Auto finance industry in Uganda; you can get a Car Loan and pay within 5 years
These days, you don’t have to have 100 per cent of the funds required to get that dream car in Uganda. There are a number of car dealers working with banks to ease payment terms over a period of time. Taking car loans or call it auto financing has helped a number of individuals and companies to acquire cars or even fleets of cars after making the required initial payments.
According to the Barclays Bank Uganda website, “Vehicle and Asset Finance is a form of secured lending that can be described as the financing of movable assets, plant and equipment.” At Barclays, security is the asset financed for the loan until the customer has fulfilled his repayment obligations. Assets include trucks and delivery vans, buses and cars, tractor heads and trailers.
According to Spear Motors’ Sales Director, Gilbert Wavamunno, they do carry out auto financing options with most of the major banks. “It is up to five years maximum. One has to pay within five years after making a 20 per cent cash deposit commensurate with the cost of car. The interest rate depends on prevailing market rate.
“You don’t have to necessarily go to the bank, we can arrange for a sales person from the bank of your choice to come to Spear Motors and finalise the deal,” he explains. He adds that it is the bank that retains one’s log book till they complete payments.
Process made easier with some Uganda Car Dealers
Wavamunno says they basically act as a link with the bank once you arrive at their showroom and want to make a purchase. Although previously this kind of arrangement was associated with brand new cars, used car dealers have also embraced this alternative.
At Motorcare Uganda, Pascal Bwire, a sales professional, says their finance leasing system is dependent on the bank’s requirement or risk. You can deposit 10, 15per cent or 20 per cent and clear in installments within five years. The bank becomes the owner of the asset till final payment is made,” he explains.
Bwire adds that although they usually deal with Stanbic and DFCU, they cannot impose a bank on you. They can still work out an arrangement with the bank you are using.
According to Sebtain Shah, a Sales person at Cosmos, it depends on the car’s year of manufacture. “For 2005 models upwards, one pays 25 per cent while for 1998-2000, clients pay 50 per cent. This is because banks don’t want to take risks on older cars. Stanbic accepts 2003 upwards,” Shah explains.
He adds that Centenary Bank, Post Bank and others accept 1997 models and upwards at 30 per cent. DFCU accepts from 1998, 2000. “In some cases, customers deposit 10-15 per cent or 30per cent in the bank then the bank pays us 100 per cent,”Shah says.
Some challenges with Uganda Banks
The only challenge is that the banks at times take long to pay. Sometimes the banks ask for logbook in the customer’s name or in the bank’s name under the new registration system. “The money takes long to come, say about three weeks to a month but we get it,” he notes.
Rehman Motors’ Manager, Suleman Mabingo says one opens an account with Equity Bank and the bank pays Rehman.
At Jambo Auto Mart, Nadim Mohammed, the Sales Manager says a customer pays 20-30 per cent deposit to them and the balance is cleared by the buyer’s bank of choice. He says Stanbic wants cars made in 2000 and above while Equity has no fixed year of manufacture.
The Monitor Newspaper Sept. 2012
