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Car Purchase For (Brave) Entrepreneurs

CAR LOANBank finance of any kind in Nigeria can be a daunting prospect. Yet for effective personal or business money management, leveraging (in this case car loans) is vital.

Now, either for pleasure or business, a new car is rightly considered a big deal. For some, it is the major pointer of how well a business is doing. After all, who wants to do business with a prospect driving an old car with dodgy air conditioning.

New cars are celebrated everywhere in the world. . .

. . . almost regardless of the reasons for acquisition. They even smell nice for weeks after purchase. And so far, no air freshener company has truly, successfully bottled this most memorable of smells.

But this is a country where the minimum wage can hardly buy a set of Pirellis on a small Toyota. So how does the average Joe experience the joy of owning a brand new car? Frankly, he doesn’t, and so let us look at car acquisition for the not so average Joe.

As it stands, virtually all banks in the country offer new car loans in some form or the other. Warning: please don’t go to Citibank to ask for a personal car loan.  Lest you are thoroughly embarrassed before being shown the door.

So, where to go? Over the next few weeks, we will break down the different flavored offerings from the different commercial banks in the country and give what we (scientifically) deduce to be the best option available. We will also offer advice on non-bank options while giving tips on how to get around some of the more stringent conditions attached to car loans by our friendly bankers.

Buyers considering car loans should be aware of the significant interest rates being charged on car loans

They must be prepared to tie their cash-flows to repayments over the next 3-4 years.

It is essential that car loan arrangements with a bank MUST allow borrowers pay down on the facility before the tenure runs out without a penalty clause of any kind.

In other words, if while dutifully paying off a car loan, the borrower gets a contract from a relative who has recently gotten a government appointment, he should be able to pay off the debt without having to pay extra charges. It is imperative that car loan terms are carefully examined before putting pen to paper.

We will examine which potholes to look out for and avoid in a typical loan offer and hopefully help deliver a smooth ride for prospective borrowers.

 

Ifeanyi Maduka

Originally published as “New Car Loans” @ www.car.com.ng

 

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