Are you interested in obtaining a car financing in Nigeria soon? Take a seat and unwind. We have broken down these steps into manageable chunks for your convenience. Contrary to conventional belief, auto loans are straightforward to obtain if you know how.

What are the Step-by-step procedures to apply for a car loan in Nigeria?

To apply for a car loan in Nigeria, execute the steps listed below:

Step 1

Specify the type of automobile you wish to purchase. The banks are always willing to finance a vehicle, whether it is fairly used or brand new. This is a crucial stage, as you do not want to approach a bank or auto-loan company without a clear understanding of your needs. Thus, even if you change your view in the long run, you will have a guide.

Step 2

After payment, find out the price and when the car will arrive. That is relatively simple. Simply visit a car dealership and identify the vehicle you intend to purchase. After completing these steps, you can receive a proforma invoice - a prototype invoice.

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It is important to note that banks typically do not finance the entire cost of a car. They typically provide 60% to 70% of the funding, while you provide the remaining funds (equity). Say, for example, the car costs N2 million; the bank will lend you 60% of that, or N1.2 million, while you are responsible for the remaining N800 thousand. Again, you will be required to purchase auto insurance covering approximately 5% of the car's value. According to our estimation, this costs N100,000.

Step 3

Determine whether your dealer has an existing relationship with your bank. Some banks make arrangements in advance with automobile dealers to facilitate the loan process.

Step 4

The terms of a car loan are outlined in a variety of bank products, although the specifics are essentially the same. Ideally, you should utilize a bank that provides a product related to auto loans. If your bank does not, you have the option of continuing with them or trying another bank. However, nearly every bank offers these products.

Step 5

Contact your bank's account officer and request a car loan if the institution provides such promotions. If you prefer to approach a different bank, you can contact their customer service for information. You would be required to open an account with such a bank, however.

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Step 6

Now that everything has been resolved with your bank, you will be required to submit a formal auto loan application. You will be required to attach a copy of your paystub, the [final] invoice for the vehicle, and a copy of your employment letter. These details are required for processing by your account representative.

Step 7

After submitting your application, there is nothing left to do but wait for processing. The bank, via the account officer, will provide you with some documents to complete. These may include your confidential information, salary information, residential address, and the like.

Step 8

The bank will then present you with a letter of offer. The bank's offer letter is a document that details the loan amount, interest rate, repayment structure, fees, security, and other terms. Additionally, they might necessitate standing orders. This is a monthly directive from you to your bank to deduct funds from your paycheck.

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In any circumstance, you should always check your bank statement at the conclusion of each month to confirm the amount that was deducted from your account. If the discrepancy is greater than 10% in any given month (for example, your repayment schedule specifies N80,000 for a given month, but you receive N88,800), you should immediately contact your account officer for an explanation.

Step 9

The loan will be disbursed to your account once you accept the offer and satisfy all of the bank's requirements. However, the bank will only release the funds to you when it is about to issue a bank draft to the car dealer for the purchase of the automobile.

Step 10

After the bank issues a draft to your merchant, you receive the vehicle. The bank and yourself will jointly own the vehicle. Consequently, your identity and the bank's name will appear on all vehicle documentation. It is important to observe that banks typically do not require collateral. Their security consists primarily of the comprehensive insurance you purchase and the vehicle itself. Therefore, if you default on your payments, the bank can confiscate your vehicle and sell it to recover its loss.

Conclusion

Loan application is not advanced science. The preceding steps do not expressly adhere to a routine and dogmatic format. In general, there may be modifications to the loan's eventual processing. However, this is intended to satisfy a desire for automobile application operations. Additionally, read more about obtaining a car loan in Nigeria.

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