The Car Loan

The financing of a vehicle, whether it is used for tourism or industry, no longer a variant of consumer loan. However, the financing of such goods has particular characteristics, so that they have become a new product, called the car loan. The loan to buy new or used vehicle is one of the most popular financial institutions. The high volume of business allows them to offer special conditions. The loan for the purchase of vehicles usually have interest rates lower than traditional consumer loans. In addition the repayment can be made larger, in practice there are entities that offer a deadline rules 6 and 7 years and some will extend to 10 years.

Along with the traditional lending to finance these acquisitions, have appeared some new financial products. Such is the case of so-called partial funding to the shorter. It is financing a vehicle of a certain price, for example 22.00, but not the total amount, but on the one hand, for example 12,000, in the short term, eg three years. In this way there would have been funded or paid 10,000 to be assumed that the residual value would have the vehicle within the said period of three years, for which the loan was arranged. Those types of loans are trying to attack the large depreciation of value suffered by car, while making possible the change of vehicle, in small time frames. In reality what has been paying a lease rent for the use of the vehicle, since the consumer does not become the owner of the vehicle. It is true that many institutions, completed the initial period, for which they entered the life of the loan offer consumers the option of returning it or buy it, the residual value agreed. You may get additional funding for the release of this second option.

But in practice it is common to use the alternative of having to arrange a loan, you generally choose a vehicle other than finance. Another novelty is that many banks offer the possibility of including in the capital of the mortgage loan to request the amount needed to finance the purchase of a new vehicle. In this case the stakes are much lower, but it should be noted that since repayment of the mortgage loan is usually long, long time will be paying the car, practically have to buy another before the end of the life of the loan. However, if the loan is well calculated contributions may be small and thus has been funded by the differences of interests, successfully acquiring the vehicle.

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