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M.FURQAN YOUNAS MUHAMMAD AHMAD JUNAID ALI SULERI NABEEL TAJ GHORI
INTRODUCTION
Auto finance arose because the price of cars was out of the reach of individual purchasers without borrowing the money. The funding for personal car finance is provided either by a retail bank or a specialist car financing company. Some car manufacturers own their own car financing arms, Such as ford with the ford motor credit company
DEFINITION
The financier finances for acquisition of vehicle while payment is to be made in equal installments comprising of both principle and interest of the period for which a vehicle is financed.
GET
FOR FINANCING
Amount
$1,500
$600 $75 $260 $275 $35 $75 $80 $50 $1,450 $50
ARE YOU
=
Monthly Payments
The vehicles financed by the banks shall be properly secured by way of hypothecation. Payments against the sale orders will directly be made to the manufacturer/authorized dealer by the bank Upon delivery, the vehicle will immediately be hypothecated to the bank
REPOSSESSION OF VEHICLE
The clause of repossession in case of default should be clearly stated in the loan agreement mentioning specific default period after which the repossession can be Initiated. The repossession expenses charged to the borrower shall not be more than actual incurred by the bank.
FACTORS TO BE IN MIND
Your target monthly payments Loan term Market Finance rates Down Payment Insurance Cover Hidden Charges
DOCCUMETS REQUIRED
FOR BUSINESS PERSONS : Copy of CNIC. Two recent passport size colored photographs. Last six months Bank statement(s). Residential utility bills (as a proof of residence). Business proof required. Copy of valid driving license (optional). Two references. Banks Signature Verification form.
DOCCUMENTS REQUIRED
FOR SALARIED PERSONS & SELF EMPLOYED: Copy of CNIC. Two recent passport size colored photographs. Last six months Bank statement(s). Recent salary slip. Employment certificate. Residential utility bills (as a proof of residence). Copy of valid driving license (optional). Two references. Banks Signature Verification form
BENEFITS
SHIFT OF BURDEN :
An auto loan will give you the advantage of buying a vehicle with monthly payments you can afford. TO BUILD CREDIT RATING : Auto loans also help build your credit rating, provided that you make the payments on time, THE OPPORTUNITY TO BUY A BETTER VEHICLE : that may have been too expensive if you were to pay cash. BENEFITS OF INSURANCE CLAINS: Insurance company will cover the damages under motor insurance and liability insurance covers
DISADVANTAGES
PAYING INTEREST :
Auto loan requires the customer to pay interest in addition to the principal, effectively raising the total cost of the car above the sticker price. Your interest rate will depend on a number of factors, such as Your credit history, The lending institution Economic conditions
DISADVANTAGES
FINANCIAL IMPLICATIONS:
Financing a vehicle can make it easy to bite off more. You might rationalize the higher monthly payment at the time by deciding to cut back on saving and investing.
DISADVANTAGES
HIGHER LIABILITY :
When you finance a vehicle, you're probably buying a brand-new or late-model used vehicle with a relatively high value, so your auto insurance premiums may also be higher. You have to carry higher liability and physical damage coverage than you normally would to protect its interests.
DISADVANTAGES :
BY COMMERCIAL BANKS
Following major banks are involved in auto finance
HBL UBL MCB NIB BANK CITI BANK BANK AL HABIB SUMMIT BANK BANK ALFALAH
DIFFERENCE BETWEEN
CONVENTIONAL CAR FINANCING & IJARAH
Transfer of risk
Down payment
No Option of returning the Option of return is there vehicle Insurance Under insurance act 1938 Under Takaful
CONCLUSION
It has opened new door for the banking sector to expand its business as well as expansion of the business of the automobile industry. Moreover customers can get their desired automobiles in a convenient manner which facilitates cash flow management and tax advantages .