Motor vehicle financing is often referred to as vehicle loan or invoice financing. This involves an agreement between lender and borrower for the financing of a vehicle. Lender refers to himself as a lender or he can be referred as the bank or the financial institution that lends money under the name of security. The borrowers are those who borrow money from lenders. The terms used for describing the borrower differ as per lender and situation.
G. When the retail installment contract is an existing second motor vehicle finance deal, the financier, lender, or lessor shall decide the interest rate and charges relating to this sale, assumption, lease, purchase or repurchase of this motor vehicle and shall specify the term of repayment. The new motor vehicle finance deal is entered into after a new purchase price has been determined, including taxes, title and registration fees if any. The latest 3rd edition of the car owner’s manual contains the legal requirements and procedures to get a motor vehicle finance loan. This includes the credit score, the age of the borrower and whether the borrower is self-employed or not.
H. There are various types of motor vehicle financing. There are two types of financing available for used motor vehicles; a dealer’s loan and an unsecured loan. In the former, a dealer holds the exclusive right to finance a vehicle. The loan amount provided depends on the value of the car being financed.
I. The best place to look for motor vehicle financing is online. You will find hundreds of finance companies and brokers on the Internet. Some sites may require you to fill out an application form in which you provide personal and financial details. Most of these motor vehicle finance companies use online auto credit facilities to facilitate speedy in-depth analysis of your financial position and capabilities. These websites provide valuable information about your vehicle, your credit history, income potential and your spending habits.
J. Once the financial institution receives all relevant information from the borrower regarding his or her motor vehicle requirements, they will prepare a loan package. It is essential for both the bank and borrower to understand the terms and conditions of the loan package before signing the agreement. This is because some lenders may require borrowers to pay high interest rates and balloon payments. On the other hand, there are some companies that offer low interest rate loans but charge very high processing fees and charges.
K. The most important factor to be considered before purchasing motor vehicle financing is how much the individual is capable of repaying as the payment period for a motor vehicle loan. Some individuals may only have a few months or years to repay a motor vehicle loan while others may have to fulfill his or her requirements for many years. It is also vital to consider the financial capabilities of the borrower in choosing a suitable motor vehicle type. Motor vehicles such as motorcycles, cars and trucks come in different types like family cars, sedans, Cougars, SUVs, golf and racing cars, among others.
L. The interest rate charged by motor vehicle finance companies will depend on the credit worthiness of the borrower. There are some motor vehicle finance companies that offer loans to people with poor or no credit worthiness. Although poor credit is not a hindrance to acquire a motor vehicle, it is advisable to compare the interest rates of different motor vehicle financing companies before choosing the appropriate one to obtain a loan.
M. The main advantage of motor vehicle financing is that the motor vehicle can be purchased within a short period of time. Some people who own cars opt for immediate motor vehicle purchases while others prefer procuring loans for longer term use. There are certain factors to be considered before going for motor vehicle financing. The information provided above is designed to assist you in making an informed decision to buy or invest in a motor vehicle.