How to finance your brand new Car?
If you've heard or read more-than-countable stories about people's terrible experiences with used cars, chances are you want to head straight for a brand new car.
Yes, brand new cars rock! You don't have to worry much about maintenance and repairs for a long time. And you can rest assured that your car has never had faults before. However, brand new cars are expensive. Far more expensive than used cars. And that's why most Nigerians cannot afford them. So, if you want to buy a brand new car, you must be ready to pay a huge price. Here are a number of financing options you can choose from:
1 Your Personal Savings
If you've nursed the dream of buying a brand new car for several months or years and have saved a lot of money for that purpose, then it's all straightforward. Simply pay for the car from your savings. That's undoubtedly the best way to pay for a brand new car. Just pay the money, and the car becomes yours for life!
However, if you don't have a really "loaded" account, this option might leave you with very little savings, which means you'll have an unsecured financial position. So, before draining your bank account to buy a new car, you need to consider every aspect of your finances to see if it's the right option to adopt.
2 Loans from Family and Friends
If your personal savings cannot cover the cost of a new car or you'll be left with too little savings after paying from your savings, then it's better to obtain a loan from relatives or close friends. If you're able to secure a loan through this means, chances are you'll be paying no interest.
However, only borrow money from relatives if you're sure that you can pay back within a short period that you will have to define with your lender. If not, you'd better seek for funding from other sources...
3 Employer Auto Loans
Obtaining auto loans from one's employer is another way of financing a car and is very common in Nigeria. Your employer will either acquire your desired car on your behalf or give you the loan in cash. Then you'd be paying back the loan - with or without interest - through a monthly deduction from your salary until you've paid back in full. Sometimes, the employer sets a period - such as 24 or 36 months - by which you must have completed the repayment.
If your employer will grant your request for this type of loan, and if your salary is important enough to comfortably shed the monthly deductions, then this is a good option for you.
4 Bank or Cooperative Loans
Another smart way of financing your new car is to obtain a car from a bank or co-operative society. Many banks in Nigeria will grant you a loan if you're an age-long customer with a good financial standing. However, bank loans usually come with crippling interest rates and repayment conditions.
Alternatively, you can obtain a loan from a cooperative society. With most societies, you'll be eligible to obtain a loan after making consistent contributions for no less than six months. Unlike bank loans, loans issued by cooperative societies come with very low interest rates and flexible repayment terms.
5 Dealership Loans
Some car dealers will allow you pay for your new car in installments. These are rare in Nigeria, but if you're able to find one, consider going for it since the terms are usually flexible. However, you might eventually have to pay much more than if you had purchased your car once and for all.
In all, financing your new car on your own is the best option. If you cannot afford this way of financing, you can consider the options mentioned above in order to buy the car of your dreams!
Example Car Loan: ₦500,000 Loan amount, 1-36 months duration, 1.92% monthly interest rate, 33.55% max APR, ₦1,003,250 total value, ₦51,250 max monthly repayment, Rosabon Car Loan