Ford Finance is a type of auto lending loan that is commonly referred to as dealership financing, whereby Ford offer auto loans to potential customers who qualify enabling them to buy their cars and trucks directly alongside arranging the finance at the same time.
These are known as secured loans, because they are in effect lead against the title of the vehicle itself, meaning that in the event of any problems repaying the loan when Ford can repossess the vehicle and get some of that money back.
The reason this is important is that a secured loan normally has a lower rate of interest than an unsecured loan.
Ford Credit is the finance arm of Ford, and is designed to help customers arrange finance or credit when wanting to buy or lease a vehicle. It should not be thought however that potential customers are given preferential treatment simply because they are looking to buy a Ford vehicle.
From Ford’s point of view, each customer’s assessed as a credit risk and a different made accordingly as to whether or not to lend the money or not, and if so on what terms and conditions.
Ford Finance Interest Rate
A Ford finance interest rate is the rate of interest that is charged to the customer on their auto loan or the period of the loan agreement.
Once an application for credit has been approved and agreed, the customer and Ford entered into a contract where the customer always the money as a secured loan for a fixed period of time.
An interest rate will be charged on the amount of money lent for the entire period of the loan and a monthly repayment costs will be worked out.
It is worth remembering that with a secured line the monthly repayment cost will be fixed at the same amount for the period of the loan, as this simplifies the process. However the interest rate is charged on the amount outstanding of the loan agreement as it slowly reduces overtime.
The reason this is important is that if the customer decides to pay off the loan early bird is likely to be a penalty charge which can be quite significant. This should be spelt out in the loan agreement.
Additionally, it can be well worth looking at refinancing any type of credit agreement pretty much at any point. This can sometimes have significant benefits for the customer can often result in a lower rate of interest for the period of the loan.
With most secured loans, the bulk of the money paid in the early months possibly years tends to be interest, so it is worth considering the option of refinancing if the customers circumstances or credit score changes significantly in that time.
