Vehicle financing is an effective way of buying a car if you aren’t currently equipped with the right amount of money necessary for buying it on your own. In other words, it makes it easy for a person to acquire a car with any other arrangement than by paying with cash.
Vehicle financing is available to both private individuals and to individuals who want to lease a car for business reasons. Here are some things you should know about vehicle financing that may come in handy in the future.
What type of finance option is vehicle financing?
Vehicle financing is a type of direct lending, where you obtain a loan directly from your bank or finance company. After receiving the loan, you must also agree to pay back the loan with additional financial charges. Once the contract is complete, you can then use the loan you have gotten to buy a car directly from the dealer. Such type of a car is called a chattel mortgage car, as the finance company takes out a mortgage of the vehicle that is to be bought. After the completion of the repayment, the mortgage is lifted and the buyer becomes the owner of the car.
Beneficial features of the chattel mortgage
Chattel mortgaging has a number of benefits when it comes to financing a car, such as having a choice of terms that ranges from twenty four to sixty months, there may be tax reductions available if the if the car is used as chattel mortgage car for businesses, the choice to use a deposit that can sufficiently reduce the size of the loan, the mortgage is secured against the vehicle, this leads to lower interest rates. By using chattel mortgage, there is also a variety of residual value or balloon value options, that can be as high as 60%, but it depends mostly on the type of vehicle you are getting.
How to apply for vehicle financing
You will most likely be asked by the Finance and Insurance department manager to fill out a credit application that will require information such as your name, date of birth, social security number, your occupation and source of income, total gross monthly income, and financial information including things like your credit card accounts and your current debt obligations. And lastly, you will also be required to state your current and previous addresses of your places of stay and your current and previous employments.
It is also recommended to get a copy of your credit report and most importantly, to read your contract thoroughly before signing it.