Car Loans Explained – How to get a Car Loan in Nigeria

Car Loans Explained - How to get a Car Loan in Nigeria

Car loans can be perplexing and intimidating, particularly if this is your first time purchasing a vehicle with a loan . There’s a lot to learn about everything from interest rates to down payments to the term of your loan. However, the more you know about vehicle financing, the more prepared you’ll be to negotiate the best offer for you.

What is a Car Loan?

A car loan (also known as an automobile loan, or auto loan) is a sum of money a consumer borrows in order to purchase a car.

If you don’t have enough funds to buy a new automobile outright, a car loan can assist you do so, whether the vehicle is new or used. You borrow money from a lender to buy a car when you receive an auto loan. You agree to repay the cash over a certain time period, plus applicable fees and interest.

Car Loans Explained - How to get a Car Loan in Nigeria

Auto Loan (car Loans) vs other Loans

The value of the car serves as collateral for the lender in the case of an auto loan. The lender is protected in the event of a default. In other words, if you fail to make payments or default on your loan, the bank has the right to confiscate the underlying asset. In this instance, they are free to take your vehicle.

The main distinction between auto loans and other consumer loans is that an auto loan is a secured loan that must be used to purchase a car, whereas other personal loans can be used to buy nearly anything and are not secured.

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Key Terminologies to know

Before we get into detail about how car loans work, let’s take a moment to get familiar with some of the most common terms you may come across as you explore loan options.

  • Annual percentage rate (APR) — APR is the amount you’ll pay to borrow the money, including interest and fees, given as a yearly percentage. The higher the APR, the more you’ll owe in return for the loan.
  • Down payment — This is a payment you make upfront toward the cost of the car. It can be cash, the value of a vehicle trade-in or both. The down payment helps lower the overall amount you need to finance — which can mean lower monthly payments.
  • Loan term — Also called loan duration, this is the length of time you’ll have to pay off your loan. Keep in mind that the longer your loan term, the more you’re likely to pay in interest.
  • Monthly payment — The monthly payment is the amount you owe each month. It’s made up of principal, interest and other fees, if applicable.
  • Principal — This is the amount that you are borrowing minus fees, penalties, interest and other costs.
  • Total cost — Total cost refers to the total loan amount, or overall principal and interest, you’ll pay over the life of your car loan.

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Factors to consider during a car loan deal in Nigeria

1. Car loan Interest rate: Seek out a car loan with a low-interest rate. You most likely have other financial obligations, so a high-interest auto loan is the last thing you need.

2. Monthly payment terms and duration for the car Loan: Look out the car’s monthly installments to see if you can afford to part with that much money every month without it putting a strain on your finances. Are you able to make the payment within the agreed-upon time frame?

If you’ve thought about everything, move on to the next portion of this article, which covers where to secure a car loan in Nigeria.

How to Get a Car Loan in Nigeria

Obtaining a car loan in Lagos, Nigeria, or any other state is far less difficult than you might believe. Whether you want to start a transportation company or just need a car to travel around, there are measures to take in order to receive a car loan in Nigeria in 2022. For example, you should have a monthly salary of between N150,000 and N250,000. If you meet the first criterion, you will be instantly approved for a car loan. Check out the standards that are typical among auto loan firms in Nigeria, which are outlined below.

Requirements and steps to get a car loan in Nigeria

A. Identify your dream car and it costs

What type of car are you going to acquire , will it be a new or used car, What model will it be, what do I want to use the car for and what is it cost?. All these are questions you are to first of all answer Before you purchase your vehicle.

Vehicle financing is a serious deal and should be taken so. Making a choice upfront will help you make informed decisions that’ll not be burdensome on you. Folks looking to go into the Uber business should know the type of car that is suitable for them. Knowing the car and how much it costs makes the car loan process easier.

B. Verified source of income or salary

You must have a consistent source of income when applying for a car loan. This is essential to determine whether you have the financial means to pay for your selected car over the term of the car loan arrangement. Financial organizations prefer to give loans to salaried individuals and business owners who have a consistent stream of income and can repay the loan without difficulty. If you do not meet this condition, you may have difficulty obtaining a car loan in Nigeria.

C. Look for trusted car loan companies

If you’ve completed the first two steps, the next step is to hunt for reputable vehicle loan providers. There are various car lending platforms and Nigerian banks in the country that have established themselves as vehicle loan service providers. They mostly assist customers in obtaining their own car, whether new or used. These organizations have many vehicle loan features with structured repayment plans that individuals must study to determine if they fulfill the criteria. Below we shared a few companies that offer car loaning services.

 Where to get a car loan in Nigeria

There are numerous auto loan firms in Nigeria if you are seeking for where to get a loan for a new car. Similarly, there are numerous financial institutions in Nigeria that offer auto financing. These institutions are going to be divided into Banks that offer car loan services and Car loans Companies. To facilitate the car loan, they all require you to fill out a form and provide documents. Check out the list below for further information:

Banks that offer car loan services in Nigeria

1. Access bank car loan

Access bank provides customers with a user-friendly car loan feature that’ll help them acquire a new or used car in an easy way. The loan is only open to salary account holders, small-medium enterprises (SMEs), and corporate bodies. Access bank is in collaboration with various car dealers in Nigeria like Autochek to give customers more options to choose from a wide array of auto brands. Only recently, the bank partnered with Hyundai Motors Nigeria to launch a new car purchase scheme titled “Buy Now, Pay Later”. This payment plan allows customers to start paying in 3 months’ time. They are to pay 200,000 monthly for a period of 4 years.

Access Bank car loan features

  • Open to salaried income persons, SMEs and Corporates
  • Equity contribution as low as 10% of the invoice value
  • Competitive pricing
  • Up to 48 months tenor
  • Wide variety of vendors to choose from

2. FCMB auto loan

FCMB runs a customer credit scheme where qualified individuals are allowed to make a part payment for car acquisition. With this scheme, customers can get up to ₦30 million car loan and pay during a stipulated time frame which is 3 years. The interest rate is 20% per annum,

FCMB car loan features

  • Auto-loan amount: Up to ₦30 million
  • Interest Rate: As low as 20% per annum
  • Equity Contribution: As low as 30%
  • Loan repayment tenure: up to 36 months

3. UBA auto loan

Just like other Banks offering car loan services, the UBA auto loan product allows customers to drive their first car and repay at their own convenience. Not only that, but customers also have the opportunity to upgrade to a higher model. Auto brands approved for this car loan include Hyundai, Mercedes-Benz, Nissan, Kia, Volkswagen, Suzuki, and Ford.

UBA car loan features

  • Access to reputable auto dealers/retailers
  • Convenient repayment terms; up to 48 months
  • Competitive interest rate
  • Maximum loan amount of N15m
  • Minimum equity contribution of 30%
  • Mandatory comprehensive insurance and vehicle tracking

4. Stanbic IBTC

Stanbic IBTC Bank offers car loans for both new and used vehicles with a maximum loan limit of N15m and tenor of 48 months. All vehicle brands are also covered in the offer. The bank offers new and existing customers the opportunity to get the car of their dreams with an affordable, convenient and structured repayment plan.

Stanbic IBTC car loan features

  • Competitive interest rates
  • A variety of partner dealerships to help you find the best car
  • Flexible payment terms with a 4-year tenure
  • A monthly electronic statement to track your repayments

Car loan companies in Nigeria

Here are the popular ones that we know of:

1. Betacar

Betacar is an e-commerce car lending company that lets people acquire secondhand cars and pay for them installmentally. For salaried individuals and business owners, the organization provides an economical and flexible car finance solution. Borrowers must pay 30% of the loan amount up front, with the remainder spread out over 12 to 24 years.

2. Creditville limited

Creditville Limited is an online money lending business that offers qualified clients payroll-based loans. Car leasing and hire purchase is one of their products, which is meant for people who want to own a car through hire purchase.

Pros and Cons of Car Loans in Nigeria



1. One of the benefits of using a car loan to purhase your dream car is that you might have fast access to your desired car. You don’t have to wait many years or pay in full before you ride; instead, you can ride now and pay later.

2. Cars are expensive, and they may consume all of your savings, leaving you with numerous unfulfilled requirements. Car financing, on the other hand, allows you to purchase a car while also meeting other financial commitments that require quick attention.

3. Paying off your auto loan on time contributes to trust and a positive credit record. Your creditworthiness will serve you well in the future.


1. People are given loans with interest rates and costs attached by car lending firms. Some of the interest rates are extremely high, making repayment difficult at times. Banks, for example, lend at interest rates ranging from 18 percent to 30 percent per year, making it difficult for people to obtain credit.

2. Loans are expected to be paid back over a set length of time. Failure to pay on time can result in an additional cost. And this punishment essentially raises the amount that must be repaid.


Note: Don’t be in a hurry to get a car loan. Do proper investigations before taking advantage of the car loan services mentioned

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