Connect with us

Loan

Procedure for Applying for a Car Loan in Nigeria

Published

on

car loans

The process of getting approval on loans in the Nigerian banking system has always been very difficult because banks charge bribes that run into hundreds of thousands or even millions.

The process of getting a car loan in Nigeria is not straightforward. You need to check the location of local banks and any other financial institutions that offer car loans, how you will get all the necessary documents for processing your application, and when you should apply for it.

This article has all the answers about applying for a car loan in Nigeria, including how to find the location and contact local banks.

What is a car loan?

A car loan is a loan that is used to purchase a car. The loan is typically paid back over a period of time, with interest. In order to apply for a car loan in Nigeria, there are a few things that you will need to do.

When you take out a car loan, you are borrowing money from a financial institution with the understanding that you will repay the debt in monthly instalments, including interest. Keep in mind that when you secure a car loan, you do not have full right to your newly purchased car until you repay your debt. In other words, the car is collateral for the loan.

     SEE ALSO:   How To Start A Loan Business In Nigeria

When you’re looking to get a car loan, it’s important that you do your research and ask the right questions. This will help you avoid getting scammed by predatory lenders and ensure that you’re getting the best deal possible.

What are the requirements for applying for a car loan in Nigeria?

You will need to provide some documents before you can apply for a car loan in Nigeria. Valid proof of identification, like an international passport or National ID, is required. Additionally, you will need to provide a recent bank statement. Knowing the eligibility requirements ahead of time will help you gather all the necessary information and avoid delays in the application process.

In order to apply for a car loan in Nigeria, the following requirements must be met:

  • The applicant must be a Nigerian citizen with a valid means of identification
  • The applicant must be at least 18 years old
  • The applicant must have a regular source of income
  • The applicant must have a good credit history
  • The applicant must have a down payment of at least 20% of the car’s value

Step-By-Step Procedure on Car Loan Application in Nigeria

Step 1: Identify the kind of car you intend to buy

The first step is to identify the kind of car you want to buy. There are different types of cars available in the market, so it is important to have a clear idea about the type of car you want. You can either buy a new car or a used car. If you are buying a new car, you will have to pay the full price of the car. However, if you are buying a used car, you will have to pay a lower price.

   SEE ALSO:10 Best Loans Platforms In Nigeria Without Collateral

Find a car loan that suits your needs. There are different types of car loans available in the market, so it is important to find one that suits your needs. You can either apply for a car loan from a bank or an online lender. If you are applying for a car loan from a bank, you will have to meet the eligibility criteria of the bank. However, if you are applying for a car loan from an online lender, you will not have to meet any eligibility criteria.

Once you have found a car loan that suits your needs, you will have to submit your car loan application. You will have to provide your personal details, employment details, and financial details. After you have submitted your car loan application, the lender will review your application and decide whether to approve your loan.

Step 2: Find out the price and when the car will arrive once you pay

If you have decided on the car you want to buy, the next step is to find out the price and when the car will arrive once you pay. The price of the car will include the cost of the car itself, shipping, and any other fees. You can find this information on the dealership’s website or by contacting them directly. Once you have the price, you can begin the process of applying for a loan.

Step 3: Find out if your dealer has an existing arrangement with your bank

If you are buying your car from a dealer, it is important to find out if they have an existing arrangement with your bank. This can make the process of getting a loan easier and faster.

If the dealer does not have an existing arrangement with your bank, you can still apply for a loan. However, the process may take longer.

Step 4: Banks offer several products that outline their terms for a car loan

Banks offer several products that outline their terms for a car loan. The products may differ in the interest rate, tenure, down payment, etc. It is essential to compare these products before applying for a loan so that you can choose the best option.

Step 5: Do get in touch with your account officer, and request a car loan

Once you have gathered all the required documents, you will need to attach a copy of your payslip, the final invoice for the car, and a copy of your employment letter.

You can then take this to your account officer or make enquiries from their customer service on how to go about applying for a car loan with that particular bank. If you decide that you want to approach another bank, it is best to open an account with them so that you can be privy to their rates and procedures.

The final step in the process is to get in touch with your account officer and request a car loan. The account officer will likely have a few questions for you, such as:

  • How much money do you need to borrow?
  • What is the purpose of the loan?
  • How long do you need the loan for?
  • What is your repayment plan?

Once you have answered these questions, the account officer will be able to provide you with more information on the car loan and help you complete the application process.

Advantages Of A Car Loan In Nigeria

A car loan is a type of loan that is specifically used to purchase a car. This type of loan is becoming increasingly popular in Nigeria as it offers many advantages, such as:

  • You can purchase your dream car even if you are financially incapacitated.
  • Car loans come with low-interest rates, making them more affordable than other types of loans.
  • The application process is simple and straightforward, so you can get the money you need quickly and easily.
  • A car loan gives you the opportunity to own a car without having to pay the full amount upfront.
  • A car loan can help to improve your credit score.
  • A car loan can be used as collateral for other loans.
  • A car loan can help you budget for a new car.
  • A car loan can be used to finance a new or used car.

Your insurance rates may be lower when you have a car loan. Additionally, you can sell your vehicle after you pay off the car loan. This allows you to get some of your money back and use it for other purposes.

Disadvantages Of A Car Loan In Nigeria

Car loans in Nigeria can be a great way to finance the purchase of a new vehicle. However, there are some potential disadvantages to consider before taking out a loan.

Car loans can be expensive. Interest rates on car loans in Nigeria can be high, which can add to the overall cost of the loan.

Car loans can be difficult to qualify for. If you have a poor credit history, you may have trouble qualifying for a car loan.

Car loans can be difficult to repay. If you’re not careful, you could end up in a situation where you can’t afford to make your monthly loan payments. This could lead to the repossession of your vehicle.

In addition, many auto-financing institutions that offer car loans in Nigeria charge outrageous interest rates. Sometimes, the fee becomes almost impossible to pay back, which can put the borrower in a difficult financial situation.

One of the biggest disadvantages of securing a car loan in Nigeria is that you might lose your car if you are unable to repay the loan. Additionally, when you borrow money to buy a car, you end up paying more than the amount you originally borrowed because of the interest rate.

Things To Know Before Applying For A Car Loan In Nigeria

1. Know The Car You Want To Buy

Before you start looking for a car loan, it’s important to have a clear idea of the car you want to buy. This will help you narrow down your options and make it easier to find a loan that fits your needs.

Think about the make and model of the car, as well as the features you want. It’s also important to consider how much you can afford to spend. Once you have a clear idea of the car you want, you can start shopping around for loans.

2. Know the Eligibility Requirements

Before you start the process of applying for a car loan in Nigeria, it’s important to know the eligibility requirements. In order to be eligible for a car loan, you must:

  • Be a Nigerian citizen
  • Be at least 18 years old
  • Have a valid Nigerian driver’s license
  • Have a good credit history
  • Have a steady income

If you meet all of the above requirements, then you can begin the process of applying for a car loan.

3. You Should Not Request More Than You Can Pay

If you’re thinking of taking out a car loan in Nigeria, there are a few things you should know before you apply. One of the most important is that you should not request more money than you can realistically afford to pay back.

Taking out a loan you can’t afford can put you in a difficult financial situation, and you may end up defaulting on the loan. This can damage your credit score and make it difficult to get a loan in the future.

So, before you apply for a loan, make sure you know how much you can afford to borrow and make sure you only request that amount. This will help you avoid any financial difficulties down the road.

4. Know the current Interest Rate

If you’re looking to finance a car in Nigeria, it’s important to be aware of the current interest rates. The interest rate on a car loan can vary depending on the lender, the type of loan, and the length of the loan. It’s important to shop around and compare interest rates before you apply for a loan. You can use a loan calculator to estimate your monthly payments and compare different interest rates.

5. Know the Repayment Plan

Before you apply for a car loan in Nigeria, you should know the repayment plan. The repayment plan is the schedule of payments that you will make to the lender. This schedule will include the amount of each payment, the date of the payment, and the interest rate. You should also know the term of the loan, which is the length of time that you will make payments.

6. Have A consistent inflow of funds

If you want to be approved for a car loan, you’ll need to show that you have a consistent income. This means that you’ll need to have a steady job and show proof of income, such as pay stubs. Lenders will also want to see that you have a good history of making payments on time.

Conclusion

It is important to note that the interest rate on a car loan in Nigeria is usually higher than that of a personal loan. However, a car loan can be a good option if you are looking to finance a new or used car. The process of applying for a car loan in Nigeria is relatively simple and can be done online or in person at a bank or financial institution.

 

Comments

comments

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Loan

Benefits Of Having A Good Credit Score

Published

on

To start with, what is a Credit Score? At least if we know what Credit Score it, it would be helpful to know why having a good Credit Score is important.

Credit score model was created by Fair Isaac Corporation commonly known as FICO, mostly used by financial institutions like Banks. Credit score is a portion of someone’s credit history. It indicates how likely a person is to pay a debt. When someone has a higher credit score, the better he/she looks to possibility lenders and the higher his/her chance of getting (more) loan or credits from a creditor or lender.

a good credit score

Benefits of Having a Good Credit Score

Generally, a credit score is based on:

  • How likely a person is to repay a debt
  • Determines what kind of loan one can get
  • Credit utilization
  • Length (Period/tenure) of credit utilization
  • Types of credit i.e. how many sources of borrowing e.g. Mortgage or car loan.

Do you know that a good Credit score can work in your favour while trying to get a job? Credit scores ranges from excellent to poor:

  • Excellent (800 – 850);
  • Very good (800 – 750);
  • Good (700 – 650);
  • Fair (600 – 650);
  • Poor (550 – 300).

To acquire a good credit score, you must be at the scale of 700 and above which helps you get low interest rate when you get a loan.

Here are some benefits attributed to having a good credit score.

1) Loan Interest Rate Reduction

A good credit score will earn you a low interest rate because the loan you obtain is linked to the history of your credit score. If you are an excellent credit scorer, you are eligible for a low interest rate on all loans given to you.

2) Ability To Bargain

A good or excellent credit score gives you the ability to bargain and your credit score is like collateral which guaranteed your ability to pay when you obtain a loan.

3) High Chances Of Getting Hired

When it comes to hiring, most companies want to know who they’re bringing into their system, in some cases, they make enquiry on candidate’s credit history. They request for your permission to perform a credit score check before sending you an offer letter. A good credit score is evident that you are a responsible citizen and good for their company. Most companies reject individuals with poor credit score and such applicants tend to find it difficult to get their desired job.

4) Easy Rental Application Process

Most landlords and property management companies look into a person’s credit score before renting out their properties. To acquire or rent a property easily, your credit score must speak well of you which means you must have a good or excellent credit score.

Most times, if you have a good or excellent credit score, you might not need a consigner. Your credit score history gives the landlord or property manager a sort of assurance that you will pay back as at when due.

5) A Good Reputation

A good credit score is something to be proud of; it helps you to stand out and gives you upper hand in almost everything. It increases your chances of getting things you want/need easily.

6) Less Insurance Payments

People with fair credit score have been observed to pay much more for their home insurance than those with excellent credit score. Most insurance companies use information from an applicant’s credit report and insurance history to develop his/her insurance risk score. So, what they do often is to place higher insurance premium on people with low credit scores.

7) Less Stressful Life

The benefits of having a good credit score go beyond your financial life; it makes you happy and live a less stressful life. It also help you focus on building your career and life since you don’t have to constantly worry about money or your account becoming red.

8) Reduction On Phone Plan Deposits

Most phone companies look into your credit card history before qualifying you for a phone plan. Your credit score distinguish you from high phone plan deposit or low phone plan deposit. If your credit score is low, you run on the plan of Pay As You Go but if you have a good credit score, you are qualified for a reduced deposit on phones.

9) Increased Credit Limits

Good credit score gives you increased credit limits which means lenders can borrow you more without the fear of you not paying back as at when due. A good credit score will increases your chance of getting more lenders when you apply for loans.

10) Shape Your Financial Future

A good credit score plays an important role in how you shape your financial future. Keeping a good credit score helps you greatly when making plans for a secure future like getting married, buying a house, starting a business, getting a car, huge investment and so on

Conclusion

Working toward an excellent credit score takes a lot of work. You have to be determined, focused, and diligent about the payment of your bills. Stick to your budget, avoid impulse buying, and buy what you need and can afford. Having a good credit score will create access to a lot of benefits which pay off for the effort you have put into getting a good credit score and when the benefits come, make sure you enjoy it to the fullest.

Comments

comments

Continue Reading

Loan

Seven Out Of Ten Bank Loans Issued To Lagos State Residents

Published

on

Lagos State

Comments

comments

Continue Reading

Business Ideas

How To Start A Loan Business In Nigeria

Published

on

One of the major challenges faced by SMEs is how to get money to start or run the business smoothly. Adequate capital is very important to the success of any business especially when the business is still at the startup stage. At this stage, adequate funds are needed to keep it running even before the profits starts to stream in.

In the quest to get adequate funding for their businesses, many business owners go from bank to bank trying to secure loans. This, of course could be frustrating and cumbersome most of the time. Due to the frustrating process and requirements involved in getting bank loans, many businesses have been forced to quit, relocate or change business lines.

Going to moneylenders for business financing is arguably a better option for getting start-up and running capital for most businesses today. Besides business and business financing, there are many individuals/paid employees today who are also in need of extra cash to pay for their piling bills or take care of the ever-increasing high cost of living before the salary comes in.

Starting a money lending business or loan business could, therefore, become a good choice for an aspiring entrepreneur who is interested in venturing into the Financial Services industry. Of course, you must have a considerable start-up capital and a good understanding of how the financial business climate works. By starting a loan business in Nigeria, you would solve a substantial part of the problem faced by many Small and Medium Enterprises (SMEs) and make appreciable gain in the process.

Starting a loan business in Nigeria

Starting a loan business in Nigeria

What is Loan Business About?

Loan business or Money lending is simply giving another individual/business money with a written agreement that the said individual/business would pay back the money with an agreed upon interest. It is a business that is lucrative and is not as heavily regulated as other financial institutions like Banks, Insurance Companies, Mortgage Houses, Mutual Funds Companies, etc.

This business of money lending has been delegated to various states in Nigeria and is being regulated by them. For example, in Lagos State, Section 4 of the Money Lenders’ Law of Lagos state defines a money lender as someone who lends out money at an interest or lends an amount out in lieu of getting paid back a larger sum of money. What this simply means is that anyone who lends money to get interest later on it is presumed to be a money lender. Note that this law only applies to people who are actively involved in the money lending business and not individuals who lend money to friends who are in need.

Business Structure of Loan Business in Nigeria

The main selling point for money lending businesses or loan businesses in Nigeria is the assurance of getting back an interest on a sum of money loaned out to an individual. It is no news that lending money can be a risky thing to do, especially to start-ups. This is why the interest rate has to be substantial to cover the potential risk of losing a particular investment.

A money lending business requires you to develop a good business structure and obtain all the necessary government licences. Starting out, you would most likely have to use your own money as a starting fund for your loan business. If this is what you wish to do which I strongly advise, you would, therefore, be running a Private Lending Business. “Private” in the sense that you would be the sole financier of the business without the need for investors.

A moneylender’s success lies in his/her ability to spot people that truly deserve a loan and weed-out those who could cause trouble in the future after obtaining the loan. Putting down a proper business plan and conducting adequate feasibility studies before starting the business will open your eyes to the likelihood of success or failure of this business and also the future growth opportunities it has.

There are various ways by which moneylenders offer their services such as checks cashing, instalment loans, advances on paydays, mortgage and other small credit services. These types of services cannot be provided by large banks.

Why Licensing Is Fundamental in Money Lending Business

Just borrowing people money does not automatically make you a moneylender. To be in this line of business, you have to be a licensed moneylender by the relevant government authority.

Before venturing into this business, you have to understand what you can and cannot do to get back the money owed you. There are situations where/when borrowers might not want to repay loans. In this case a licensed moneylender can institute an action in Court to recover the principal loan including the accrued interests.

On the other hand, a court action cannot be instituted by an unlicensed moneylender in a case of a borrower’s refusal to pay back the loan and/or the interest on the loaned sum. The only step he can take is to stand as an individual in court to get back the actual money borrowed but would have to forfeit the accrued interest on the loan.

Procedure for Obtaining License

To obtain your license for starting a loan business in Nigeria, please, visit any Magistrate Court in Nigeria having jurisdiction in the area you want to run the business, then apply with the following supporting documents:

  1. A cover letter addressed to the Chief Magistrate on your Company’s letterhead.
  2. Certified True Copy of CAC Form 2.
  3. Certified True Copy of CAC Form 7.
  4. Memorandum and Articles of Association of the Company.
  5. Certificate of Incorporation.
  6. Tax Clearance of the Applicant.
  7. Police Clearance from the Commissioner of Police.
  8. Evidence of Maintenance of current account with a licensed Bank.

After your application and the supporting documents have been reviewed and vetted by the office of the Chief Magistrate, a Letter and Forms B and C will be issued to you.

Please note that the objects in your Company’s Memorandum of Association must be clearly stated as a financial service or money lending business. Also, N20, 000,000 (Twenty Million Naira) is the minimum share capital required.

Upon getting the necessary Court documents, proceed to the Ministry of Home Affairs and Tourism to apply with the under-listed accompanying documents.

  1. Application letter.
  2. Money Lender Ordinance [Form B] 1938 – from Magistrate Court.
  3. Duly completed Form C- from Magistrate Court.
  4. Police Report from Commissioner of Police showing- fingerprints of individual Applicants/Directors/ Proprietors/.
  5. 3-year Tax Clearance Certificate, [including current year] / Development Levy for each individual Applicant/ Director/ Proprietor.
  6. Pay as You Earn [PAYE] Certificate, Tax Clearance of at least two (2) of its directors, and evidence of payment of Company taxes.
  7. Copy of Certificate of Incorporation and CTCs of Forms CAC 2 & 7.
  8. Evidence of payment of Application fees.
  9. Evidence of maintenance of a bank account with a licensed bank.

The government officials would visit the intended office where you wish to or currently operate from for physical inspection. This is the final stage. During this visitation, your records will be inspected if your company had already been running for a while unlicensed, engaging in the business of money lending. Else, only the office premises and officers would be inspected. If this activity goes well and the officials are satisfied with the compliance of the office with the perquisite statutory requirements, the Money Lending License Certificate would then be issued to you or your company.

Tips for Running a Successful Loan Business in Nigeria

If you’re planning on starting a money lending company: Here’s a list of the things you need to keep in mind

  1. Charge interest rates that are appropriate to the risks involved in the loan;
  2. It is always good to start with a small market to be competitive;
  3. Confirm the credibility of your client from two to three sources before engaging them;
  4. Make sure to check your customer’s insurance especially in the case of big loan amounts;
  5. Maintain a professional office space; keep it clean.
  6. Keeping a friendly environment can help show your clients that they can trust you;
  7. Make sure to keep adequate documents of every detail of your loan; and when the time is right – you can expand;
  8. Avoid creating artificial geographical limits for your company

Conclusion

Money is an essential commodity for every human and it is always in constant demand. After getting some money, people tend to need more money no matter how much they have because human needs are insatiable; as humans, we always need more. We need money to start off a business, to take care of bills, to buy ourselves luxuries, even to pay off loans. These necessities of life make people seek out loans on a consistent basis and this is where the money lending business comes in.

Having explained what is involved in the business of money lending above, you should be able to start and successfully manage a loan business in Nigeria any time from now. I carefully explained the processes to follow if you want to start a money lending business.

It is worthy to note that money lending business can be risky and also involves a large amount of work just like most financial businesses out there. However, having a good business plan with adequate knowledge of the industry, operating a loan business can turn out to be a very profitable business to do.

In case you are looking for a reliable company to get funding to start your loan business, you should try Sumotrust. The company is reliable, tested and trusted when it comes to supporting businesses to attain great heights in Nigeria and beyond.

Comments

comments

Continue Reading

Trending