subject: Different Types Of Car Finance Available For You [print this page] Car finance is any financial agreement whereby a person is allowed to purchase a car by any method other than by paying the whole amount at one particular point of time. Here a third party helps the acquirer to raise funds to compensate the dealer or the original owner. Car finance might be required by both businesses as well as as individuals and various different types finance are available to both. Businesses provide various advantages like tax and cashflow and therefore market share for each sector differs.
The need for car finance arose basically because of the fact that the prices of cars are high and are out of the reach of many individuals and so they need to borrow money to buy cars. The funds may be given by either a specialised car financing company or by a retail bank. There are also various car manufacturing companies like Ford which have also come up with their own financing units.
The finance may be arranged either by the dealers themselves who provide the cars or it might also he arranged by finance brokers who take commissions. These individual brokers provide various different finance options but in the end the options should be selected after considering ones own capacity and lifestyle.
Many different products are available for personal car finance and personal car finance is a subsector of personal finance. The various different products of car finance are hire purchase, car lease, contract purchase and straight car loan. Thus, car finance includes leasing but is not simply restricted to it. So many forms of finance are available because of the fact that cars have a high scrap value and can also be sold in second hand markets and this enables various forms of financing other than unsecured loans.
There are various types of financing where the finance company may keep ownership of the car during the contract period and this form of finance where the interim ownership is with a third party and is subsequently leased to the acquirer is more typical in the case of business assets than in the case of private assets.
Types of car finance
As stated above, various different types of car finance are available and these are discussed in detail below.
Hire purchase system
This is an agreement between the dealer and the buyer where the buyer has to pay a certain sum of money in the beginning and then has to pay monthly installments and the value of these installments depends on the amount of money which is still owed to the dealer. The car does not become the property of the buyer until all the installments have been paid.
Re-mortgage
Under this method, the owner may remortgage the home and use the extra money for the purchase of the car.
Interest free car financing
This type of financing is usually available with new cars and the buyer can purchase the new car without having to pay any interest on the cost of the purchase.
Personal contract purchase
This form of finance is generally used with banks and the monthly payments are deducted from the bank account of the buyer's account. This agreement can be followed for two to four years and after this time period the buyer may either pay off the car by paying the remaining amount or he may return the car.
by: Amber Sayon
welcome to Insurances.net (https://www.insurances.net)
