Many people can’t buy the cars just because of recent economic turmoil. The only option left to them is to use the local or public means of transportation. It was because they couldn’t repay the Auto loans they took for Buying their own cars. It is the right of the lender that if the client is not making regular and timely monthly installments, he can take the Car back. All of these factors are to be considered regarding the decline and specifically the lender-borrower relationship.
Decline in the Automobile Industry
There has been a decline in the automobile industry for a couple of years which has affected the economy of the country as well. Therefore, the recovery from this decline in the economy is solely dependent upon the progress of the automobile industry. For this reason, the Car manufactures have taken certain steps for the improvement of the industry. They have brought a lot of changes and created a number of opportunities in for the lenders and borrowers.
In the past, most of the dealers used to prefer to fund the new cars rather than the used ones. This reduced the opportunity for many people to finance their private vehicles. After the economic turmoil that has occurred recently, the private party Auto Loan lenders got a prominent place in the automobile industry and the society.
Private Party Car Loans
They got an importance after the turmoil. These lenders used to fix the Auto Loan amount according to the invoice of the client. They had to verify the commercial context and the authenticity of the customer’s documents. This has to be done to assure the amount given to the customer.
Normally higher rates of interest are applied in the Car loans given by the private party it is because there is a higher risk factor in this case. There is solution for this as well, if the competition in the market rises, you can have better options and thus can have comparatively lower rates of interest.
Criteria of Private Party Loans
If we specifically talk about the rates on interest in case of private party loans, they are still higher if we compare them to the general market. Anyhow, these loans are based upon two criteria.
- One of the criteria is based on the Credit worthiness of the borrower.
- Other one is based on the Car’s value in the general market.
These types of loans are preferred by the people because they can easily negotiate about the Car prices and related concerns. They just have to give the accurate evaluation of the assets and the Insurance coverage on their vehicle.
Auto Loans-Under Privileged People
Most of the low income, poor and under privileged people of the society prefer the private party loans. They have this preconceived notion that these parties can help them in having their dream Car. But they don’t have much idea about these types of loans.
Short Comings of Private Party Loans
Private party loans have many disadvantages. The foremost thing is the higher rates of interest. Even if they claim that the interest rates are not high, they are still higher than the market.