auto finance (2)
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SHERMEEN KHAN
00923125142366
Shermeen21@gmail.com
Shermeen35
Should economists fear auto lending as a characteristic of an increased appetite for risk in an
economy?
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1.0 Literature Review
1.1 Area of Research
Research is being conducted to evaluate auto financing practices. Companies are engages in
financing and leasing automobiles. The research is focused on the risks to which economy is
exposed as a result oh extensive auto financing. Although auto financing is beneficial for the
companies engaged in auto financing, yet the while economy faced some issues as a result of
practices of auto mobile companies. The research focuses on the issue that how auto financing is
contributing to the economy.
Loan is a kind of debt. A loan involves repayment of financial assets between lender and borrower
of loan. Borrower receives loan from the lender which is called Principal amount. This principal
amount has to be repaid after a certain time period. Usually the amount of loan is repaid in the form
of regular installments. Installments are of equal amount, such transaction is called annuity.
Lenders provide loan on a cost which is called Interest. The interest is basically a kind of income
for the lender and expense for borrower. Different kinds of loans are offered by the lenders. Auto
loan is one of such kinds.
1.2 Auto Loan
Auto loan is a loan which is granted for buying a car or vehicle. It also consists of principal
payment and interest payment. Auto loan is basically of two types. One is direct auto loan and the
other one is called indirect auto loan (Michael, 2007). A direct auto loan is a kind of loan in which
bank or any other financial institution pays money to the customer for purchasing car. In case of
indirect auto loan car dealerships act as intermediary between banks and customers (Evans, 2008).
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1.3 Certificates of Automobile Receivables (CARs)
Certificates of Automobile Receivables (CARs) are basically securities which are collateralized by
the loans that are given to customers for purchasing cars. Auto loans have short maturities usually
between 2 to 5 years. These loans are self amortized. CARs are characterized bimonthly or
quarterly fixed interests and principal payments. The cash flows of CARs are similar to that of a
corporate debt. These securities are very popular in the public and financial institutions. Furthers
collateral securities are issued on the basis of CARs. The maturity period of CARs is usually 3 to 5
years (Frank, 2002). The servicing fee on CARs is high as compared to other mortgage based
securities. CARs require more monitoring in contrast with asset based securities.
1.4 Auto Loan Securitization
Securitization is a process that deals with collection of various kinds of contractual debts which
include property mortgages, commercial mortgages, auto loans and credit card obligations. A
particular interest is charged on the debt which is paid back to the investors after a regular interval
of time. Auto finance is very important form of consumer finance. A large number of autos have
been sold in the last decade as a result of auto financing (Frank, 2008). Auto financing has
facilitated sale of automobiles to a great extent. Different modes of auto financing are described as
follows:
Secured Loans
Financial Leases
Conditional Sales
Operational Leases
Hire Purchases
Auto securitization deals with the entire above auto financing modes except operational leases.
Operational leases are different modes of financing in terms of risks and cash flows. Auto backed
securitization has been a very important part of Asset Backed Securitization. Auto loan markets
have spread all over the world. In Asian countries financial companies are intensively working on
auto loan securitization. Securitization of auto loans started since 1985 (Stuart, 2007). Auto loan
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securitization was the largest segment of asset backed securities at that time. Securitization of auto
loan is basically the securitization of retail installment contracts. On this king of loan interest is
paid on monthly basis and the maturity time of loan is almost 60 months. The prepayment speed in
auto loan securitization market is based on absolute prepayment rate. This rate is basically the
percentage of loan which is to be paid backed in installments (Stuart, 2007).
Auto loan securities are the oldest form of asset backed securities. Following authorities are
responsible for issuance of auto loan backed securities:
Financial subsidiaries of auto manufacturers
Commercial Banks
Financial companies that are focused on auto loans
Auto loan market depends upon the credit worthiness of borrowers. Credit worthiness of prime
loans is high as compared to other types of loans. Prime loans are issued by subsidiaries of auto
manufacturers. These loans are of high quality because the y are secured loan. Second reason is
that their repayment instantly. Another reason of their high credit worthiness is that their maturity
time period is short.
Some issues are highlighted by financial analysts regarding auto loan securitization (Vinod, 2006).
First legal issue is that whether sale through auto finance is true sale or not in legal terms. This is
because the ownership of vehicle is registered in the name of inventor. The physical ownership of
the asset is transferred to the borrower. Another legal issue is raised in auto loans that whether
there are some obligations like insurance obligations or environmental obligations or not.
1.5 Cash Flows of Auto Loans
The cash flows of auto loans comprise of monthly installments which include interest and principal
prepayments. Prepayments of auto loans result from (1) trade-ins that require full payoff of the
loan, (2) repossession of autos in case of defaults, (3) resale of autos, (4) damage of autos, (5)
refinancing of loan (6) from payoff of loans.
In the whole cycle cash flows arising from repossession and resale of autos are of critical nature.
These cash flows are very common in an economy which is undergoing recession. Interest rates
on auto loans are low as compared to other kinds of loans because they are levied by manufacturers
as a promotional tool. Major cash flows in case of auto loans arise from refinancing (Frank, 2002).
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1.6 Auto Lease
Lease agreement can be defined as an agreement in which customer pays no down payment and
gets restrictions of mileage. If the restrictions are crossed, customer is charged extra money.
Interest charge and depreciation charge are included in lease payment. Depreciation is calculated
on the basis of mileage that has been covered by the auto. Customer can either return or buy the car
at depreciated value at the end of the lease agreement (Kobliner, 2009). Lease has become very
popular mode of financing over the last two decades. A number of companies are engaged in
easing their equipments. Leasing mode of financing is very important source of cash flows for the
companies. Lessees have advantage in ease agreement that they can invest money in any other
business rather than in depreciating asset which will be useless in the future (Mollaghasemi, 1995).
It is very important to consider costs of vehicles during the leasing period because many indirect
costs are involved in it. Leasing agreement is a flexible mode of financing. There are basically two
modes of leasing. One is close ended leasing in which lessor has to bear the cost of depreciation.
The other one is open end leasing agreement in which lessee is made responsible party to manage
market value of asset at the time of its sale.
1.7 Auto Repossession
Repossession is an activity in which financial institutions repossess or take back the assets which
are either rented or leased. The party which has ownership of asset has the right to repossess the
asset or property without appealing to the court. At the time of leasing the asset lessor or creditor is
given specific rights which remain valid until the lease obligation is not paid. These rights are
finalized with the mutual consent of lesser and lessor. The court establishes and imposes these
rights. If lessee commits any default or does not pay installments, lesser has right to repossess the
asset. Companies that are involved in leasing assets have reported record business in the recent
past. Auto loans are the important source which resulted in repossessions of assets by the
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companies. In year 2008 there was 10 % in crease in the repossession of autos by the companies
(Melody, 2008).
1.8 Secured Loans
A secured loan is a kind of loan in which asset is kept as pledge by the borrower as a security for
the loan (Debby, 2008). This asset can be property, car, or any other asset. Secured loans are
characterized by low rates of interests than unsecured loans because they are backed by securities.
Rates of interests are also affected by other factors like credit history, market conditions, expected
returns and ability to repay the loan. Secured car loans are those loans which are backed by some
securities. The assets which are kept as security can have more or less value than that or car. This
security allows creditor to repossess the car in case of any default from borrower side. Secured car
loans allow customers to purchase the car even if they have less income. Secured car loans allow
customers to borrow large amounts of loans equal to the value of security. The assets kept as
security allow borrower to set terms of repayment. Secured loans are more flexible as compared to
other kinds of loans. Borrowers who have less income can get secured loans easily by keeping
assets as collateral. In case of secured car loans, lenders do not hassle to repossess the car in
payment is delayed or any other issue occurs.
1.9 Unsecured Car Loans
An unsecured car loan is a kid of loan in which is not backed by any kind of security (Debby,
2008). The lender gives car loan on the basis of credit history of borrower. In case of unsecured
loans different kinds of issues arise such as bad credit, non payment of installments by the
borrower. In these loans lender takes the risk and imposes some hard rules on the borrower. This is
the reason such loans are not easy to get. Borrowers have to be credit worthy person in order to get
unsecured loans. Lender investigates the credit history of borrower and then grants unsecured loans
in order to avoid any kind of defaults. These loans carry higher interest rates because they are not
backed by any security. It brings financial load on the borrower. If any delay in the payments
occurs, lenders can ask for repossession of asset because they have concern about their
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investments. So it is important for borrowers to pay installments on time. Some of the benefits of
secured loans are given as below:
Secured loans do not require any kind of security. These loans are beneficial for students or
other persons who do not have any assets to be kept as security.
Process to get unsecured loan is easy as compared to other traditional kinds of loans. Credit
history is analyzed and loan is granted to the customers in short time.
Unsecured loans can be extended by increasing installments and keeping the interest rates
low.
In case of poor credit history, unsecured loans are difficult to get. It can be easy to get
secured loans if borrower makes reasonable down payment to the lender.
1.10 Research Questions
Research questions are designed to narrow down the topic of research. The foundation of whole
research is based on research questions so it is important to design accurate research questions.
Research questions designed for this particular research are as follows:
What is auto finance and what are different modes of auto financing?
What are the factors that influence customers to take a particular type of auto loan? What
are benefits of different auto loans?
How do interest rates affect decisions of borrowers to take auto loans?
What kinds of risks are exposed to the market as a result of vigorous auto financing
schemes?
What steps government can take regarding auto finance industry?
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Chapter Three
Research Methodology
3.1 Introduction
Developing a theory, explaining a phenomenon, or extending an existing theory all are the
examples of research. Social research is a type of research which involves explanation of
behaviors of societies (Pan, 2011). Research requires specific situations and paradigms. Each
research is conducted by a specified research methodology. Different kinds of research
methodologies produce different results. It is very important to interlink research methodology
and research aims and objectives (Hatch and Cunliffe, 2006). This chapter presents details and
justification of research methodology. Research philosophy, approach, data collection
techniques and research ethics are discussed in this chapter of research.
3.2 Research Philosophy
Research philosophy creates background of the research and determines conditions in whichresearch is being conducted. Blaikie (2000) says that research philosophy must be interlinked with
the research aims and objectives. There are fur main kinds of research philosophies. These are
realism, positivism, Interpretive or Social Conservatism and pragmatic philosophy of research.
Realism philosophy of research deals with the explanation of existing theories and models.
Pragmatic research philosophy decides about the solution of problems. The positivism philosophy
of research decides about the social values. Interpretive or Social Conservatism deals with the
social behaviors.
This particular research is being conducted by adopting positivism philosophy of research.
Positivism philosophy deals with the explanation of existing theories and models. The affect of
auto financing on the consumers and perceptions of consumers about auto financing can be best
explained through positivism philosophy of research. The aims and objectives of research can be
properly defined with the help of positivism philosophy of research. The realism philosophy deals
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with the experimentations which is not objectives of this research. Interpretive or Social
Conservatism and pragmatic philosophies do not match with the aims and objectives of research so
they are avoided.
3.3 Research Approaches
There are two types of research approaches. One is called inductive approach and the other one is
deductive approach of research. Deductive approach of research deals a phenomenon from general
to the specific point of view. Inductive research approach deals from specific to a general point of
view. Deductive research approach explores existing theories and models and reaches at a specific
point of view whereas inductive research approach constructs theories on the basis of observations
(Saunders et al., 2009). This particular research is being conducted by incorporating both
approaches of research. Deductive research approach deals with the construction of literature
review of research whereas inductive research approach fids the impact of auto loans on the
economy and investigates perceptions of customers about auto loan products. These both
approaches are important for the complete explanation of research aims and objectives.
3.4 Research Method
There are two methods of research. These are qualitative and quantitative research methods.
Qualitative research methods deal with the explanation of behaviors and perceptions of individuals
of society. Qualitative research methods explain research problem in the form of words. On the
other hand quantitative research methods explain research phenomenon in numeric form.
Quantitative research methods involve statistical operations on data (Saunders et al., 2009). There
is another research method which is called triangulation research method or mixed method.
Triangulation research methodology is combination of qualitative and quantitative research
methods (Denzin, 1970). This type of research methodology is beneficial as compared to the single
methods because it compares secondary and primary data. This particular research is conducted by
triangulation research methodology. Literature review of research is constructed with the help of
qualitative research methodology. Existing research work regarding auto financing is investigated
with the help of qualitative research methods. Quantitative research methods are used to analyze
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the findings of survey. The use of triangulation methodology establishes strong base of research.
Primary data is compared with the secondary data and relation is developed.
3.5 Data Collection Techniques
Two types of data are used in the research. These are primary and secondary data. Primary data is
the first hand data. It is collected for the first time and does not exist in the literature. Secondary
data already exists in the literature in books, articles and journals. Primary data is the first hand
data so chances of biasness in this data are less as compared to the secondary data which is
processed form of data. Primary data is also called fresh data. There are various kinds of tools fro
the collection of primary data. Primary data can be collected through questionnaire survey,
interviews, and focus group discussions or through observations. In observation technique
researcher observes attitudes and behaviors of a particular group. This technique of data collection
is very narrow and does not produce accurate results. Questionnaire survey technique is used to
find the characteristics of a large population in short time. Survey is flexible and cost saving tool of
primary data collection. Interaction of researcher is very low during the survey so chances of
biasness in the results are very low.
During interviews researcher directly asks questions from the respondents. This technique data
collection is used at places where researcher has to ask some detailed queries. Interaction of
researcher with the respondents is high so the results produced can be biased. Interviews require
higher cost and proper arrangement to be conducted. The results of interviews are of high quality as
compared t that of surveys which can produce vague responses.
A focus group consists of six to twelve persons. A trained mediator is appointed in order to ask
questions from the participants of focus group. Participants are asked to present their point of view
regarding the subject of discussion. They are asked to describe whatever comes in their minds. In
this way it can be said that focus group discussions are natural discussions. It can happen that focus
group discussions produce biased results because of interaction of mediator with the respondents.
Focus group dissuasions are costly and require proper arrangement.
On the basis of pros and cons of all data collection techniques, researcher has adopted
questionnaire survey technique for this particular research. A questionnaire is developed to conduct
survey. Focus group discussions and interview techniques are not adopted for this particular
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Analysis of Data:
Introduction
4.1 Introduction
Primary data for the research is collected through a survey. 100 % response rate has been achieved
in the survey. This chapter percents the data and analyses it critically. Results of each section of
questionnaire will be discussed in detail and compared to the literature review.
4.2 Findings of Questionnaire
Mode of Auto Purchase:
Respondents were asked to identify the mode of auto purchase. They were given two options. One
was cash and the other one was auto financing. Respondents were directed to fill the rest of
questionnaire if they selected auto financing as mode of auto purchasing. The results show that 38
% respondents purchase auto through cash whereas a large proportion of respondents selected auto
financing which is objective of this research. The respondents who purchase cars on cash said that
they prefer cash purchase of cars because it charges less cost to them. Some of the respondents said
that they prefer cash purchasing of Auto because financing takes more time and it is not flexile toolof financing. The respondents who purchase cars through auto loans prefer this mode because it is
convenient for them. Some of the respondents have shown that they prefer auto financing because
they cannot afford cash cars. Graphical representation of the results is a follows:
Demographics of Respondents:
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To evaluate the demographics of the sample researcher has asked about the gender, age, education,
profession, income and accommodation of respondents.
Gender:
The results of the demographics show that there were 54 % males and 46 % females in the sample.
It can be deducted that males have more interest in cars as compared to females. Other deduction
made from the frequency distribution of sample in terms of age is that males prefer to take part in
survey as compared to females. The graphical presentation of frequency distribution of gender of
respondents is as follows:
Age:
The results of the frequency distribution of age of respondents show that 5% respondents were of
less than 25 years old. 17% respondents belonged to 25 35 years age class. There were 40 %
respondents who were between 36 45 years of age. 27 % respondents were between 45 55 years
of age. There were 11 % respondents who were above 55 years of age. The results suggest that
most of the respondents who take interest in car purchasing belong to middle age category i.e. 36
45 years. Individuals of this age category are in their mid careers so they can afford purchasing
cars. Individuals who are less than 25 years of age have just started their careers so they cannot
afford luxuries in this age. On the other hand individuals who are older in age prefer to save money
rather then spending on luxuries so they are also less in proportion in the sample. The graphical
presentation of frequency distribution of age of respondents is as follows:
Education:
Results about the education of respondents show that 7 % respondents had education of high school
diploma. There were 19 % respondents who have completed undergraduate program. 34 %
respondents have completed graduate program. There were 29 % respondents who have completed
Masters Degree. 11 % respondents have received Doctorate Degree. The graphical presentation of
frequency distribution of education of respondents is as follows:
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Profession:
Respondents were asked to mention their profession. The results show that there were 30 %
businessmen and 70 % salaried persons in the sample. Most of the salaried persons take auto loans
whereas businessmen prefer to purchase cars on cash basis. The graphical presentation of
frequency distribution of profession of respondents is as follows:
Income:
Results about the income level of respondents how that there were 8 % respondents who had
income of less than 5000. 17 % respondents were in income range of 5001 to 20000 . There were
40 % respondents who were in 20001 400000 income range. 26 % respondents belonged to
400001 60000 income class. 9 % respondents belonged to 60001 90000 income class. None of
the respondents had income level of more than 90000. The deductions made from the frequency
distribution of sample in terms of income is that most of he respondents who have middle income
category take interest in purchasing cars through loans. The graphical presentation of frequency
distribution of income of respondents is as follows
Accommodation:
The results about the accommodation of respondents show that there were 34 % respondents who
have their own accommodation. 46 % respondents live in rented accommodation. There were 23 %
respondents who reside in other than their own and rented accommodation. These respondents
either lived in companys owned house or share the accommodation with their friends or
colleagues. The graphical presentation of frequency distribution of accommodation of respondents
is as follows
Prefer Mode of Auto Financing:
Respondents were given two choices for choosing mode of auto finance. The choices were: Auto
loan and auto lease. The results of this question show that 57% respondents prefer auto loans
whereas 43 % respondents prefer auto lease. The respondents who chose auto lease said they get
tax benefits in their business by this mode of auto finance. Respondents prefer auto loan because it
is less expensive as compared to auto lease. Kevin (2008) suggests that auto lease works better
when individuals want to replace the car every 2 to 3 years. He further suggests that individuals
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who want to have long term benefit should purse auto loan. The results of the question are
graphically represented as follows:
New, Current or Previous User of Auto Financing:
Respondents were asked to sows the duration of using auto financing. They were given three
suggestions. These were new, current, and previous. The results of survey show that there were 19
% respondents who were new users of auto finance. 39 % respondents were current and 42 %
respondents were previous users of auto finance. It can be deduced that in the past auto finance was
at boom so most of the respondents acquired auto finance at that time. In current time auto finance
is not as much as it was in the past, so new users of auto finance are less. The results of the
question are graphically represented as follows:
Interested in Financing New Car or Used Car?
Respondents were asked that whether they have interest in financing new car or used car. The
results of the survey show that 45 % of the respondents have interest in financing new car whereas
55 % respondents have interest in financing used car. Financing a new car involves higher cost
whereas financing a used car involves less cost. This is the reason most of the respondents prefer
financing used car. In financing an old car expenses like deprecation, insurance, maintenance, and
taxes are less. If a person finances a new car then all the above expenses will be higher for the same
mileage (Kiplinger, 1990). This is the reason most of the respondents prefer to finance a used car.
The results of the question are graphically represented as follows:
You consider your auto financing decision?
Respondents were asked to identify that how do they decide for the auto financing. 39 %
respondents said that first they plan and then decide about auto financing. There were 12 %
respondents whose decisions about auto finance were of impulsive nature. 19 % respondents said it
was hard to resist auto financing so they decided to adopt it. 20 % respondents had best option for
purchasing auto in the form of auto financing. 10 % respondents have market others option. In
others option, most of the respondents specified that their relative or friends have recommended
them to choose auto financing. Auto financing affects cash flows of individuals for a number of
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years so it is very important for customers to take rationale decision about auto financing. The
results of the question are graphically represented as follows:
Do you consider your Auto financing decision?
Respondents were asked to identify the worth of their decision about auto financing. 57 %
respondents consider their decision as beneficial. 43 % respondents consider their decision as non
beneficial. It is very important to mention that respondents who plan for the auto financing decision
consider their decision as beneficial whereas respondents who take decision either impulsively
consider their decisions as non beneficial. It can be deduced that planning is very important for
taking decision about auto financing. The results of the question are graphically represented as
follows:
Any other mode of financing, you are availing?
Respondents were asked to mention that whether they are availing any other mode of financing or
not. 76 % respondents said that they do not avail any other mode of finance. 24 % respondents
avail other modes of financing rather than auto loan and auto lease. Most of the respondents said
that they have purchased car on credit in the past. The results of the question are graphically
represented as follows:
Have you ever been defaulted?
An optional question was asked that whether the respondents have ever been defaulted or not. The
results of the survey show that 33 % respondents said that they have been defaulted in the past. 67
% respondents said that they have never been defaulted for auto financing. The respondents who
had taken decision about auto finance impulsively said that they have been defaulted. On the other
hand respondents who take decision after proper planning have not been defaulted for auto
financing. The results of the question are graphically represented as follows:
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Customer Preferences
In the questionnaire some questions about customer preferences were asked. Respondents were
asked to identify their preference about secured or unsecured lending. 52 % respondents said that
they prefer secured lending because it involves lower rate of interest. O the other hand 48 %
respondents said that they prefer unsecured lending because they do not have any asset which can
be kept as collateral. In case of secured loans lender is secured for the amount kept as security
whereas in case of unsecured loans lender does not take any security from borrower. Unsecured
loans present risks for the borrower so to compensate that risk they charge higher rate of interest.
Borrower selects secured or unsecured loan depending upon his or her financial strength. The
results of the question are graphically represented as follows:
Your opt Auto financing to
Respondents were asked to mention that why do they opt auto financing. 45 % respondents said
that they opt auto financing to buy their first vehicle. 27 % respondents opt auto financing to buy
their second vehicle. There were 17 % respondents who said that they opt auto financing to change
or upgrade vehicle. 11 % respondents identified other reasons for opting auto finance other than
above mentioned reasons. The results of the question are graphically represented as follows:
You prefer Auto financing product which offers
Respondents were asked to identify their preferences for the products of auto finance. 39 %
respondents said that they prefer those auto finance products which offer them value. This value
represents value of money. 24 % respondents said that they prefer those auto finance products
which offer them less hassle. There were 11 % respondents who said that they prefer those auto
finance products which offer them product quality. 15 % respondents favored customization. 9 %
respondents said that they prefer those auto finance products which provide them value added
services. 2 % respondents preferred some other reasons for preferring auto finance products. The
results of the question are graphically represented as follows:
Please rate your overall perception towards use of Auto financing in relation to auto industry
& economy
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Respondents were asked to identify their overall perception about auto financing in relation to
industry and economy. 46 % respondents said that auto financing is beneficial for the whole
economy whereas 54 % respondents said that auto financing is non beneficial for the economy.
The results of the question are graphically represented as follows:
Chapter Five
Conclusion
5.1 Introduction
Data collected through survey technique has been analyzed in the previous chapter. In this chapter
all the findings of the research will be given conclusion shape. All the findings of the research are
related to the secondary data which is presented in the literature review. On the basis of results
recommendations are proposed. Limitations of the study are also listed in this chapter of research.
5.2 Conclusion
The results of the survey show that most of the respondents who were salaried persons adopt autofinancings. Respondents who had average salaries prefer to adopt auto financing rather than
purchasing auto. Prefer mode of auto finance is auto loan as compared to auto lease. Auto loan is
less expensive mode of auto financing as compared to auto lease (Kevin, 2008). Most of the
respondents were previous users of the auto financing. New users of auto financing were less
because auto financing has been reduced. Financing of a used is cheaper as compare to that of a
new car so most of the respondents preferred financing old car (Kiplinger, 1990). Auto financing
impacts cash flows of individuals for 2 to 3 years after acquiring the auto finance. It is important
for the individuals to take decision about the auto financing after proper planning. It has been found
in the results of survey that most of the respondents plan before taking decision about the auto
financing. These respondents take rationale view of the situation and decide for appropriate mode
of auto financing. Auto financing is proved beneficial to these respondents whereas it has been
proved non beneficial to the respondents who do not plan for auto financing. The respondents who
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plan before taking decision have not ever been defaulted whereas respondents who do not plan and
decide impulsively about auto financing have been found defaulted. Most of the respondents have
said that they prefer secure lending as compared to insecure lending. Secure lending is
characterized by low interest rates so respondents preferred it. On the other hand respondents
having low income prefer unsecured loan. It has been found that salaried persons prefer auto loan
as compared to auto lease. Auto loans are less costly whereas auto lease is expensive mode of auto
financing. Businessmen prefer auto lease because it offers them tax shield Kevin (2008). Auto
financing is beneficial for the individuals who cannot afford to buy a new car. It allows persons
having less income to have their own car. It has been found from the results that auto lease is best
for the individuals who tend to replace their cars every 3 to 4 years.
5.3 Limitations
5.4 Recommendations
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oxford: Simon and Schuster.
Kevin Chappell, (2008), Auto Financing: Leasing versus Buying. Ebony, Vol. 63, No.
Kiplinger's Personal Finance, 1990. Vol. 44, No. 10
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Questionnaire Auto Financing
May we Know About You?Name E-mail
Address
(optional)
Phone
(optional)
May we add you to our mailing list, which offers news and exciting products, promotions and surveys regarding services improvement?
Yes No
1. Your Preferred Mode of Auto Purchase?(Please Tick One)
Specify reason_________________
B. Auto FinancingSpecify reason _________________________(If you selected option A, Please Answer only Section 3 below of the
questionnaire)
2. Your Preferred Mode of Auto Financing? )
A. Auto Loan B. Auto LeaseSpecify main reason for preference _____________________________?
3. Key Demographics:A. Gender: Male
FemaleB. Age: 55
C. Education: High school Diploma Undergraduate
Graduate
Masters
Doctorate
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D. Profession Businessmen
Salaried Person
OtherE. Income Bracket (Monthly in ) 90,000
F. Accommodation: Owned
Rented
Other_________________
4. Product Usage:A. New, Current or Previous User of Auto
Financing? New
Current
PreviousB. Interested in Financing New Car or
Used Car? New
Used
C. You consider your auto financingdecision? Chose Only One
Planned Impulsive
To hard to resist
Best option available
Other Specify? _____________________
__________________________________
D. Do you consider your Auto financing
decision Beneficial
Not Beneficial
Specify
Reason_____________________________
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E. Any other mode of financing you are
availing? Yes
Please Specify
___________________________________
___________________________________
No
F. Have you ever been defaulted?
(optional) Yes
Please Specify Reason?
____________________________
No
5. Customer Preferences:A. You Prefer Secured Lending (Low Markup)
Unsecured Lending (High Markup)
B. Your opt Auto financing to Buy your first Vehicle (Necessity)
Buy Second Vehicle (for family usage)
To change/upgrade Vehicle model (Luxury)
Other Reason? _______________________
C. You prefer Auto financing product
which offers (Choose most Preferred) Value (Low Markup) Low Hassle (Fast Processing)
Product Variety (More Vehicle Options)
Customization (tenure, flexibility in repayment
options etc.)
Value added services (Insurance, trakker
service etc.)
Other, Specify? ________________________
D. Would you like to suggest any room for
improvement /options in your existing autofinancing product?
________________________________________
________________________________________
6. Customer Perception:
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Please rate your overall perception towards
use of Auto financing in relation to auto
industry & economy
Beneficial
Not Beneficial
Specify Reason______________________
__________________________________
Thank you for your Participation!
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