As part of its efforts to boost demand for the purchase and support of locally produced vehicles in the nation, President Nana Addo Dankwa Akufo-Addo has announced that the government will soon launch an Asset Based Vehicle Financing Scheme.
The scheme, according to him, will afford Ghanaians the opportunity to purchase locally manufactured and assembled vehicles under the Ghana Automotive Development Policy.
Speaking at the commissioning of the Rana Motors KIA vehicle assembly plant in Accra on May 2, President Akufo-Addo was optimistic that the scheme will improve demand for vehicles and gain traction for components and kits produced domestically.
“Government will continue to engage in discussions that will lead to the expansion of the market for domestically assembled vehicles at the regional and continental level to drive demand and create the necessary traction for assemblers to transition into complete knockdown assembly which will be supported by components and kits produced domestically to feed into the supply chain”
President Akufo-Addo said government has thus far shown committed through the implementation of the zero-rating of Value Added Tax (VAT) on the sale of domestically assembled vehicles.
“This means that there is no VAT on the sale of domestically assembled vehicles even to the end-user as part of efforts to make domestically assembled vehicles affordable”
He further lauded the efforts of Rana Motors Limited who is believes has significantly contributed towards Ghana’s private sector and government’s industrialization agenda even in the wake of the current economic challenges.
President Akufo-Addo however said the state-of-the-art facility has the capacity to produce some 30,000 vehicles annually with the opportunity to further increase.
The Rana Motors KIA vehicle assembly plant is located at Amasaman in the Ga West Municipality of Greater Accra.
The plant is a landmark achievement that marks the roll out of the first generation of KIA vehicles assembled under the Ghana Automotive Development Policy of the government.
Meanwhile, the vehicle assembly plant currently employs about 50 workers and offers indirect employment to about 300 persons.
Asset-Based Vehicle Financing Scheme is a financing program that enables individuals or businesses to purchase vehicles through a loan that is secured against the vehicle itself. The scheme is designed to make vehicle ownership more affordable and accessible for those who may not have the financial means to purchase a vehicle outright.
Under this scheme, the lender provides financing to the borrower to purchase a vehicle, and the vehicle itself is used as collateral for the loan. This means that if the borrower defaults on the loan, the lender can repossess the vehicle to recover their investment.
The Asset-Based Vehicle Financing Scheme can be used to purchase a variety of vehicles, including cars, vans, trucks, and buses. The financing terms typically range from one to five years, depending on the type of vehicle and the borrower’s creditworthiness.
The benefits of this scheme include lower interest rates, flexible repayment terms, and the ability to own a vehicle without having to pay the full cost upfront. This makes it an attractive financing option for individuals and businesses who need vehicles for personal or commercial use.
However, it is important to note that taking out a loan to purchase a vehicle also comes with risks. Borrowers should ensure that they can afford the monthly payments and that the vehicle they are purchasing is a sound investment. It is also important to choose a reputable lender and carefully review the terms and conditions of the financing agreement before signing on the dotted line.
The main advantage of ABVFS is that it allows individuals and businesses to purchase vehicles without having to provide any other form of collateral. This makes it easier for people who may not have other assets to secure a loan. In addition, the interest rates on ABVFS loans are generally lower than those on unsecured loans, since the lender has some security in the form of the vehicle.
Another advantage of ABVFS is that it allows individuals and businesses to purchase vehicles that may be too expensive to buy outright. Instead of having to save up for years to purchase a vehicle, individuals and businesses can finance the purchase and pay for the vehicle over time.