Asset-backed financing: Secured car loans

Created: 15.03.2019

Car

 

What is a secured car loan?

A secured car loan is a loan with a motor vehicle such as a car, motorcycle, three-wheelers or other road vehicle as collateral for the lender to have the security that the loan can be fully repaid. The collateral of the car loan can be a new or a used vehicle.

There are two main types of car loans:

  • Financing leasing, financing the acquisition of a vehicle with the vehicle used as collateral, where the car buyer pays monthly payments to loan provider which holds the car title until the full payment of the loan. This type of a car loan is a loan taken out for the purpose of buying a car. If the buyer don’t have enough money to buy a car outright, but can afford to repay a loan in monthly installments;

 

  • Leaseback financing, with the vehicle sale-leaseback, whereby loan is issued with the vehicle used as collateral, the process starts with the car owner transferring the car ownership to the loan provider to obtain a loan, making monthly payments to the lender which is the new owner until the loan is repaid. This type of car loan is used to finance other money needs, such companies needing working capital loan or a particular wanting more funds or better interest rate than the unsecured loan can give.

 

What if the loan isn’t repaid?

In the secured car loan, the car given as collateral with the loan is the security for the loan. This means if the borrower fails to repay the loan, the lender can sell the car in order to pay the debt. Because the loan is secured, the risk to the lender is lower, and this usually reflected in a lower interest rate then an unsecured loan. Also the vehicles usually have insurance and some lenders installed GPS-monitoring equipment on the vehicles.

 

Investment possibilities?

There are various non-bank lenders that provide secured car loans present in lending marketplaces, all of them with buyback guarantee.

Crowdlending Marketplaces include:

mogo

Mogo Finance, a Latvian group founded in 2012 with focus on used car financing. Mogo is the largest non-bank lease and car loan provider (Financial Leasing, Leaseback) in its region with current operations including Latvia, Estonia, Lithuania, Georgia, Armenia, Poland, Romania, Moldova, Belarus, Ukraine, Albania, Macedonia, Bosnia & Herzegovina, Bulgaria, Kazakhstan, and Uzbekistan.  Mogo has issued bonds of that are traded on the NASDAQ OMX Baltic market and in the Frankfurt Stock Exchange’s regulated market segment (General Standard), segment for bonds of Deutsche Börse AG. The subsidiaries of Mogo Finance include:

  • AS mogo (Latvia); (1)
  • mogo OÜ (Estonia); (1)
  • UAB mogo LT (Lithuania); (1)
  • Mogo LLC (Georgia); (1)
  • Mogo Sp. z o.o. (Poland); (1)
  • Mogo IFN SA (Romania); (1)
  • Mogo Bulgaria EOOD (Bulgaria); (1)
  • Mogo Loans SRL (Moldova); (1)
  • Mogo Albania sh.a. (Albania);
  • OOO Мого Кредит (Belarus);
  • MOGO Universal Credit Organization LLC (Armenia); (1)
  • ТОВ МОГО УКРАЇНА (Ukraine).

(1) Countries with secured car loans present in Mintos. Loans in EUR, GBP, GEL and PLN.

 

iutecredit

IuteCredit Group, an Estonia-based group founded in 2008 that operates in Albania, Moldova, Macedonia, and Kosovo. Besides providing unsecured loans to people, it’s also  diversified into secured car loans. The IuteCredit Group has issued bonds of that are traded on the NASDAQ OMX Baltic. The IuteCredit Group’s subsidiaries include:

  • IuteCredit Albania SHA; (2)
  • ICS OMF IuteCredit SRL (Moldova); (2)
  • Iutecredit Kosovo Sha;
  • IuteCredit Macedonia DOOEL-Skopje.

(2) Countries with secured car loans present in Mintos. Loans in EUR.

 

Watu

Watu Credit Limited is a Kenya-established non-bank financial company, founded in 2015. Its main lending operations are in asset financing at several locations in Kenya, providing loans for clients intending to purchase motor vehicles. Watu Credit is currently focusing on motorcycles and three-wheelers vehicles.

(3) Countries with secured car loans present in Mintos: Kenya. Loans in EUR.

If you want to invest in Secured Car Loans in Mintos or also on all other loan types in Mintos, you can benefit of a referral program to new investors, using this link to register, you will earn 1% bonus for new users (better than the 0.75% normal referral bonus). *

 

First Finance

First Finance, a brand name of UAB SOSCredit, was founded in 2012 in Lithuania, is a non-bank lender that offers loans to small and medium-size businesses in Lithuania. The majority of borrowers are individual entrepreneurs or small companies who are seeking a loan for working capital for their business and are happy to provide collateral, such as vehicles, with secured car loans representing 51% of his loan portfolio. First Finance works closely with taxi companies, companies engaged in vehicle import and sales, small logistics companies and the whole medium-sized business segment which provides vehicles for its employees. For small and medium-sized businesses, non-bank leasing is the only way to buy cars. Car dealerships can free up working capital by pledging cars for sale and get up to 80% of their value. Besides all vehicles are insured, the vehicles are tracked with GPS transmitters in order for First Finance to locate the vehicle for repossession if needed.

(4) Countries with secured car loans present in Lenndy: Lithuania. Loans in EUR.

If you are interested in starting investing in Lenndy, there is a special promotion to new investors that offers a 10 EUR bonus, just follow this link to register. *

 

https://aventusgroup.com/images/logo.png

Aventus Group, a Lithuanian-based financial group founded in 2009, specialized in unsecured loans to individuals in various countries, Poland, Latvia, Czech Republic, Ukraine, Russia, Kazakhstan and Moldova. Aventus Group has two IT hubs – one in Lithuania and one in Belarus. Starting in 2018, it began granting secured car loans in Ukraine and Kazakhstan. Every loan uses the car being financed as collateral. Additionally, to ensure their transparency and reliability they use new technologies: GPS-monitoring equipment is installed on every car.

(5) Countries with secured car loans present in Peerberry: Kazakhstan and Ukraine. Loans in EUR.

 

  • iuvo

Business Banking Group (BBG) was founded in 2013 and with headquarters in Japan, started expanding its operations in 2015 with the BBG Credit brand in Georgia, its main location, operates also in Armenia, Cyprus and Ukraine. BBG offers cross border short (Auto Credit), long (Auto Leasing and Lease Back) term loans to customers from Georgia, Japan, Cyprus, to purchase used cars from Japan, USA or local dealers.

(6) Countries with secured car loans present in iuvo: Georgia. Loans in EUR.

As today, there is up to € 90 bonus for new investors, if you are interested receiving the referral bonus just send me a private message. *

 

 

As today, Mintos, the biggest European lending platform by monthly volume, has 64,6 million EUR in outstanding car loans, only surpassed by unsecured loans to individuals. Lenndy has 3,35 million EUR in outstanding car loans, representing almost 40% of the total of loans outstanding in the platform.

 

If you like to invest in the secured car loans, just follow the links to the platforms. Some platforms offer sign-up bonuses through referral links.

* See how to get the bonus in the post “P2P Lending & Real Estate Crowdfunding: Promo codes“.

 

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