There are different mortgages available for every person who needs a loan. These different mortgages also have different terms. Majority of the companies that offer loans would ask for real estate properties as collateral while others prefer having other kinds of properties. With the discrepancies when it comes to the collateral, one thing is true with the mortgage; you need an asset in order to start a loan. In this section, you will be reading about a type of mortgage that you can use when you need to get a loan.
What is chattel mortgage?
Chattel mortgage is a type of loan process that allows a person to borrow money using a movable assets as collateral. And when they say movable property, they are talking about cars here. The person who is going to ask for a loan needs to have a privately owned car in order to be qualified. This is going to be his key to a positive result in getting loans. This type of mortgage is easier to acquire than other types because of its flexible finance option.
Features of a chattel mortgage
Let’s focus on the asset needed for this type of mortgage. The movable property that you will be using in order to qualify yourself is the most salient aspect. The loan providing company is not going to take any property that is permanently held by the person who is applying for the loan. Lands, buildings and houses, are not part of the qualified asset. Only properties that are not permanent can be used here.
The movable property that is used as collateral will automatically fall under the care of the lender when the mortgage starts until it ends. The lender will then have a claim over the asset until payment is completed. This is advantageous on the part of both parties. The asset is not permanent; therefore, it would be easier for the two parties to use it during the deal.
The easy part of paying
Now that, you are already familiar with the process, here is the real deal with this type of loan. First, you are going to use an asset that is not permanent. This asset can be sold anytime you want. When you can no longer pay for the loan, the collateral can be sold, and the money will be used in order to pay for the remaining balance.
This is beneficial on your part as a borrower because you will not be sued for any of the difference when you cannot pay for it. On the side of the lender, the strategy is also extremely valuable because they will not be losing a significant amount of money when the borrower cannot pay for his debt. This is how flexible the finance option of this mortgage is. The strategy of companies offering chattel mortgage is way better than the techniques used by other types of mortgage. The property that is going to be sold will cover every payment that was not settled in the agreement, making it easier for the two parties to act on without any issues.
Joel Cordle is associated with Fincar. Know about Chattel mortgage at Fincar.