United Bank for Africa Plc (UBA) is expanding its consumer lending portfolio by financing vehicle purchases, as rising automobile prices increasingly push Nigerian consumers and businesses towards credit rather than outright cash purchases.
Under a new partnership with Mikano Motors, UBA will finance up to 70 percent of the cost of eligible new vehicles, leaving customers to provide a 30 percent deposit and repay the financed portion over 36 months at an interest rate of 23 percent.
The initiative, branded “Drive Your Dream Today,” signals a growing push by financial institutions and auto dealers to use structured consumer credit to keep vehicle sales moving in an increasingly expensive market.
Rather than requiring buyers to mobilise the full purchase price, the arrangement spreads a significant portion of the cost over three years, potentially widening the pool of customers able to purchase new vehicles.
The partnership reflects the increasing role of consumer finance in Nigeria’s automobile market, where high vehicle prices have made outright purchases more difficult for households, professionals and small businesses.
UBA said the facility is open to salaried employees as well as self-employed Nigerians, entrepreneurs and other eligible customers without conventional monthly salaries.
Chidi Okpala, UBA’s group executive director-designate, personal and business banking, said the financing model was designed to reduce the initial financial burden on customers.
“A customer puts down 30 per cent, we finance the rest, and they pay us back comfortably over a three-year period,” Okpala said.
Self-employed customers brought into lending pool
One notable feature of the scheme is its inclusion of self-employed customers and entrepreneurs. Traditional salary-based lending models can leave business owners and informal-sector professionals with fewer options for accessing structured consumer credit, despite having viable income streams.
Frank Okoh, UBA’s group head, consumer lending, said the financing structure was designed to accommodate both salaried and business customers.
Prospective borrowers can begin with an eligibility assessment at a UBA branch or through the bank’s consumer lending channel. Following approval, the customer obtains a proforma invoice from Mikano Motors for the selected vehicle before completing the financing process.
The model effectively integrates the lender, dealer and customer into a single acquisition process, reducing some of the friction associated with arranging vehicle finance independently.
Auto dealers seek financing to protect demand
For Mikano Motors, access to financing could help address one of the biggest constraints on new-vehicle sales: affordability.
The dealership expects the UBA facility to expand the number of customers able to purchase its vehicles through installment financing.
Tarek Mostafa, general manager of Mikano Motors, said the company would support customers beyond the initial sale through maintenance, genuine spare parts and other after-sales services.
That creates an additional commercial opportunity for the dealer, since a larger financed customer base can generate recurring demand for servicing, parts and maintenance over the life of the vehicles.
The financing arrangement, however, does not eliminate the cost of vehicle ownership; it redistributes it over time.
Customers must provide 30 percent upfront and pay interest of 23 percent on the financed portion over 36 months. The structure therefore gives buyers greater flexibility over cash flow while adding financing costs to the overall cost of acquisition.
The UBA-Mikano partnership comes as banks increasingly look for ways to expand retail and consumer lending while dealers seek alternative mechanisms for sustaining demand in a high-cost environment.
By embedding financing into the vehicle-buying process, the partnership creates a model in which access to bank credit becomes part of the sales proposition rather than an entirely separate transaction.
The initiative also aligns with UBA’s initiative to build a stronger consumer-credit culture, according to the bank.
