At one point or the other, the need to buy a new car in Nigeria will arise. Whether for business, easier transportation, or comfort, you will need to get a new car. However, buying a car is a milestone for most Nigerians, as it is not easy to afford. Be it a brand new 2020 model car, or an old tokunbo car; it is not easy to purchase a car. The need to get a car loan arises when you do not have sufficient funds to buy a car in Nigeria on an outright purchase.
What is a car loan?
A car loan is a loan given by money lenders or financial institutions for the sole purpose of purchasing a car. When getting a car loan, you can specify how much you need, and create a comfortable repayment plan. Car loans usually run from one to five years, although longer terms are available. The interest rate of car loans is highly dependent on the amount borrowed and the tenor of the loan. Larger loans usually have lower interest rates but it very advisable to only borrow the amount you can afford to pay.
Advantages of car loans
The main advantage of getting a car loan is the easy possibility of getting a car. Once you’ve bought your car, you can decide to use it for business or pleasure.
Disadvantages of car loans
There are a few disadvantages of getting a car loan in Nigeria. Cars generally depreciate, and are usually quite expensive to maintain. You would have to take it for servicing, purchase fuel, and fix issues that arise. Before the car loan is paid off, the value of the car may have depreciated to a lower amount than you initially bought it. In the case of houses or real estate properties; if you have trouble repaying a loan, you can sell the property off, get enough money to repay the loan and still have a little interest. But that is not the case for cars. If you intend to change your car regularly, a car loan may not be the best option.
Interest rates for car loans are also generally higher than personal loans in Nigeria. However, this is dependent on the money lender and agreement.
Things to consider before getting a car loan
Before opting-in for a car loan, there are a couple of things you need to consider, to avoid a financial crisis.
1. Ability to repay loans monthly
Before taking a car loan, it is important to properly evaluate your finances and determine the amount you can repay monthly. Consider your day to day spendings and the possibilities of emergencies over the tenor of repayment. Once the loan has been disbursed, you would have to always make monthly payments at the agreed date.
2. Interest rate and charges
Another thing to consider is the interest rate and charges from the loan company. Try not to be desperate when obtaining a car loan. Explore other money lenders and take the loan with the most favorable agreement and interest rate. Research on companies that give the best car loans in Nigeria before getting a loan.
3. Type of car needed
Buying a car is a level of luxury. Before obtaining a car loan, determine the type of car you need, not the type you want. Purchasing a car beyond your financial capacity will do more harm than good.
Sycamore is a peer to peer lending platform that offers up to N5,000,000 on personal and business loans. They are reliable, safe, and easy to access. Visit www.sycamore.ng for more