Description/Position, Nature of Employment (Permanent or Contract), and Job Status (Confirmed or unconfirmed).
- You must provide a copy of the customer’s staff ID.
Contact Information
Tel: +234 700 2255 822 (0700-CALL-UBA)
+234 1 280 8822 (2808UBA)
Email: cfc@ubagroup.com
The interest rate for UBA car loans is 22%. The loan amount and tenure depend on factors like your repayment ability, income, the type of vehicle you want to buy, and other liabilities. UBA allows you to borrow up to N15 million with a maximum repayment period of 2 years.
You can apply for a UBA car loan on their website or by visiting any UBA branch. The approval process typically takes between 2 to 4 weeks. Once approved, UBA will pay the dealer directly, and you can drive off with your new wheels.
First City Monument Bank (FCMB Auto Loan)
FCMB Auto Loan is one of the popular auto loan products in Nigeria offered by First City Monument Bank (FCMB). The FCMB auto loan product is designed to meet the demands of clients who want to acquire a car but are unable to pay the whole amount immediately.
Customers can obtain a loan amount ranging from N500,000 to N30,000,000 through the FCMB auto loan, based on their financial capacity and the type of car they want. The loan payback time is adjustable and can range from 12 to 60 months, depending on the amount borrowed and the type of car acquired.
Whether you need a new or used car, the FCMB auto loan product allows customers to enjoy the comfort and luxury of having a car while keeping their financial stability.
The features of FCMB Auto Loan
- Interest rates are as low as 29.5%
- The repayment period is between 12 to 60 months
- Contribute as low as 20% toward the purchase.
- Borrow N500,000 to N30,000,000
- Comprehensive Insurance on the car for the entire loan period
- No security is required
- They offer competitive pricing with no hidden charges.
Eligibility
- Individuals in structured employment
- Self-employed individuals with regular income.
Benefits of FCMB Auto Loan
- You get to buy the car of your choice from their list of acceptable brands and spread payment over a convenient period.
- They provide the installation of free tracking devices for auto valued at N3,000,000 and above
- Convenient insurance payment included in the loan repayment amount
- They provide reliable dealers accredited to ensure you buy from a safe source.
- No residual cost at the end of the loan
Contact Information
Telephone: 01-2798800, 07003290000.
Email: customerservice@fcmb.com
Whatsapp: (+234) 09099999814 or (+234) 09099999815
FCMB Auto Loan allows you to buy your dream car with convenient repayment terms. With competitive rates and amazing benefits, an FCMB Auto Loan is a great choice if you’re looking to finance a new or used vehicle.
Stanbic IBTC Bank Nigeria
Stanbic IBTC Bank is one of the leading providers of vehicle financing in Nigeria. They offer Vehicle and Asset Finance program with competitive interest rates and flexible repayment plans.
It is straightforward and quick to apply for a vehicle loan, and the loan terms are flexible. Salaried customers can enjoy a maximum duration of 60 months, and non-salaried customers can also benefit from this product. Bankers have a maximum duration of 48 months. Tenors are subject to extra consideration for used autos.
With Stanbic IBTC Vehicle and Asset Finance, you can have the ease of owning your desired car without having to pay the full sum upfront. Their loan product offers you a financing alternative that is both inexpensive and convenient, allowing you to keep your financial stability while satisfying your ambition to acquire a car.
Features
- They offer flexible Payment Terms, with up to 4 years tenor for repayment.
- You have access to competitive interest rates.
- Salaried Client – Salary Domiciled – 60 months with a minimum of 10% initial contribution from the asset cost
- Bankers – Salary not Domiciled – 48 months ( for Bankers only) minimum of 40% initial contribution from the asset cost
- You have access to their comprehensive dealer/partner network to help you find your car.
- Affordability, Choice, and Flexibility
Requirements
- You must have an active account that is at least 6 months old with the Bank.
- You should be at least 18 years old at the loan application date and a maximum of 59 years.
- You must not have any history of dud cheques.
- You must have a satisfactory credit report.
- You must be a permanent and confirmed employee of a reputable organization.
- The salary account must be domiciled in Stanbic IBTC.
- You must have a minimum Income level of N90,000 monthly.
- You must provide confirmation of receipt of the first salary in the account.
A New Loan Product from Stanbic IBTC that Can Finance a Car
A new Product called PAAS- Personal Assets Acquisition Scheme. For salary-domiciled customers and pre-approved Employers only.
Feature
- You have Access to Vehicles, both new and used, but with a maximum loan limit of N15m and a tenor of 48 months.
- General Combo financing
- Management fee
- Asset Insurance cover. For any accident and damage to the assets financed
- Life insurance cover for job loss, permanent disability, and death only
- No initial contribution. 100% financing.
- Maximum Turn Around Time (TAT) of 24hrs from submission of complete documentation
Contact Information
Tel: 01 422 2222
Email:CustomerCareNigeria@stanbicibtc.com
Stanbic IBTC Bank allows you to borrow up to 100% of the vehicle cost, with loan terms of up to 5 years. They have a quick and easy application process.
Autochek Financing
Autochek is a company that focuses on providing innovative automobile technology solutions. Their most recent offering, Autochek financing, allows customers to buy their dream car and pay for it in monthly installments.
Autochek Financing is one of the best options for getting a car loan in Nigeria.
Features
- The amount of the Autocheck car loan varies according to the value of the car being purchased. Regardless, customers will make a down payment of 30% worth of their preferred car.
- The repayment period for an Autocheck car loan in Nigeria ranges between one and five years, depending on the loan amount and the borrower’s preferences.
- Autochek car loan interest rate is 15% per annum.
- Repayment is done in monthly installments, and the loan can be repaid before the end of the loan term without penalty.
Eligibility
To be eligible for an Autochek car financing service, applicants must meet certain requirements, which include the following:
- The applicant must be at least 18 years old.
- The applicant must be a Nigerian citizen or a permanent resident.
- Applicants must have a steady source of income.
- The applicant must have a good credit score.
Because of this, only salaried individuals or registered business owners are eligible to apply for a car loan through Autocheck. An Autocheck loan is not for you if you do not have a consistent source of income.
Application Requirements
- A completed application form, which can be printed from their website.
- A valid means of Identification (e.g., Your National Passport, Driver’s License, National ID Card, or Voter’s Card).
- A utility bill that is no more than three months old from the date of your application.
- Your work ID
- Employment Confirmation Letter if you are a salary earner or a CAC certificate / BN1 document if you are a business owner.
- Your bank statement may also be required.
Once all these are ready, you can proceed to apply for a car loan from Autocheck.
Benefits
- All Autochek car loans include insurance, annual maintenance, and registration to make the financing term as easy and comfortable as possible. These services are available at the customer’s nearest Autochek center.
- In addition, each customer is assigned a service adviser for the duration of the loan. The adviser ensures that the vehicle has regular maintenance checks.
Contact Information
Head office: 1, Sylvia Crescent Anthony Village, Anthony, Lagos
Email: info@autochek.africa.com
Tel: +234 700-288-6243
Overall, Autochek financing is an excellent option for anyone looking to purchase a vehicle without having to pay for it all at once. Customers can easily achieve their aim of purchasing an automobile with their simple monthly payment.
Betacar Financing
Betacar is an innovative e-commerce website dedicated to revolutionizing the car-buying experience in Nigeria. The BetaCar Financing loan scheme allows salaried individuals and company owners in Nigeria to purchase certified Tokunbo cars and pay for them over a period of 12-24 months.
How It Works
- Search available cars to select your preferred car.
- Use the car loan Calculator on your selected car to check the upfront deposit required, the monthly repayment, and the period of payment.
- Click on the “Apply for Loan” button and fill out 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, so start preparing all your documents.
- Visit Betacar Office Headquarters for inspection and test drive.
- Scan all required documents and submit them.
- Their team will review and let you know once your application package is completed.
The most notable feature of BetaCar Financing is that the car is usually ready for pickup within one week after submitting a complete application package.
Betacar offers loans up to 70% of the vehicle’s value with flexible repayment terms of 12 to 60 months. Their interest rates are very competitive, starting from 7% per annum. Additional benefits include insurance coverage for your vehicle, quick loan processing, and the option of early repayment to save on interest charges.
Contact Information
Head Office: Block 126, Plot 1, T.F Kuboye Road, Lekki Phase 1, Lagos, Nigeria
Email: info@betacar.ng
Tel: 0809-4600-007 0809-4600-008
Betacar aims to make vehicle ownership accessible to more Nigerians through its affordable financing solutions. If you need a car loan with minimal hassle, Betacar should be at the top of your list.
Comparing Interest Rates and Repayment Terms
When comparing interest rates and repayment terms among car loan companies in Nigeria, a few key factors should influence your choice.
The interest rate determines how much you’ll pay for the loan overall. Lower rates mean lower costs. However, some lenders may offer lower rates but charge higher processing fees, so consider the total cost of the loan.
Repayment terms refer to the length of the loan. Longer terms, like 4-5 years, mean lower payments but higher interest paid. Shorter terms of 1-3 years minimize interest but mean higher payments. Choose a term that fits your budget.
Some lenders also offer flexible or early repayment options. This allows you to pay off the loan faster and save on interest if you have extra cash. Look for lenders that don’t charge fees for early repayment.
Finally, check if the lender offers fixed or variable interest rates. Fixed rates remain the same, giving predictability. Variable rates may decrease but often increase, creating uncertainty. For stability, fixed rates are usually preferable.
Comparing these key factors among top lenders like [Lender 1], [Lender 2], and [Lender 3] will help you find an affordable loan that matches your needs. Check their websites for current rates and offers to make the best choice for your new set of wheels.
Tips for Getting Approved for a Car Loan
To get approved for a car loan in Nigeria, follow these tips:
- Do your research: Check your credit score and report for errors before applying. Review rates and terms from different banks and credit unions to find good offers.
- Improve your credit: Pay down debt and make payments on time. Apply for a credit-builder loan. Check if a co-signer with good credit can help.
- Provide income proof: Most lenders want to see pay stubs, tax returns, or bank statements to verify your income amount and stability.
- Make a good down payment: A larger down payment, like 20-30% of the vehicle’s cost, shows you’re serious and can get you a lower interest rate.
- Choose the right vehicle: Pick an affordable, dependable vehicle that will last long. Newer models usually qualify for lower rates.
- Shop around at different places: Compare different banks, credit unions, and online lenders to find the best deal. Each may evaluate you differently.
- Negotiate the best terms: Once approved, negotiate the lowest possible interest rate and fees. Even small changes can save money.
- Read the fine print: Carefully review the final paperwork to ensure the agreed terms, like the APR, loan length, and payments, are correct before signing.
FAQs About Car Loans in Nigeria
Here are some of the most asked questions about Car Loans In Nigeria and their answers.
Do I need a down payment for a car loan in Nigeria?
Most lenders will require a down payment, usually 10-30% of the vehicle’s purchase price. The higher your down payment, the lower your interest rate and monthly payments will be.
Are car loans in Nigeria secured or unsecured?
Car loans in Nigeria are secured loans, meaning the vehicle you purchase acts as collateral for the loan. If you default on payments, the lender can repossess the vehicle. Interest rates for secured loans are usually lower since the lender has less risk.
What credit score do I need for a car loan in Nigeria?
Most major lenders like Zenith Bank and GTBank will require a minimum credit score of 675-750 and above to qualify for a car loan. The higher your score, the better your interest rate will be. If you have a score below 675, you may still qualify but with a higher interest rate or by providing a larger down payment.
What is the interest rate on car loans in Nigeria?
Interest rates for car loans in Nigeria range from 17-30%, depending on factors like your credit score, down payment amount, loan term, and the vehicle you choose. Newer vehicles and those with lower mileage typically qualify for lower rates.
Conclusion
At the end of the day, choosing the right car loan company for you depends on your needs and financial situation. Do some research, compare interest rates and fees, and make sure you understand all the terms and conditions before signing anything.
The companies on this list are a great place to start, with competitive rates, lots of experience lending in Nigeria, and good customer service. No matter who you choose, make your payments on time, keep your credit in good shape, and that new set of wheels will be all yours before you know it.