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Buy A Car And Pay In Monthly Installment Guide In Nigeria

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Let’s admit it; we all need a car, especially when you get to certain stages in your life, a car becomes a must-have. But you know, while we are all aware that we need one, we still don’t make the move to get that dream car. It’s not because we don’t know how to drive really (P.S, if you don’t know how to drive, find out a list of driving schools you can explore here), the major challenge is the fact that we often can’t afford to pay for a brand new car or even a fairly used one all at once.

For a lot of people, our cash flow comes in monthly, or even if it doesn’t, it’s easier to calculate your income on a monthly basis. Well, that’s an advantage because you can easily pay for that dream car in monthly instalments; this implies not having the whole cash to pay for a car at once does not have to stop you from a car. Monthly instalment paying implies paying specific amounts over a period of months until you complete paying the entire cost of the car.

In today’s article, we bring you a guide on buying a car and making payments in monthly instalments in Nigeria.

Where To Get a Car for Monthly Instalment Option

You can’t always get an option to pay in monthly instalments everywhere. Broadly speaking, two major sources that can offer monthly instalment options are:

Get Financing from your car dealer

Some car dealers afford you the option to pay in monthly instalments. This means they become the lender while you become the borrower. In this instance, they offer you a payment plan such that you don’t have to pay for the car immediately, but depending on the cost of the car, the total cost is spread through the months (maybe 20-52 months), till the selling price is paid with interest.

Check: How To Get A Car Loan In Nigeria – Top List Of Auto-Finance Companies

In this case, until you pay in full for the car, even though you flex around with the car, you don’t have total ownership or right to the car.

Lend Directly

When you lend directly, then the car dealers are not the ones offering financial aid, but rather you source for the cash, using a car loan from other places e.g banks, cooperative societies, etc. Hence, you enter into a financial agreement with the car loan source on how you will pay the money in full with interest.

Check out a list of car hire purchase companies that allows you to pay in instalments here

Buy A Car And Pay In Monthly
Buy A Car And Pay In Monthly

Factors That Affect Your Monthly Installment Payment/Plan

Down Payment

Down payment is the amount of money you pay out-rightly that covers part of the cost of the car and signifies your commitment to fully purchase the car. The downpayment can represent any per cent of the overall cost of the car, it depends on the agreement between you and the lender.

For instance, if you are buying a brand new Honda Clarity which costs about #12 million, if the down payment is 20%, then you are paying #2.4 million upfront. This means you are left with 9.6 million to complete the payment.

Now, the more the amount you pay as a down payment, the lesser the amount of money you have to pay as monthly instalments and vice versa.

Loan Term

The loan term refers to the total duration of time you are expected to pay the total amount. It varies depending on where you get the loan. either from a bank, a cooperative society, or a car dealer.

The longer the loan term, the longer the amount of time you have to pay up in monthly instalments.

Interest Rate

The interest rate is actually the cost or the extra money you have to pay for taking a car loan. The interest rate varies depending on the kind of car and the lender too. However, generally, the interest rates are usually better for new cars than fairly used ones.

The higher the interest rate, the more you have to pay in monthly instalments.

Monthly Installment

The amount you have to pay in monthly instalments depends on the interest rate, the cost of the car, and the estimated loan term.

How To Calculate Your Monthly Installment

The mathematics you need to calculate the amount you pay in monthly instalments is easy-peasy.

Using the example of the Honda Clarity above, after your down payment of #2.4 million, the remaining #9.6 million has to be paid over four years at a flat interest rate of 5% per annum.

  • Your total interest = interest rate/100 x loan amount x loan term
  • Your monthly interest = total interest / (loan term x 12)
  • Your monthly installment = (loan amount + total interest) / (loan term x 12)
  • Loan term= 4 years
  • Interest rate= 5%
  • Loan amount = #9.6 million
  • Total interest for 4 years= 5/100 X #9.6million X 4 = #1.92million
  • Your monthly interest = #1.92 million/ (4 X 12) = #40,000
  • Your monthly installment = (#9.6million + #1.92million) / (4 X 12) = #240, 000

You can apply this formula in paying for any car you desire to buy in monthly instalments.

Car loan companies in Nigeria

  • First Bank Nigeria – Auto Loan, Auto Loan & Finance

Applying for an automobile loan at First Bank Nigeria has been made easy as Both individuals and businesspersons can apply for an automobile loan from FirstBank and possibly receive up to 10 million Naira for a period of up to 4 years. You should have a salary account in FirstBank. Choose only the car dealer that is approved by this Nigerian bank and only a brand-new vehicle. You’ll be asked to fill out the loan application form, prove that you have money for instalment payments (income), and visit the bank’s office.

  • Creditville Limited – Car Loan / Auto Lease

Creditville Ltd offers an auto loan that facilities individuals in paid employment in the form of asset finance towards the acquisition of a personal vehicle(s). The car we help you buy is solely for private use. The vehicle financing shall not be used for ANY commercial purpose. Ownership of the car bought ultimately transfers to the customer at the end of the facility tenor, subject to having met all prescribed repayment terms.

  • Access bank – Hyundai Auto Loan Promo

Customers shall be required to obtain a Pro forma invoice from Hyundai Motors addressed “Access Bank/Customer’s name”. The program supports only new cars and is willing to work with local businesses and individuals who have a salary account at this bank.

  • Affordable Cars Nigeria – CAR FINANCE SCHEME

The Affordable Cars easypay is a bank finance scheme based on instalment
payment arrangement which affords individuals and corporate entities the opportunity to buy cars of their choice without the need to pay the whole value at once.

This requires a deposit payment of 20% – 30% with the balance being spread over 12-48 months with interest at the prevailing lending rate.

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Now, you shouldn’t shy away from buying that car you have always wanted. The hassle of boarding a taxi and other public transport can be very terrible. You have the option to pay installmentally for the car you want to buy. You can check us out at or send us a mail at [email protected] to buy or sell your car.

Carmart Nigeria allows you to sell your car for the best price from the comfort of your home. Rather than hearing bad offers from dealers or adding a banner of "FOR SALE", let carmart Nigeria do all the heavy lifting for you, Upload the details of the car and get the best offer from interested buyers.


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