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.
How Does Auto Loans Works?
This loan is paid installment every month by the borrower until he or she finishes paying the loan and the interest
How To Get An Auto Loan
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.
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.
How Long Is The Repayment Period Of An Auto Loan
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
Pros Of Auto Loan
Immediate Access To Your Car
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
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.