It’s very common for most clients, especially first-time buyers to ask more about bank financing in relation to owning a motor vehicle. Car Bank financing, car loan or commonly referred to as bank financing simply is the process of car acquisition without having the full cash required by the car dealer.
We will discuss the important factors to consider while taking a car loan and explain about the whole process. I am sure 99% of all your car financing questions will be answered when you finish reading this article.
There are several important things that someone has to consider when taking a car loan.
Number 1 is your financial ability. Yes you need a car NOW but do you have the financial muscle to get one? You are in business or employment. Is your business able to raise the deposit required(mostly 20-30% of cost of car), insurance and car tracking costs too. If you are in employment, can you raise the deposit (mostly 0-20% of the car cost) plus insurance and car tracking fees?
If the above is doable, you should also be sure that you can comfortably meet your monthly repayment. Basically, you will raise the initial deposit and the other costs and be required to be paying monthly for an agreed period of time.
Number 2 do proper research of your dealership of choice. It’s true you need a car, but you need a good car at a good price. You also want good post sales services and of course nobody wants to be conned.
Check out social media pages of your preferred dealership, see their reviews across all platforms and also work with referrals. I strongly recommend buyers to purchase from used car dealerships with a physical location. Preferably a car showroom.
Number 3 get to know all costs involved. Most car loans have some hidden charges, get to know all charges from your car dealer or the bank loans office. This will help you make an informed decision. Some financial institutions have friendlier terms than others. Your car dealer will help you with this information.
Number 4 know which car you want. Before you take a car loan, research and decide on which car suits your needs and the one you like. You can start with a list and narrow down to the specific one that you will settle with.
The process is similar weather you are in employment or in business, the only think that differs is the percentage that the financier gives you, the requirements and the repayment period. We have simplified the process in the seven steps below.
For employed clients, the percentage financed ranges from 80-100% and the repayment period from 48-60 months.
For Clients in business, the percentage financed ranges from 70%-80% and the repayment period is 36-48 months.
Step 1: Gather all the documents needed for the process:
Salaried Clients
a) copy of ID and KRA PIN
b) 3 months recent pay slips
c) 6 months bank statements
d) contract/ employment letter
Business Clients
a) copy of ID/KRA
b) twelve months bank statements
Step 2: Submit the documents to the dealer/bank officer
Since you already identified a trusted dealer who will guide you to the best financier, send the documents above mentioned to the. If you wish to stick to your financier, submit the documents to them.
Step 3: The dealer submits the documents to the suitable/agreed bank for pre-approval
The documents are submitted and vetted by the financier, this can take from 24 hours to 48 hours depending with financier.
Step 4: Dealer notice/Offer Letter
The financier commits expressly by writing that they are willing to offer the required finance to you so that you can be repaying monthly. Here, the offer letter will state all the costs involved, that is the costs to be met by the client. They will also indicate the contribution in terms of percentage and amount in shillings that they(financier) will offer.
This is a very important stage in the financing process. The client and the dealer are both happy, the bank is happy too.
Step 5: Deposit payment.
At this point, I can strongly advise the client to put in some money to ensure the car that they liked is not sold to another client.
Since the bank has stated the amount to be paid to the dealer, the client will now deposit that cash to the trusted dealer. At this point the client will meet all other costs that come car financing.
Step 6: Joint ownership
After the payment of deposit and other costs by the client, the dealer will initiate a joint transfer from the dealership to the financier and client. The client and the financier are then required to accept the ownership in their respective e-citizen portals.
Step 7: Release and payment
This is the most exciting part for the car buyer. The bank issues a commitment letter to say that they will pay the dealership the stipulated amount. They also request the dealership to release the car to the client as they wait for payment from the financier.
The dealership immediately releases the car to the client. In Gybird motors, this is a ceremony for each car released from our car yard. We make it as memorable and enjoyable as possible to the client. Of course, you are not buying a pair of shoes but a CAR!!!
