Car Financing in Nigeria: Coscharis and Co.

According to some report I received today, Access Bank and Stanbic IBTC signed a Memorandum with Coscharis Motors to allow customers in Nigeria pay a 10% down payment and spread the rest of their payments for a car over 48 months. The rate is about 16.5 percent which is bonkers to my now fairly Americanized sensibilities but which is quite competitive for Nigeria.

The move itself isn’t new, I think financing has been around in Nigeria for a while, but the issue has been low adoption, which is largely because most people even the nominally employed, don’t have the stable income predictability that makes this a good deal for them. You don’t wanna rope yourself into a 4 year car loan, and then lose your job a year into it. So until we fix the structural problems on the economic side, I really don’t know that this kind of consumer credit schemes will take off, or even that they should.

On the other hand, the aggressiveness with which the three parties seem to be pushing it, and the fact that Coscharis even discounted a bit to keep that rate low means they’re betting really hard on this. So maybe they’re convinced it’s going to make a big dent? Or maybe Coscharis wants to take out the little competition that exists in this area in furtherance of their auto-empire? Like, I get the business case for it, but is there really any room for consumer credit to gain traction in Nigeria?

I don’t know. I will try to keep my eye on this, it’s an interesting area for the country.

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4 Comments

  1. Mehn.

    Their timing is wrong. Not especially with the looming economic winter hitting the Nigerian market.

    These are my personal thoughts sha. But consumer credit schemes will only pick up when the middle class is chilling/balling. Here in Nigeria, the people who can afford to take on car loans can afford to buy them.

    Plus what’s the effective life span of a car in Nigeria? (don’t compare it with the normal average, with our wonky roads and crazy drivers o!) Then you now want to have a 4 year plan of payment on said scheme. Hmmph hmmph hmmph.

    Jibola

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  2. I’m actually interested in that, what the effective useful life of a car is in Nigeria. Perhaps, a survey might help.
    But I agree with you, it seems like misplaced priorities for now, but maybe the increased sales is worth it to Coscharis, to be honest.

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  3. I don’t think this is generally a bad idea and I don’t quite agree that those who can afford the payment plan can afford to buy the cars outright. I’d like to know how it is don in america in the case where the person loses his job and unable to continue payment. Does he return the car and part of his payment returned especially if the payment is almost complete? I would like to know. Let’s see if the model can work here. Also there’s a lot of people getting mortgage these days in nigeria so I think the business can thrive.

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  4. Over here, if you can’t continue your payment, the bank repossesses your car, and all payments you’ve already made are gone. Which makes sense because you’ve actually been using the car the whole time, and so it doesn’t carry it’s full value.
    It’s basically a leased car until it’s completely paid for.

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