Wednesday, May 30, 2012

General Idea On Auto Finance

Buying an automobile is such an exhilarating thing. If your budget is limited, there are copious numbers of models and add ons to choose from. Once you decide what you want to buy, the next step is looking at the auto finance options. One of the most expedient and cheapest mode to fulfill the desire of owning an automobile is auto financing. Auto finance means financial assistance given to an individual for buying an automobile like scooter, bike, truck, car, lorry and any other automobile as per desire of the buyer and which is simple to repay till its last installment. Ontario auto finance is combination of these factors: Low rate of interest, long repayment period, Low miscellaneous cost, No hidden cost, Flexible terms and conditions. It is also known as auto loan. Its repayment amount depends upon three factors: Amount financed, loan term and Interest rate. These factors are the core of any financing deal.

Amount financed is the amount financed which will be equal to the difference between the cost of an automobile and the amount which the buyer can arrange himself. Loan term means period of repayment. Generally, the lender offers lower monthly installment when the repayment period is longer. Interest is return to the lender for undertaking risk on providing finance to the buyer and, these can be taken into account as charges for the buyer. Interest rates is decided and settled on the basis of certain factors such as prevailing market, base rate, amount borrowed and credit score of a person. As a result, interest rate differs from person to person. It is also recommended that the buyer must be aware of all terms and conditions of the financing deal. He must make sure that the deal doesn't compromise of hidden cost, as making such undesirable payments regularly increases the cost of the financing.

Ontario auto finance while providing finance for an automobile, the person with poor credit score needs to pay high rate of interest compared the person with good credit score. They are of two types: secured auto financing and unsecured auto financing. Secured auto financing is finance where borrowers offer collateral against the financed amount and in return the lender proffers low rate of interest as he feels secured. Unsecured auto financing is exactly the opposite of secured auto financing. In this financing, the borrower does not offer collateral against the financed amount and in return the lender proffers high rate of interest as he feels unsecured and doubt on creditworthiness of the borrowers. The buyer must look for such a lender which have appropriate match with the financial needs and requirements of him.

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