Mike: Hi Ugo I need a car loan how do i get one? Ugo: Getting a car loan in Nigeria is not that difficult provided you are qualified for it. The following steps may just give you a shot at getting the loan Mike: Hold on. Qualified? How is one qualified? Ugo: Nigerian banks are very much inclined to extend car loans to individuals who have a regular income stream. A regular income stream basically means you have a regular source of revenue such as salary or income from a trade. Salary earners with companies that a well known have better chances of securing a car loan. Individuals who are self employed can also get a car loan provided they can prove that their business generates a regular pattern of inflow. The easiest way to demonstrate that is to show them your bank statement for a period of atleast 2 years. So basically, these are the guys that you can classify as qualified. Mike: Now I get it. So if I was working for one “Baba A Supplies” I might not get a loan? Ugo: The chances of getting the loan will indeed be very small. However, it does not rule you out completely as it only makes it more difficult. You will have to prove to them that the company is a viable company and that they are able to pay you continous salary for the period of the loan. Mike: Ok so how can I get the loan? Ugo: These are the following steps (For salary earners. Same maybe slightly different for self employed individuals) Step 1: Identify the kind of car you wish to buy. Be it a tokunbo car or a brand new car the banks are always willing to finance. This is a very important step as you do not want to approach a bank without knowing what car you have in mind to buy. That way you have a guide even if you decide to change your mind on the type of car along the way. Step 2: Find out the price of the car and when it will be delivered to you once you pay. That is pretty much easy. All you need to do is to go to a car shop/dealer identify the car you wish for and get a proforma invoice. A proforma invoice is basically a draft invoice. It is none binding on you or on the seller of the car. Banks usually don’t finance the entire purchase price of your car. They usually fund 60% or at most 70% whilst you fund the balance with your own money (equity). So if the car cost N2m the bank will give you 60% of that which is N1.2m while you pay the balance N800K. You will also be expected to pay for insurance of the car which is about 5% of the value of the car. That is N100k in extra cost to you as well, so you have to take that into consideration when applying for a loan. Banks don’t accept 3rd part insurance. Step 3: Find out if the car dealer already have arrangement with your bank. Some of them also have arrangement with car dealers which also aid processing of the loan. For example you wish to purchase a car from Car Dealer and Company (CD Co) and have approached Bank X. Bank X and CD Co also have an arrangement where buyers of their cars can get loans. Then the process becomes easy for you. If they don’t still approach your bank with the invoice anyway. Step 4: Banks offer several products that outline their terms for a car loan. However, the details are mostly the same. The difference probably lies in the speed at which your loan will be processed and their ability. So if you use a bank that offers a product relating to car loans the better for you. If your bank doesn’t then you can either proceed with them or try another bank. However, almost all the banks offer such products. Step 5: Assuming your bank does, get in touch with your account officer and request that you need a car loan. If you want to approach another bank then just identify the bank and approach their customer service desk for direction. But bear in mind that you will have to open an account with them and give them standing orders (which I will explain later) Step 6: Now that you have met with the bank, you will be asked to draft a formal application letter for a car loan. The letters isn’t anything complicated and will typically look like this (Car Loan template) . Once you are done with the letter attach a copy of your payslip, the invoice for the car (now you must had got the final invoice) mentioned above and a copy of your employment letter. Give it to your account officer for processing Step 7: Now that you have submitted your application the bank all you now need to do is wait for it to be processed. The bank through the account officer will present you a set of forms to fill which will include things like your personal details, salary, address, bank address etc. They are mostly routine and should be easy to fill. Step 8: Once that is done the bank will present you with an offer letter. The offer letter from the bank is a document showing the amount lent to you by the bank, the interest rate, repayment structure, fees, security etc. Lets take them one at a time Loan Amount : Loan amount is the sum that the bank has finally agreed to lend to you. Remember it helps fund part of the purchase price of the car. Please note that the bank will not disburse the money to you if they do not have deposit of your own contribution (equity) in an account domiciled with the bank Interest Rate : This is the rate the bank charge you on a monthly basis. The bank will mostly write it like this “interest rate is 20% and is subject to market conditions”. What this means is that the rate may go up or down depending on what the rates go for in the market. Most times it goes up. It is important to look closely at the interest rate as it forms a huge chunk of the money you pay the bank. So make sure you ask around to be sure your rates are competitive (as good as what is obtainable in other banks). The banks will also charge you fees. The fees are the Facility fee and Management Fee. The Facility Fees are mostly 1% flat and is a one off fee. The Management fee is usually also 1% but is paid every year of the anniversary of the facility. Repayment Term: Since the loans are mostly 4 years repayment terms will simply state that you will “repay the loan monthly in arrears for 48 months”. They will also give you an option to pay off the amount if you wish to pay off the loan before the end of the 4 year period. Always ask for a repayment schedule as it gives you an idea of the amount you will be paying every month. See sample repayment schedule Here as well. If your salary account is domiciled with the bank that loaned you the money, then repayment will be by a direct debit from your salary at the end of every month. If your salary account is domiciled elsewhere then you will give the bank post dated cheques for the duration of the loans. They may also require standing orders which are basically an order by you to your bank (where you have your salary account) to deduct from your salary every month pay the bank that gave you the car loan. In both cases you should always check your bank statements at the end of the month to see how much was debited to your account as loan repayments. Check the amount debited to your bank (loan) account against your repayment schedule to be sure you haven’t been over charged. If the difference is more than 10% in any given month (i.e your repayment schedule says N80k for a given month then suddenly you see N88k for that month) you should quickly call your account officer for explanation. Step 9: Once you accept the offer and fulfill all requirements of the bank the loan will be disbursed to your account. But mind you the bank will only disburse the amount to you when they are about to issue a bank draft to the car dealer for the purchase of the car. Step 10: The bank will issue a draft to the car dealer after which the car will be released to you. The bank will hold a key of the car. The ownership of the car will be shared between you and the bank. Therefore your name and the banks name will reflect in all the car documents. The car is now yours and you can now drive it home. Note that the bank do not usually ask for a collateral. Their security is basically the comprehensive insurance which you pay for and the car itself. So when you default in payments, the bank can seize the car from you and sell it recover their money. Note: This is just a guide and does not guarantee that you will get the loan if you follow the steps above.
How to become a successful Bitcoin trader
Major steps that are needed if you want to become a successful BTC trader.
A BTC trader is simply an individual who seeks gains from differential changes in the market price of BTCs. The main objective the BTC trader has in mind is buying prices at low and selling when the flagship currency gains higher. BTC trading can thus be very lucrative and has become one of the fastest-growing careers in the financial spectrum.
Data obtained from a leading BTC analytic firm, Coinmarketcap showed that the market capitalization of BTC currently stands at over $170 billion. This further illustrates that in 2013 BTC moved from $13.30 to its present-day value of over $9000, meaning that early bird BTC traders had gained over 67,600% since it began.
Consequently, this article will show major steps that are needed if you want to become a successful BTC trader.
Self-Control & Discipline
Adebayo Juwon, an FTX consultant for Africa, spoke to Nairametrics in an exclusive interview, explaining in detail the need for a BTC trader to be very disciplined and have a security-conscious mindset. He said;
“Firstly I must note that trading is not for everyone, to be a successful crypto trader, self-discipline is a prerequisite to achieving one’s goal. The crypto market is very much volatile than what the traditional traders are used to, hence more risk and reward.
“A crypto trader must be security conscious; you’re responsible for your account security in the crypto ecosystem, as hackers are preying on whose account is less secured.”
A successful BTC trader must be able to understand the relationship between reward and risk management. This entails high understanding levels about the degree of randomness in BTC market and the risk involved in taking such risk. As a successful BTC trader, you are required to understand when its best to trade BTC as market conditions change from time to time.
Adebayo Juwon, FTX consultant for Africa also added vital points on why a BTC trader should never ignore risk management. He said;
“Also, to be a successful crypto trader, one must have good risk management in place, in a highly volatile market your profits can be zapped away in minutes. Risk comes in different ways in the crypto market, there are lots of scam projects with the good marketing team, they tend to attract investors also, it’s very important to do your own research in the crypto space, and rely less on market sentiment.”
Recall that some days ago Nairametrics, revealed the best time many BTC traders prefer to take their trading positions in the BTC market, thus preferring to trade around the American trading session because of the high price swings that occur at the start of New York stock market trading time -about 2.30 pm GMT. This means there were higher chances of making more money at the start of American trading sessions than other trading sessions (London and Asian trading session).
Basic fundamental and Technical analysis skills
Every successful BTC trader must keep track of macro fundamentals going around the BTC community because such information more often determines the market price of Bitcoin. Either rumours or news have exponential effects on the BTC market and often create lucrative trading opportunities.
Chris Ani, a professional BTC trader in a phone chat interview explained to Nairametrics in detail, the major attribute every successful BTC trader must possess, including the need to have basic trading skills. He said;
“To prevent yourself from becoming a slave to the market, you must be trading small enough size on your trades that you are not emotionally attached to them. Trading opportunities wait for no one.
“You have no idea when and where they will appear. Whenever they appear, you have to be ready with your trading plan. You must also master technical and fundamental analysis and most importantly the one that works for me, understand the seasons and market structure so as to know when to trade, allow big wins run, or rather exit the market in order not to lose your money.”
Finally, it’s very important to understand that no matter how good you get at BTC trading, you will often make mistakes and lose money. Always remember, trades that go bad are part of what will make you successful in the long term. Success in BTC trading simply means you are winning more relatively than losing.
What SME’s need other than Intervention loans
Since access to finance is a key constraint to SME growth, funding it has become paramount.
Small and Medium Enterprises (SMEs) play a major role in most economies, particularly in developing countries. According to the World Bank, they represent about 90% of businesses and more than 50% of employment worldwide. Formal SMEs contribute up to 40% of national income (GDP) in emerging economies and these numbers are significantly higher when informal SMEs are included. The World Bank predicts that “600 million jobs will be needed by 2030 to absorb the growing global workforce, which makes SME development a high priority for many governments around the world.
Since access to finance is a key constraint to SME growth, funding it has become paramount. This has birthed a myriad of programs ranging from incubators to accelerators both locally and internationally giving out loans, grants, and other resources to ensure that the sector is equipped to create jobs and stimulate the overall economy. There have also been federal grants and other forms of support given to SMEs. Since the outbreak of the Covid-19 pandemic, SMEs have been prioritized as recipients to loans and other stimulus packages. The CBN’s N50 billion Targeted Credit Facility (TCF) geared towards supporting SMEs and households whose economic activities have been disrupted by the COVID-19 pandemic, is just one of the different packages that have been put in place to cater specifically to it.
While there is data to back the impact SMEs have on our economy, it is true that even though small businesses help the economy, not all small businesses will contribute to the dream – or even survive past its early years. According to The Better Africa report, by Weetracker, an African digital media company, the top 5 countries that experienced the highest shutdown rates among start-ups between 2010 and 2018 were Ethiopia at 75%, Rwanda at 75%, Ghana at 73.91%, Zimbabwe at 66.7%, and The Democratic Republic of the Congo (66.7%). Failure rate for start-ups in Nigeria averaged 61% over the same period. What this means is that if small business loans are being given to businesses at random in Nigeria, 61% of those businesses are bound to fail and the monies given, completely lost.
The small business loans being offered by the CBN is a good step in the right direction. However, determining whether it ends up in the hands of the startups that are viable enough to scale and create the jobs or the larger percentage that will fail, depends to a large extent on how they are selected. In disbursing the loans, there must be clear methods of choosing the recipients. CBN’s N50 billion Covid-19 intervention fund for SMEs in conjunction with NIRSAL Microfinance Bank, simply noted that it would appraise and conduct due diligence applications before sending them to the applications to the CBN for final approval, to CBN for review. The results will tell their story.
Why the economy needs more than loans
The CBN giving out intervention loans is just one part of finding the solution – and this too does not say much about the amount in loans being given and their effect on the economy at large. If it’s too little to make any real difference, then it might only buy many of these businesses a few more months of dogged survival, after which all will be lost.
The overall operating environment must be able to stimulate growth either through favourable tax incentives for specific industries, moratorium on other forms of loans, or just the provision of basic infrastructures like electricity and speedy internet services.
Another important thing is to ensure there is a ready market for businesses within the country. Even with the right federal loans, a business having no ready market will sink its funds into inefficient marketing. This ready market, however, has a lot to do with the ease of local production to ensure competitive pricing, further curtailing the proliferation of imported items, and more.
In other words, economy will benefit even more from its overall development. The loans might help but, overall, there is unlikely to be sustainable exponential growth until the things that should be in place to expedite the development process exists.
How Nigerian SMEs can survive high mortality rate
SMEs are a very important economic catalyst in developing and industrialized countries.
In Nigeria where unemployment is a serious issue, the local businesses have a special position in the industrial sector because it has created employment and has been able to utilise labour. The local businesses, otherwise known as SMEs which means, Small And Medium Enterprise are everywhere, found on every street and corner as they surround us.
There is however no universal definition of SMEs that is widely accepted as it differs and varies from countries, but this is usually based on employment, assets or combination of the two. Institutions and organizations define SMEs in different ways depending on the purpose and the objective. Take for example, according to Organization for Economic Co-operation and Development OECD (2005) SMEs are considered to be independent firms that employ less than a given number of employees. However, SMEs were classified in terms of size, and financial assets.
The Small and Medium Industries and Equity Investment Scheme (SMIEIs), defined SME as an enterprise with a 200 million naira maximum asset base, with the exclusion of land and working capital and with a workforce of not less than 10 employees and not more than 300 employees. Akabueze,(2002).
The Third National Development plan of Nigeria (1975 – 1980) defined a small scale business as a manufacturing firm that employs less than ten people, or whose machinery and cost of equipment does not exceed N600,000
The Federal Government Small Scale Industry Development Plan of 1980 defined a small scale business in Nigeria as any manufacturing process or service industry, with a capital not exceeding N150, 000 in manufacturing and equipment alone.
These definitions give a clearer explanation as to how the meaning of SMEs differs and varies. However, just to give you a clearer understanding of what local businesses or SMEs mean, they are independently owned organisations that require less capital and less workforce and less or no machinery. They are ideally suited to operate on a small scale to serve a local community and to provide profits to the business owners.
Most enterprises in Nigeria, most of which are in the commercial sector are categorized as small businesses. The role of the small and medium enterprises towards the development of Nigeria is of great importance as it has contributed greatly to the country in terms of growth and development and also in providing employment opportunities.
From seminars to workshop initiatives for SMEs both locally and internationally, a lot is being said about SMEs all over the World.
According to the Central Bank of Nigeria report (2003), SMEs are a very important economic catalyst in developing and industrialized countries.
According to the United Nations Industrial Development Organization (UNIDO), developing countries can conquer poverty and inequality by democratizing, deregulating, and liberalizing the integration of the global economy. Recent studies have shown that SMEs contribute to over 55% of GDP and over 65% of total employment in high-income countries also that SMEs and informal enterprises account for over 60% of GDP and over 70%of total employment in middle-income countries (OECD, 2004).
However, considering the term “small”, there’s a whole lot of enormous challenges that come with it. In Nigeria, the factors working against the development and growth of local businesses are quite numerous, some of which include:
1. The issue of funding is a major problem with SMEs in Nigeria. However, the problem is not how to source it but the accessibility to either short or long term loans.
2. Lack of infrastructural facilities is a serious impediment to the performance of SMEs. The problem of inadequate infrastructural facilities includes electricity, good road network, availability of potable water, and solid waste management. These infrastructures are left to the business owners to provide themselves.
- Poor Management and Low Entrepreneurial Skill Base is a serious clog in the survival of small businesses as there is a lack of essential and required expertise in business which leads to wrong and costly decisions and mismanagement.
- Entrepreneurs often blame their failures on inadequate sales. However, the problem lies with poor marketing skills that could help promote their sales.
- Most entrepreneurs go into business without proper planning by taking a realistic view of what their strengths and weaknesses are, let alone giving careful consideration and analyzing the economic trends or business conditions in that particular sector of activity, which sometimes leads to mishandling when the business starts to expand.
- The root of most employee problems in Nigeria is poor personnel management. They put aside personnel matters till crises set in. Such crises usually pose serious threats to the firm’s survival if they are not promptly looked into.
- The harsh deteriorating macroeconomic environment in Nigeria has adversely affected the performance of small business enterprises and has posed as a major challenge to their survival and growth. Most small business enterprises are struggling with the problem of uncertainty caused by the unstabilized macroeconomic environment and policy shifts.
With all of this ongoings, some of the solutions preferred to ease these challenges include:
1. The need for government, and non-governmental organizations to create Seminars and workshops initiatives and other forums, to establish a platform for the interaction of SMEs owners/managers with others which can help to improve on their management capabilities.
2. Government should also provide the necessary infrastructures in order to ease the burdens and thereby encourage and promote rural industrialization.
3. The SME owners/managers should strive to develop effective marketing strategies in order to boost business operations which will become profitable.
4. It is important for SMEs to develop good personnel management policies to avoid crises that could affect their business.
5. Local business owners should take to proper planning, realizing his strengths and weaknesses before diverting into any business to avoid mishandling.
6. Goverments should help create a macroeconomic environment that is stable as it will enable these local businesses to make reasonable forecasts on costs, turnover, and return on investment.
7. The government should help in making funds easily accessible to SME owners/managers, be it short or long term loans that could help to encourage them to execute their business plan.
8. SMEs operators should also develop their competences in managing and sustaining their businesses by constantly engaging in training, research and development.