How Much 'Equity Contribution' (Down Payment) for a Car Loan in Nigeria?

So you want to buy a brand new car using a bank loan (Auto Finance). You walk into GTBank, Access Bank, or Stanbic IBTC, and they ask you: "What is your Equity Contribution?"

This is just fancy banker English for Down Payment.

In Nigeria, you rarely get a 100% loan for a car. Banks want you to have "skin in the game."

Why the Down Payment Matters

1. It Lowers Your Monthly Repayment

Interest rates in Nigeria are high (currently 25-30% per annum). Every Naira you borrow costs you expensive interest.

• Scenario A: Buy a ₦10M car with 10% equity (Borrow ₦9M). You pay interest on ₦9M.
• Scenario B: Buy a ₦10M car with 40% equity (Borrow ₦6M). You pay interest on only ₦6M.

Scenario B is much cheaper and easier to repay monthly.

2. It Increases Approval Chances

Banks are scared of "bad loans". If you are willing to pay 30% or 40% upfront, it proves to the bank that:

1. You have savings discipline.
2. You are serious about the purchase.
3. You are less likely to run away with the car.

What is the Ideal Equity Contribution?

Most Nigerian banks require a minimum of 20% to 30%.

• For a ₦20,000,000 car (e.g., a new Corolla or SUV), you must have at least ₦4,000,000 to ₦6,000,000 cash in your account before they lend you the rest.

Salary Earners vs. Business Owners:

• Salary Earners: Might get away with 10-20% if their company has a deal with the bank.
• Business Owners: Often need 30%+ because income is variable.

Conclusion

Don't wait until you are at the car dealership to think about this. Start saving for your Equity Contribution now. The more you pay upfront, the less "Gbese" (debt) you carry.

Use our Vehicle Loan Calculator to see how changing your down payment affects your monthly salary deduction.