Loans

Auto Loans In Nigeria

Buying a car is expensive and at some point, you might think of using your entire saving to buy a car of your choice. This can make you financially handicapped due to how expensive it is to buy a car.

What if you can get an auto loan even here in Nigeria without passing through various paperwork with minimal interest and a longer debt tenor.

If this is what you’re looking for, then you’re in the right place. In this article, you’ll learn everything about how the auto loan process works and how to secure your first Auto loan

Before we dive into how to get your first auto loan, we need to look into some important things about the auto loans and what you need to check in an auto loan offer before requesting it. 

The truth is, everyone wants a car even when we don’t need them. The car gives an exciting and exhilarating moment in one’s life. Do you know that owning a car can be a motivation or a sign of progressive life? LOL, we ain’t gonna talk about that in today’s article.

Everyone wants to have his/her own car even if the place of work is not far from the place of living. Jumping from one public transport to another can be annoying sometimes most especially in places like Lagos Nigeria where people almost fight daily because they want to jump into public transport and go to their place of work, if you live in Lagos mainland, you’ll understand what I mean.

What if you can avoid that by owning your own car without breaking the bank to purchase one for yourself! Yes, you heard me. You can be a car owner with little money.

Also Read: Lcredit loan review

What Is An Auto Loan?

An auto loan is a form of financing that allows someone to borrow money to buy a truck or car of his choice. This kind of loan sometimes comes with an interest and repayment tenor of three to five years depending on the country or company.

This loan tenor defers from each and every company because of their term and conditions. This is why it is advisable to compare different auto loan companies and know which one is good for you.

The auto loan helps you in making the right financial decision in other to buy a car of your choice without stress. We all know that getting a brand new car can be expensive, some of these cars cost more than $10,000 and it will be unwise to buy one with your last save when you’re on a monthly salary where you pay out your other important bills.

The Auto Loan allows you to pay back the money monthly like a stipend until you’re able to finish paying for the car.

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How Does Auto Loans Works?

Auto loans work like a simple interest loan where the lender expects the borrower to repay back the loan amount and the interest attached to the car.

This loan is paid installment every month by the borrower until he or she finishes paying the loan and the interest

Here is an example of an auto loan
For you to get an auto loan of a car worth $20,0000, you’ll need to pay an upfront fee of like $2000. You will be left with an $18,000 principal fee.

How To Get An Auto Loan

Getting an auto loan is very easy and straightforward. For you to get the loan you need to be qualified first. This is the first and most important thing. After that, you can consider the following;

Source Of Income

You need to have a stable source of income either on a daily basis or monthly basis. This will allow you to repay back your loan when the date is due. The lender will take the money from you every month and when you fail to pay it back it will become a problem for you and this will likely reduce your credit score.

Bank Statement

Before you can take an auto loan, you need to present your bank statement to the auto financing company. 

Some of these companies as for your statement for the last 6 months in other to know the inflow and outflow of money in your account. This will give them an insight and estimation to know if you’re capable of paying back your loan.

Also Read: Loan without BVN

How Long Is The Repayment Period Of An Auto Loan

The repayment period of a loan depends on different factors such as the price of the car, loan amount, and credit rating or score of the borrower. The borrower is expected to pay back the loan in monthly installments over the period of 1-5 years depending on the terms of the loan and the agreement the borrower and the dealer had.

In advanced countries like the United State where people are now buying cars more frequently, lenders are now giving loan tenors of up to 80 months which is 7 years. With this, borrowers now have a longer repayment period to pay a smaller amount of money compared to what they would have been paying for a short-term loan. 

The disadvantage of having a longer-term loan tenor is the fact that you’ll be paying a higher interest rate compared to what you’ll be paying for the short term. 

Pros And Cons Of Auto Loan

In as much as it is interesting to have a car of your choice or dream through an auto loan and paying back stipends every month. It also comes with its downside most especially if you couldn’t pay your loan. 
If it is your first time taking an auto loan, it is very important to have a repayment plan ahead in other not to default on your loan. 

Pros Of Auto Loan

There are different benefits and advantages of taking an auto loan, these are; 

Immediate Access To Your Car

An auto loan allows you to have access to your car almost immediately after completing the process of acquiring the car. This means that you can start driving your car instantly after getting it while you plan ahead on how to pay back the loan.

Increases Credit Score

Paying back your loan automatically increases your credit score and credibility. For every auto loan you take, there is always an agreed date to pay back the loan in full. When you pay on or before that date it builds your score and this will encourage lenders to contact you for available loan offers just for you.

Higher Competition Among Lenders

This is an advantage for you to get a loan of your choice with a good interest rate and tenor. With the rapid increase among lenders, every lending company is creating enticing offers in other to beat their competitors. This gives you a better option to select the lender that has your interest in mind.

Cons Of auto Loans

Some of these lenders that approve your auto loan, always ensure that you get a car that is not more than 5 years from the manufacturing date for some important reasons. This reason is that an auto loan is a secured type of loan, the car that is being sold to you through the auto loan is still used as collateral by the lender. If you fail to meet up and pay the agreed monthly installment, the lender has the power to seize the car from you with no refund of the money you must have paid unless if there is another new development on mutual consent.

The major reason why lenders try as much as possible not to offer old cars is that the value of cars is depreciating every day as time passes. If the seller is to sell your car to get back his money, he might be at a losing end of the trade. 

To avoid the lender taking your car if you fail to repay the loan for any reason, you can ensure you take a personal loan to finance the car. With this, the lender cannot take your car from you, but failing to pay the personal loan comes with a consequence.

Auto Loan Financing Companies In Nigeria

Conclusion

If you find this article helpful, don’t forget to share. For any question regarding Auto Loan In Nigeria, you can drop a comment, we’ll try to respond as fast as we can 

About the author

Jacob Efeni

Brillaweb is owned by Jacob Efeni, an internet marketer, Seo expert, writer, and affiliate marketer, under Brillaweb Connect. The blog is an information blog that gives you top-notch articles on Banking, Finance, Business, Mortgage, Insurance, Entrepreneurship, and Credit cards.

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