Imagine that you are about to purchase a car. Because you want to be a smart con
ID: 448698 • Letter: I
Question
Imagine that you are about to purchase a car. Because you want to be a smart consumer, read “Auto Loans: Take Control of the Financing Before You Take Control of the Wheel” at http://www.planetfinance.com/personal-finance/auto-loans-take-control-of-the-financing-before-you-take-control-of-the-wheel/ and “FTC Facts for Consumers: Buying a New Car” at https://www.consumer.ftc.gov/articles/0209-buying-new-car. Each of these links has been added to the external links under the External Links tab in Blackboard. After reading these documents, imagine that you have decided to obtain a car loan from your credit union, which will create a secured transaction. In 200 to 250 words, 1) identify how a car loan could create a secured transaction; 2) identify the security interest and the collateral in such a transaction; 3) provide the identity of the parties to such a transaction; 4) discuss the rights that these parties will have before a potential default on the loan; and 5) discuss the rights that these parties would have in the case of default.
Imagine that you are about to purchase a car. Because you want to be a smart consumer, read “Auto Loans: Take Control of the Financing Before You Take Control of the Wheel” at http://www.planetfinance.com/personal-finance/auto-loans-take-control-of-the-financing-before-you-take-control-of-the-wheel/ and “FTC Facts for Consumers: Buying a New Car” at https://www.consumer.ftc.gov/articles/0209-buying-new-car. Each of these links has been added to the external links under the External Links tab in Blackboard. After reading these documents, imagine that you have decided to obtain a car loan from your credit union, which will create a secured transaction. In 200 to 250 words, 1) identify how a car loan could create a secured transaction; 2) identify the security interest and the collateral in such a transaction; 3) provide the identity of the parties to such a transaction; 4) discuss the rights that these parties will have before a potential default on the loan; and 5) discuss the rights that these parties would have in the case of default.
Imagine that you are about to purchase a car. Because you want to be a smart consumer, read “Auto Loans: Take Control of the Financing Before You Take Control of the Wheel” at http://www.planetfinance.com/personal-finance/auto-loans-take-control-of-the-financing-before-you-take-control-of-the-wheel/ and “FTC Facts for Consumers: Buying a New Car” at https://www.consumer.ftc.gov/articles/0209-buying-new-car. Each of these links has been added to the external links under the External Links tab in Blackboard. After reading these documents, imagine that you have decided to obtain a car loan from your credit union, which will create a secured transaction. In 200 to 250 words, 1) identify how a car loan could create a secured transaction; 2) identify the security interest and the collateral in such a transaction; 3) provide the identity of the parties to such a transaction; 4) discuss the rights that these parties will have before a potential default on the loan; and 5) discuss the rights that these parties would have in the case of default.
Explanation / Answer
Ans 1.
A car loan create a secure transaction because borrower pay security interest for collateral (home, a car and other assets owned by borrower) and banks and other lenders would repossess the asset if borrower defaults in payment. The creditor can sell repossessed asset to settle the loan.
Ans 2.
A Security Interest is generally defined as a non-possessory (sometimes it may also be possessed by the lender) interest in the asset or property of another. In our case collateral is house and secured interest is payment of monthly instalments of car loan.
Ans 3.
Here transaction is happening between creditors such bank and other lenders and bowers such as car buyers.
Ans 4.
A security interest generally is created with a security agreement, which is a contract governed by Uniform Commercial Code (UCC). The creditor can ask the debtor for documents which ascertain the debtors have rights in collateral. Either debtor must have ‘authenticated’ a security agreement with description of collateral or the creditor should have possession of collateral.
Ans 5.
The creditors have right to reduce a claim to judgment, determine when to foreclose, enforce the claim, security interest as per available judicial procedure. If the collateral is documents, creditor may proceed either as to the documents or as to the goods they cover.
I hope this will help. Good luck.