Owning a car is thrilling; a significant milestone often experienced by individuals who have recently acquired a driver’s license or have reached a stage where personal transportation becomes a necessity or desire. However, owning a vehicle in Ghana in recent years has become a luxury many are unable to afford due to many factors, including high import costs, burdensome vehicle taxes, low income, and inflation rates.
Regardless, for some people, it is imperative to take this bold step for many reasons. And they do this sometimes with their life savings, loans from friends, fintech companies, or banks.
Although vehicle acquisition schemes have become very popular in Ghana over the last decade due to the cost of vehicles, exchange rate vulnerabilities, and recent flexibilities in lending parameters, there are many people who find themselves at sea when making decisions about auto loans.
Here, we will look at some financing options available in Ghana and how you can make a well-thought-out decision in your quest to get your new car with the help of financial institutions.
A look into auto financing in Ghana and various options available
Bank loans
Traditional bank loans are one of the most popular ways to finance a car in Ghana. Banks are a dependable choice for people wishing to buy their ideal car because of their affordable interest rates and adjustable payment schedules. In order to help potential car owners, automakers have also cooperated with some of these banks; nevertheless, the conditions and loan structures vary from one bank to another. However, there might be a number of obstacles in the way of approval, like strict regulations and drawn-out approval procedures.
Hire purchase agreements
Another popular option for auto financing in Ghana is hire purchase agreements. With this option, you can pay in installments over a specified length of time and still drive the car of your dreams. Hire purchase agreements offer a simple way to get your ideal car with a small upfront financial investment and the assurance of ownership at the conclusion of the contract.
Lease financing
Lease financing may be the solution for individuals looking for a more economical and adaptable strategy. With lease financing, you can take advantage of the benefits of owning a new car without having to pay for it up front. For car enthusiasts, leasing financing provides a simple choice with fixed monthly payments and the ability to upgrade your automobile on a regular basis.
In-house financing
For car buyers, in-house finance presents a special chance to obtain financing straight from the dealership or auto seller. In-house financing simplifies the car-buying process with customized payment plans and easy on-the-spot approvals, making it a practical option for individuals seeking a smooth experience.
Auto loan challenges
An average of 100,000 cars were imported into Ghana per year in 2022, according to a data released by the Ghana Automobile Dealers Association. Access to loans for individuals continues to be a major obstacle as the government’s proposal to implement a vehicle financing program for domestically produced automobiles is still in progress.
In recent years, the country’s low rates of automobile ownership—11 percent per 1000 residents—have been directly attributed to high borrowing rates and low incomes among paid earnings. Since the majority of people live outside of Accra and other large cities, taking public transportation every day is a hassle you should try to avoid if at all possible.
Even though 80% of Ghana’s firms are in the informal sector, financial institutions still view lending to SMEs as dangerous since they often lack proper business ideas or make unprofitable investments that result in high default rates.
Takeaways for potential car owners
At the end of the day, you do not necessarily have to crash your entire life savings if you want to get a car, whether new or used. There are many options available as modern financial systems are providing flexible payment plans to allow you to own a vehicle without breaking a sweat. The best thing you can do before taking a step is to do proper research to help you understand any option you go for, and make sure it is convenient enough not to put you in a difficult position in the future while you are redeeming yourself.
