I Should Think That Although Many People Need A Car to travel to work and Home That statistics say that More People Default On Car Payments Than Mortgage Payments As It is A Home For The mortgage Owner And His Family. There is Some Help For Mortgage Holders and Families in The UK Who Are In Dire Need. Whereby In Most Cases Eventually The Car Is Re Possessed From The Debtor. Hence Many More Cases And Much More Of A Risk For The Car Loan Finance House. If A House Is Repossessed The Mortgage People Will Get All or Most Of Their Money Back. Property Normally Increase In Value.
Not So For The Car Loan For Eg. A Simple Exampled. A Car Purchased For £5000 .in Spring Time And Deposit Of ,£1000 Is Paid ( I Do Not Know The Minimum Percentage Deposit Required) Some Car Hypermarkets Either Used A 2nd Finance House as Well As The Original??? Or Used A High Premium Insurance Policy To Guarantee The Loan Which The Car Buyer Had To Pay in addition To his Loan Payments.
Leaving £4000 To Be Paid For The Car. The Buyer Defaults After Paying £150 per Month For 4 Months. Two Months Later The Car Is Repossessed. It Is November Time When Cars Are Not Selling Too Well. The Car Has Not Been Taken Care Of. Out Of The Original,£5000, The Dealer May Have Made £1500 Profit On The Car. Hence £5000 minus £1500 Being,£3500 Minus The Commission Of Say £300 That They Have Passed On To The Dealer. Leaving Therefore £3200 Value earlier In The Year. In the November The Car Is Put Through The Auction In A Sorry State. The Best That it sells for Is £1000. Then There Is The Cost Of The Court Order The Recovery Vehicle The Vehicle Compound Fee Then The Transporter To Take It To The Car Auction Site And Administration Probably Uses Up The £1000, That it is sold for or Even More
The Finance Company Loses At Least .£4000.
It Wants To Try And Ensure That They Do Not Lose Out To Similar People Who They Finance Their Car Purchases. Also It Could Have Been £150 per Month For 48 Months Which Totals £6200 Minus The £300 Commission.PaidToThe Dealership is £5900 Minus the £4000 loan isv£1900 Say £2000 Loss Of Busines that Someone Else Would Have Brought for Them. Total Loss £4000. Potential Loss £2000 Total £6000. Although Their Rates Are High. It can Be Seen Why Car Loans Have A Bigger Impact On A Persons Credit Report. This Is merely An Example Of How The Loss To The Car Loan Finance House May Occur.
Author: Ronald Mather
Source: Quora
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