How banks lift consumer lending via new vehicles’ acquisition

With the understanding that the major pillars of economic growth and development are infrastructure and transportation, banks like Stanbic IBTC Bank and Access Bank have chosen to play a pivotal role in revamping Nigeria’s transport industry via the funding of new cars and other equipment, writes Hope Moses-Ashike.

The major factor behind the attraction of second-hand cars in Nigeria, famously called Tokunbo cars, is not far-fetched: in an economy where GDP per capital is nine percent of the global average, only the well-heeled can afford new cars. The Tokunbo cars, despite the multiplicity of challenges they pose, are adjudged better than having no car at all. Afterall, a second-hand culture, in almost every facet of life, had taken deep root in the country.

Compelled to meander through many hours of traffic gridlock on largely uneven roads, notably in Nigeria’s commercial capital, the vehicles, some of which are possibly due for recycling in Europe and America, become derelict. Apart from the offensive sight they often become due to exposed metals, broken glasses, holes and lack of maintenance, the risk of accidents is also very high. Notorious for causing traffic snarls due to frequent breakdowns, the pain inflicted on the owner is often traumatic, with almost similar ripple impact on the economy. Constant breakdowns and the attendant visits to the mechanic’s workshop inevitably take a huge toll on the pocket. It also means that the vehicle owner usually has to jettison more productive activities while awaiting the vehicle’s repair; and for those who rely on these vehicles for livelihood or business, such frequent breakdowns translate to lost time and revenue.

Against this backdrop, the consummation of a three-party partnership involving Stanbic IBTC Bank, to empower Nigerians socially and economically. Under the scheme, unveiled in Lagos Access Bank and Coscharis Motors Limited opens a fresh vista of opportunities and possibilities recently, Stanbic IBTC Bank and Access Bank will provide financing for the acquisition of new cars by interested Nigerians, whether unit or fleet buyers, on concessionary terms. These include a competitive interest rate, instalment payment and flexible repayment period, simple documentation, speedy approvals and a minimum of 90 percent finance on the value of the vehicle. The scheme covers a wide range of brands under the Coscharis stable. Coscharis Motors distributes brands such as Ford, BMW, Land Rover, Rolls Royce, Jaguar, MINI, Joylong and MG, among others.

The uniqueness of the financing scheme, which runs for an initial period of 12 months and renewable for another year, is that the customer will contribute a minimum of 10 percent of the cost of the vehicle while the participating bank will provide the balance. The scheme thus frees the customer from the very difficult task of raising a lump sum, which may run into several millions of naira. In addition, the monthly repayment period is spread over four years, depending on the customer’s preference, which not only eases the burden of repayment, but ultimately determines the actual amount for repayment monthly. The package also includes free vehicle registration, maintenance and service support as well as vehicle recovery and emergency assistance. For the vehicles financed, comprehensive insurance has been negotiated at a concession and payment made easy for the clients.

The common denominator in this partnership is its potential to accelerate economic empowerment and self-actualization. The enthusiasm displayed by the partners at the MOU signing ceremony in Lagos was not misplaced; with the potential to increase the number of new vehicles plying Nigerian roads, economic activities are expected to proceed more efficiently, with the attendant job and wealth creation.

This point was succinctly highlighted by the Coscharis Group Managing Director, Josiah Samuel, when he said: “The need for the collaboration was informed by some key factors: many corporate Nigerian workers, including the Small and Medium Enterprises, want new vehicles from Coscharis but have inadequate financial capacity to effect outright payment; and most of the SMEs buy fairly used vehicles to run their businesses in order not to drain their working capital.”Implementing the initiative alone, he stated, would have required considerable capital outlay by Coscharis as well as an extensive lead time. The involvement of Access and Stanbic IBTC Banks to perform the financing role has solved the challenge.

The Coscharis boss added that the finance scheme, in offering Nigerians a competitive source of finance to buy new cars, would boost patronage of automobiles, enhance the social status and quality of life of Nigerians, create employment opportunities for many and drive economic development. “What makes this scheme enticing is the fact that it brings within the reach of Nigerians the ownership of brand new and affordable cars, which will in turn enhance economic productivity, protect life and ensure peace of mind, especially against the backdrop of the high fatality rate associated with rickety vehicles plying Nigerian roads.”

Describing the deal as a milestone, Executive Director, Personal and Business Banking, Stanbic IBTC Bank, Obinnia Abajue, said it dovetails into the bank’s commitment to Nigeria’s economic development as well as building a sustainable environment for people and businesses. He said that the main motivation for the deal was to bring the acquisition of new cars within the reach of more Nigerians, with the multiplier effect on social status and economic wellbeing.

“This partnership is unique in being the first time two financial institutions will be partnering with a leading automobile company, Coscharis Motors, to empower people by making the acquisition of new vehicles of choice stress-free. A dedicated team of experienced professionals from our Vehicle and Asset Finance unit is available round the clock to deliver to Coscharis Motors and its customers excellent service and professional advice, in line with the terms of the partnership,” said Abajue.