A Motor Loan works in a similar manner to a personal loan, however the money required to be paid for the vehicle is usually paid straight to the motor dealer from the finance company.
The main difference from other motor finance products is that you own the vehicle from the start of the agreement. This means that you do not have flexibility throughout the length of the agreement with regards to returning the vehicle, however, because you own it from the outset, you can sell it if you choose to.
At the end of the agreement
In order to end your agreement, you must pay each monthly instalment until the finance is paid off. You do have the option of settling this early, and you may benefit from a saving if you do so.
Benefits of a Motor Loan
- You own the vehicle straight away
- Flexibility on the length of the agreement
- Fixed monthly payments
Things to consider
You usually won’t have the option to hand the vehicle back during the lifetime of the agreement should you wish to do so.