Vehicle finance refers to all the different financial instruments that enable an individual to obtain a vehicle, such as used car loans and lease contracts. These products are often referred to as financing instruments because they give loans to people to pay for the cars they want. These types of loans can either be secured or unsecured, depending on the agreement of the lender and borrower. The advantage of secured vehicle finance is that the borrower guarantees payment in case of default.
As vehicle finance becomes more popular, many lenders have come up with new financing products. One of the most popular today is the Mozo car loan. Mozo is a new type of financing product that offers low interest rates. This has been particularly effective for first time car buyers, as the interest rates are much lower than most other vehicle finance products. The Mozo is not yet available in all parts of the UK but is expanding its coverage at a rapid pace.
The Mozo typically offers a fifteen to the twenty-month fixed-term loan term. This means that for the first six months of the loan term, the vehicle will only be owned for that period of time. At the end of the fixed term, the borrower can then choose to take advantage of a range of repayment options, which include a variety of options such as leasing. The monthly payment will be significantly lower than it would be for a conventional financing product.
A further advantage to this type of vehicle financing product is that the initial repayment is typically quite low. In comparison to other vehicle finance products, the monthly payments are usually only a third of what they would be on conventional loans. This means that the borrower saves money on both the initial payment and any ongoing monthly repayments that they might be faced with. The benefit is that the process is straightforward, unlike a complex transaction such as leasing where there are complex legal issues and documentation requirements. Another advantage of Mozo financing is that it is a very flexible option. The process can be tailored to suit the individual requirements of each individual customer.
When a vehicle is purchased, most finance companies will require that a certain level of equity exists in the vehicle. This is referred to as the loan balance. The amount of equity that is present in the vehicle is usually stated as the car value in the sales documentation. It is, however, important to understand that the level of equity that exists in the vehicle will differ between buyers. This is because different vehicles will generally have different loan lengths. It is for this reason that most vehicle purchase contracts specify specific loan length provisions.
Vehicle finance products are typically provided by finance companies that are either independent or specialist lenders. These lenders are able to provide a full range of vehicle finance products. These may include the commonly known secured loans, such as borrowings against the vehicle’s value, loans with varying lengths of leeway, as well as more specific types of finance such as the flexible option finance and the zero percent financing options. In addition, some lenders offer leasing finance options to customers. These can be particularly useful for those who own a used vehicle and would like the option to buy a new one at a later date.
Vehicle finance options are typically broken down into two different categories based on the level of financing required. The secured loan is based upon the fact that a borrower has an asset that they can secure with collateral in order to get the finance they require. Typically this would be the property that the borrower owns. While some might argue that this is not a tangible asset, the fact remains that it is a security. Therefore, if the vehicle owner should default on their loan the secured loan could be converted to unsecured finance and the collateralized asset would then be the tangible asset. An example of this would be a lease deal.
Another form of vehicle financing options is where you take out a signature loan or a signature credit. With a signature loan, the lender will be requiring that you use your vehicle as collateral in order for you to get the finance. However, the interest rate that the lender would charge will generally be considerably higher than that of an unsecured loan. As such, it may be a better idea to use a cosigner with a bank that offers these types of financing options to make sure that the interest rate that you are charged will be reasonable and competitive.