Finance Management

What was once considered to be a symbol of luxury and status has now been transformed into a dream even the not so opulent can create and turn to reality. The advent of car financing, custom designed to suit a gamut of customers from a varied background, has certainly made comfort a facility for one and all. The topic of car loans can be lucidly comprehended under the following headings:-

• Definition of car financing
• Benefits of a car loan
• Structure of a car loan
• Target groups
• Plans of refund
• Types of car finance
• Available sources

Definition

The topic related to car finance entails the usage of various financial products by individuals or businesses to acquire a car. The point of importance is to note, that all means comprise the definition except for a single lump payment to acquire the same.

Benefit of a car loan

A car loan allows the beneficiary or the borrower to acquire the car without one large single payment, which might actually be not feasible. The acquisition of a loan allows a borrower to raise his stakes or funds to possess a car of his choice without the actual possibility or affordability of the same.

Structure of a Car Loan

• The car loans are allotted by the credit units, usually a bank
• The amount allotted might actually be the entire amount or a percentage of the entire amount, as decided by the source or lender.
• Various plans are usually in vogue and the onus is on the borrower to  decide accordingly
• The interest rates are decided accordingly, which vary between different sources or lenders and even between various available brands as pre decided by the manufacturer and the lender

Target Groups

The target group might be an individual or a business group. The difference probably is the tax rebate benefits which can be utilized, in case of business groups or larger parties.

Plans of Refund

◦   Settling the debt is according to the plan which is agreed upon at the very outset.

◦   Plans usually range between several years.

◦   The longer the plan, the lesser the monthly installments, but obviously it implies a greater amount to be paid back as interest.

Types of  Car Loan

• Personal car finance
• Personal loans might include the following:-
  • Straight forward car loan
  • Hire purchase
  • Car leasing
  • Personal contract purchase
  • Non personal finance, usually referring to a business group or a larger client group

Available sources

• Usually various third party financers

Some car manufacturers have their own financing. For instance the Ford Motor Credit company and the Ally financial of the General Motors.