The necessity for increased knowledge and transparency on the processes involved in vehicle financing in Nigeria has been emphasized by industry stakeholders.
They contend that greater understanding is necessary to make the area more hospitable.
It is true that purchasing an automobile in Nigeria, new or old, is expensive. These days, very few Nigerians are able to easily buy a car without taking out a loan.
In addition, because of the high interest rates, the amount of business in the bank-dominated auto financing industry is declining.
In order to assist many Nigerians, especially the working class, who require a loan to finance the purchase of their dream vehicles, auto financing companies and banks can be of assistance in this regard.
Car-financing schemes have been successfully launched by companies such as Autocheck and Innoson Vehicle Manufacturing Co. Ltd.
In a same vein, Union Bank of Nigeria collaborated with Choice International Group Motors Limited to offer auto-financing services to clients using an asset finance loan program who buy GAC range vehicles.
According to recent statistics from the Central Bank of Nigeria’s Money Market Indicators, commercial banks would charge a maximum lending rate of 27.59 percent for loans to consumers with low credit ratings in August 2023.
This is despite the fact that the country has been weakened by the 40% increase in duty payments on fairly used cars, making car purchases unfeasible for the majority of Nigerians.
Mayokun Fadeyibi, Chief Operating Officer of Autochek MarketPlace, stated that the penetration of vehicle financing throughout the continent is dependent on education. Individuals must understand how credit operates in order to be well-equipped to utilize it wisely.
Speaking to The Guardian, Fadeyibi stated that transportation is a crucial pillar supporting a range of economical activities.
She said that as a private company, there isn’t much that can be done to influence the government when it comes to efforts to ensure that the government fulfills its part in the vehicle finance scheme. However, the company is constantly working with as many stakeholders as it can to ensure that vehicle ownership is more accessible and affordable.
According to Fadeyibi, it might take some time and tenacity to get government backing for an automobile financing program, but fostering close ties with important players and showcasing the program’s advantages for the whole economy might boost participation.
In addition, she said that the hike in import taxes will raise the price of buying cars even more and have an impact on both individual and business consumers’ purchasing decisions.
Even if the 40% duty rise is “not great news,” people still need cars, so even if they purchase smaller ones, we expect them to keep buying cars. Over time, it has been clear that there are seldom large changes in the overall demand for automobiles.
According to her, consumers may choose to forego purchases altogether or choose less expensive options due to affordability, but generally speaking, people only buy cars if they feel they are necessary.
Speaking with The Guardian as well, Jimoh Olawale, Marketing Manager of Dana Motors Limited, stated that the lack of financing choices, high prices, and poor customer purchasing power are all contributing factors to the automobile industry’s current profound and difficult phase.
Olawale stated that auto finance businesses, being a vital component of the sector, would also have to adjust their business models to conform to the new economic realities.
He stated that since the economic recovery is probably going to take longer than most people think, it is crucial for today’s industry players to change and adapt in order to provide the throngs of customers with a long-lasting and sustainable financing choice.
Olawale stated that while diversification of the economy has become the new mantra for many political economists and stakeholders, a frightening financial institution will always turn the dream of our industrialized economy into a nightmare because of how important car financing is.
According to him, the automotive industry is currently struggling to survive due to the unrelenting importation of used cars and consumers’ ever-decreasing purchasing power. The only things that appear to be available to all parties involved are affordable car financing and supportive monetary policies, which would significantly increase the sector’s chances of survival.
