Buying a car on credit in Nigeria, from new models to tokunbo
In Nigeria, car loans are mostly offered to salaried workers by banks and a few fintechs, in partnership with dealers, for new vehicles or imported used tokunbo cars, usually with a large deposit and a rate that follows CBN policy.
A market dominated by tokunbo cars
Most cars sold in Nigeria are tokunbo, used vehicles imported from the United States or Europe, often through the ports of Lagos or via neighbouring Benin. New cars remain reserved for wealthier buyers and for company fleets.
Bank offers arranged with car dealers
Several large banks have signed agreements with distributors such as Coscharis or Toyota Nigeria to finance new vehicles. The loan is paid directly to the dealer, and the car stays pledged to the bank until the final instalment is paid.
Term, deposit and repayment capacity
Bank car loans generally run for two to four years. The required deposit frequently reaches twenty to thirty percent of the price, and the monthly instalment must stay affordable for a salary paid into the lending bank.
A naira price that follows the exchange rate
Because almost all vehicles are imported, their naira prices have risen sharply since the 2023 float. A pro forma invoice can become outdated within a few weeks, and the borrower sometimes has to top up the deposit before delivery.
CREDICORP and locally assembled vehicles
The S.C.A.L.E. programme launched in late 2024 by the Nigerian Consumer Credit Corporation targets single-digit rate loans for vehicles made or assembled in Nigeria, such as those built by Innoson in Nnewi, through partner lenders.
CNG conversion and new uses
The presidential initiative on compressed natural gas encourages converting cars and minibuses to CNG to cut fuel bills. Some financing covers the conversion kit, which is attractive for taxi drivers in Abuja or Lagos who spend heavily on fuel.
Fintechs and loans on tokunbo cars
A few fintechs and finance companies accept inspected tokunbo vehicles, with a GPS tracker made compulsory. Their rates are well above bank rates. For a more modest need, see the personal loan in Nigeria guide.
NAICOM policy and papers for a pledged vehicle
Third-party insurance is mandatory, but the lender requires a comprehensive policy from an insurer licensed by NAICOM. The registration, the proof of ownership certificate and the road worthiness papers must all record the lender's interest.
Work vehicles: hire purchase and leasing
Ride-hailing drivers, keke operators and businesses often prefer the hire purchase arrangement known as work and pay, or a lease contract. These formulas, widespread in Lagos and Port Harcourt, are covered on the car leasing in Nigeria page.
Islamic car finance at Jaiz and TAJBank
Non-interest banks buy the vehicle and then resell it to the customer at a margin fixed at signing, following the murabaha principle. The total cost is known in advance, which shields the buyer from changes in the policy rate.
Checks before buying a tokunbo
Before seeking finance on a tokunbo, check the clearance documents with the Nigeria Customs Service and the vehicle's history. Accident-damaged or improperly cleared cars are rejected by lenders and can even be seized by the authorities.
Car loans in neighbouring Niger
In Niger, within the WAEMU zone, car credit is granted in CFA francs under the usury ceiling set by the BCEAO, and volumes are far smaller. The car loan in Niger page describes this cross-border market in more detail.
Financing a car in Lagos or Abuja, step by step
- Choose the vehicle and get a pro forma invoice from a dealer or an identifiable tokunbo seller.
- Check your credit report and the repayment capacity that your salary, paid into the bank, can support.
- Compare bank, Islamic and fintech offers, asking each for the total cost in naira.
- Gather the deposit and take out comprehensive cover with an insurer licensed by NAICOM.
- Sign the contract, let the bank pay the seller, then install the tracker if the lender requires it.
Cost of a naira car loan
| Item | What drives the amount | Comment |
|---|---|---|
| Deposit | Lender policy, new car or tokunbo | Often 20 to 30% of the price, indicative |
| Interest rate | CBN policy rate, borrower profile | Lower in CREDICORP programmes |
| Comprehensive insurance | Vehicle value and age | Renewed every year during the loan |
| Tracker and processing fees | Lender requirements | Charged at disbursement |
| Registration and papers | State of registration | Plates, proof of ownership, road worthiness |
Documents for car finance in Nigeria
- Seller's pro forma invoice
- BVN, NIN and ID document
- Payslips and an employer confirmation letter
- Six months of bank statements
- Customs clearance documents for a tokunbo
- Valid driver's licence
What derails car credit in Nigeria
- Buying a tokunbo without genuine customs papers, which exposes you to seizure and makes financing impossible.
- Failing to anticipate the rise in the naira price between the pro forma invoice and delivery of the vehicle.
- Selling or transferring the car before the loan ends while it is still pledged to the lender.
- Paying an advance to a fake car seller on social media who promises guaranteed financing.
Lenders to contact
- Jaiz Bank: Nigeria's first non-interest bank, publicly listed, offering Shariah-compliant accounts and financing to individuals and businesses.
- TAJBank: Second non-interest banking institution launched in Nigeria, providing Islamic banking services to both retail and business customers.
- Jaiz Bank: Nigerian Islamic bank offering Sharia-compliant home finance as well as personal financing for household appliances and equipment.
- Accion Microfinance Bank: Nigerian microfinance bank lending to micro-entrepreneurs and small businesses, also offering personal loan products such as BrightA MyOwn Loan Plus.
Nigerian car loans in questions
Do Nigerian banks finance tokunbo cars?
Some do, but mainly for recent models that have been inspected and properly cleared. Many banks prefer new cars sold by a partner dealer. Specialist fintechs accept more tokunbo vehicles, in exchange for a higher rate and a GPS tracker.
What does the CREDICORP S.C.A.L.E. programme offer?
It aims to make vehicles made or assembled in Nigeria, as well as solar equipment, affordable at reduced rates. CREDICORP funds and guarantees partner lenders, who remain the borrower's point of contact for assessing the application.
Can you repay a car loan early in Nigeria?
It is generally possible, but the contract may include early repayment fees. Check this clause before signing and ask for a written statement of the outstanding principal so you know exactly how much remains to be paid.
Is comprehensive insurance needed for the whole loan term?
Yes, most lenders require it until the final instalment, because the vehicle is their collateral. Failing to renew the policy may be treated as a breach of the loan agreement and can trigger action by the lender.