Car Financing Terms Made Easy
Posted on February 18, 2009, under Car Financing.
For this post, I thought we should explore the meanings of terms and phrases used very extensively in the car finance sector. You hear terms such as chattel mortgage, hire purchase, novated leasing, closed-end leasing, installment plan and leasing bandied about with great nonchalance, but do you ever pause for a minute and wonder what any of those terms really mean?
I know that I used to be very confused about certain terminology that would be taken for granted by every auto finance agent I met, while I would be struggling to keep up with the conversation. Since I’ve been in the vehicle finance sector myself, I have educated myself about these terms, so that I can project and present an informed and knowledgeable answer to questions posed by anyone who wants to know about these terms in connection with their particular circumstances.
Regardless of the business, it is very important to understand the language and the terms in which that business is being conducted or else you could find yourself in a very embarrassing and financially unstable position because you were unfortunately not aware of the power of the ideas you were speaking about. Every car aficionado should learn the meanings, context, and purpose of car finance terminology early in his or her interest.
I will make a series of blog posts where I shall discuss various terms and phrases that crop up in vehicle finance agreements and discussions. I will try to provide as much information about these terms as possible but please remember that this shall at best be a sort of glossary of terms and meanings to which those terms may correspond. I will of course try and include as many specialized terms as I can find, however, if you do find what you are looking for here, mail me or ask mea question and I will gladly get back to you.
Shall we begin then?
Alright! Starting out:-
Chattel mortgage – What is chattel mortgage? Very simply put, chattel mortgage is a legal term applied to a contract adopted by certain states that have adopted the English law system. According to the law, under a chattel mortgage, the purchaser (person making a purchase) takes a loan upon an article of movable personal property (which is known as the chattel) and purchases the article of movable property from the lender. The lender then proceeds to secure his loan with a mortgage over the chattel. With me so far? The chattel is legally transferred to the purchaser at the time of the purchase and the loan is considered repaid, the mortgage upon the chattel is taken away. Thus, when you take up chattel mortgage, you borrow money to buy a car, and secure the loan by giving up a mortgage. You are given legal possession of the car, and your mortgage is taken off when you repay the loan in full to the person from whom you have bought the car via chattel mortgage.
Hope this helped!
