Cash Loan on Chattel Mortgages

by David Jenyns on February 18, 2008

The purchaser does not pay cash but uses a cash loan instead. The trouble with a cash payment requirement for a car is that few people can pay out $4,000 all at once.

When a person is required by cash loan contract to pay (and this payment really amounts to saving) he generally pays. Your time payments roughly cover how much of the car’s value disappears over a period of months and years. Of course the payments must exceed this depreciation in value. Else in the event the buyer does not make payments on the cash loan and defaults to the finance company or bank, the value left on the car, which the finance company seizes, is less than the amount owed by the purchaser, and therefore the finance company loses.

Besides automobiles, most of which are sold on the time payment plan, almost all mobile homes (house trailers) are sold on the same cash loan plan. Each year more items are added to the time payment plan group. The chattel mortgage is an obligation on the part of the purchaser to pay the investor.

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