EDITORIAL: Banks should begin designing financial packages for the new VW cars

A visit to any bonded warehouse will be met by rows of second-hand cars, a feature that is common with many African countries. New cars are a rarity on our streets apart from government vehicles, or those owned by corporate or foreign organizations. Vehicle prices are way beyond many people’s financial means and most resort to bank loans, or if one is a senior civil servant, is facilitated by the state’s car loan scheme that works more like hire purchase. That is the state of affairs the world’s biggest car maker, Volkswagen (VW), finds when it begins setting up an assembly plant in Rwanda. It has promised to build environmentally friendly, low cost and fuel efficient cars. The question that remains is: how pocket friendly will the cars be? That is a question VW and financial institutions can help to answer. A partnership between the two sectors needs to get off the starting block at the earliest time possible. Arranging friendly financing terms is the only way VW and potential customers will both come out winners. Apart from accessible loans, leasing is another viable option that could be considered. One does not need to own the vehicle as it is more like renting. The advantage is that someone will be able to get a new car every few years depending on the lease conditions. VW intends to begin production mid this year so that should give banks and other stakeholders ample time to come up with friendly packages and sensitise the public on the advantages of weaning off second--hand and unreliable, and environmentally hazardous second hand cars.

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EDITORIAL: Banks should begin designing financial packages for the new VW cars