When applying for credit or finance to buy any new or used Ford car or truck, it is quite a good idea to clarify the terms of our used in terms of both the lender and the type of finance or credit that they are offering.
Ford, in common with other auto manufacturers have their own finance division which is known as Ford credit. This is sometimes referred to in a more slang type term as Ford finance meaning simply borrowing money to buy or lease the car.
Ford finance is also a term used when arranging any type of financial credit from any other lender such as a bank or a credit union with the express purpose of buying a Ford vehicle.
Any type of finance arrangement arranged directly with full credit is likely to be what is known as a secured loan. This means simply that the vehicle that the money is borrowed in order to buy is in the sense security or collateral for the loan.
Ford Credit Finance
This means that if the individual taking out the loan failed to make any repayments then the credit provider in this case, Ford credit, can repossess the vehicle and resell it in order to regain some of the money they have lost through the defaulting loans.
It is worth pointing out that the individual still liable for any balance owing after the sale of any repossessed vehicle. This normally occurs when the value of the repossessed vehicle has fallen beneath the amount left on the loan, a fairly normal occurrence considering the depreciation of the value of vehicle and the length of time of most auto loans.
It is also possible to arrange an unsecured loan, although this is more likely to be with a traditional lender such as a bank or a credit union. In the instance of an unsecured loan the asset, in this case the Ford car or truck, is not used as security and therefore the lender has no automatic right to repossess it in the event of a default on the loan or of the individual being unable to pay it.
Depending upon the sums of money involved the lender would have to take legal action to either try and reclaim the vehicle or the amount lent was outstanding. It is also important to realise that the interest rate charged on an unsecured loan is likely to be significantly higher than that charged on a secured loan, as the risk to the lender is seen as that much greater.
