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Financing

Finance is the science[citation needed] of funds management, or the allocation of assets and liabilities over time under conditions of certainty and uncertainty. A key point in finance is the time value of money, which states that a unit of currency today is worth more than the same unit of currency tomorrow. Finance aims to price assets based on their risk level, and expected rate of return. Finance can be broken into three different sub categories: public finance, corporate finance and personal finance.

The subject of car finance comprises the different financial products which allows someone to acquire a car with any arrangement other than a single lump payment. The provision of car finance by a third party supplier allows the acquirer to provide for and raise the funds to compensate the initial owner, either a dealer or manufacturer

 

Car finance is required by both private individuals and businesses. All types of finance products are available to either sector, however the market share by finance type for each sector differs, partly because business contract hire can provide tax and cashflow benefits to businesses.
Car 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

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The finance is arranged either by the dealer which provides the car or by independent finance brokers who work on commission. Individual brokers will provide any solution for which the individual can get credit approval, but their own particular lifestyle and cost considerations that should determine the choice of finance option.
 

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The leasing share of the US consumer automotive industry expected to grow by 18-25% [3] though this is growing again after the credit crisis cause major leasing companies to exit the market in the US. The credit crisis of 2008 and subsequent recession saw the second hand car market collapse and funding companies had to sell their returning cars at much lower prices than expected. Some major providers stopped offering private contract hire during this period.

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