Vehicle finance refers to all the different financial products that allow an individual to get a vehicle, such as vehicle loans and vehicle leases. The easiest way of obtaining vehicle finance is by taking out a loan, and this can be done from several lenders online or via the high street lender. A loan is a long-term arrangement where a person agrees to pay back the lender over a set period. This is usually for a fixed amount of money, and a repayment date will be decided upon. Repayment may be in the form of monthly payments or lump sum payments.
These vehicle finance products can be confusing, so it is advisable to go through some providers who can explain them in layman’s terms. The terms will be specified in a loan agreement, which is a legal document drawn up by the provider with the relevant authority. This legally binds the provider and ensures all parties involved have a clear understanding of the repayments involved. It is essential for you to read the agreement carefully to make sure you are happy with your vehicle finance products.
The other vehicle finance product is a personal loan, which can also be taken out from either the high street lender or online. Like a loan, a personal loan is a long-term agreement between an individual and lender. However, in a vehicle loan, the amount of money that you borrow is based on your original price list or the sales price of your vehicle. If your vehicle sales price has increased since you originally took out your vehicle finance products, then your repayments will have to reflect this increase.
In addition to interest rates and monthly repayments, vehicle finance products also come with different options, such as choosing between an open end and closed end loan. An open-end loan means that you can take out a larger amount of finance over a longer period of time. This is very useful for those who need larger sums of money over a longer period of time and has many advantages. An open-end loan also means that the monthly repayments are spread over a longer period of time, allowing a lower monthly repayment to be made. However, because the amount of the monthly repayments will be larger, it also means that the overall cost of borrowing will be greater. A closed-end loan is a different situation altogether, as the repayments are made in lump sums, meaning that the total cost of borrowing will be reduced.
One of the other key facts associated with vehicle finance loans is that there is a specific amount of the monthly repayments that you cannot exceed. These repayments are referred to as points and can only ever be exceeded by a ten percent deposit against the total amount you wish to borrow. Any more than this and you risk losing your no points, so it is always a good idea to get this sorted out early on in the vehicle finance deal. If you go over the amount you can afford, you will find that interest rates start to increase rapidly, and by the time you realise it, the car loans have been increased to their maximum level!
The final key fact related to vehicle financing is that it is not necessarily an exclusively American phenomenon. Many people from across the pond actually end up paying less for their car loans than their local dealerships can offer them. This is because the majority of Americans who purchase a new or used car do not make use of their local dealership’s financing options. In fact, a study carried out by the Consumer Federation of America found that nearly 25 percent of those who bought their cars from a dealership did not make use of their dealership financing facilities. This huge chunk of consumers clearly needed to learn about vehicle finance loans and how they worked – and it is surprising that they were able to do so relatively easily!
Vehicle finance loans are an important way of getting a loan for the use that you require at any point in time. You may only need a vehicle finance loan once, for example, to buy a brand new car. This means that it is easier to get an affordable car loan with lower interest rates than you would get with a personal loan or home equity loan. Alternatively, you may be planning on buying a second hand vehicle – and this is a much easier situation to deal with. If you are planning on buying a second hand vehicle, then a personal loan or home equity loan is not the way to go!
Therefore, the bottom line is that vehicle finance loans are certainly a great way of getting finance for your new vehicle. However, you need to know what you are looking for to ensure that you get the best deal possible. Vehicle dealerships tend to group loans together by vehicle type and make – and this makes shopping around for financing easier. Make sure you shop around for a vehicle finance loan that deals with your particular vehicle type and make. Also, make sure you shop around for the lowest rate possible!