Vehicle Financing Structure With Retained Future Interest

Resolve Bottlenecks,
Find Innovative SolutionsGenerate Solutions

Solution Overview

Problem

Current vehicle financing methods either result in high monthly payments for ownership or lack ownership benefits in leasing arrangements, leading to inefficiencies for both consumers and finance companies, with cumbersome reporting requirements for leasing operations.

Innovation Solution

A method and system that allows for the transfer of legal title in vehicles through a financing structure with low payments, where a vehicle finance company receives a future interest in the vehicle, enabling the consumer to obtain legal title with periodic payments, and potentially vesting the future interest after a set period, thereby reducing reporting burdens and allowing for integration of leasing operations into ownership operations.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Reliability

If a vehicle consumer enters into a retail installment contract (RIC) to purchase a vehicle, then the consumer obtains legal title and ownership benefits, but the consumer must pay higher monthly payments

Engineering Contradiction:

Improveownership benefitsVSAvoidmonthly payments

Core Design Contradiction:

ReliabilityVSLoss of energy

Solution Approach 1:

The patent segments the ownership interest into two parts: a present interest (legal title transferred to consumer) and a future interest (retained by finance company). This segmentation allows the consumer to obtain legal title and ownership benefits now while paying lower monthly payments, with the finance company receiving the future interest price later. The RIC is structured to transfer legal title immediately while the finance company retains a reversionary interest or remainder interest in the vehicle.

Inventive Principle:

Principle #1Segmentation

2Loss of energy

If a vehicle consumer enters into a leasing arrangement, then the consumer pays lower monthly payments, but the consumer does not obtain legal title or ownership

Engineering Contradiction:

Improvemonthly paymentsVSAvoidlegal title

Core Design Contradiction:

Loss of energyVSReliability

Solution Approach 1:

The patent inverts the traditional leasing model by transferring legal title to the consumer while the finance company retains a future interest. Instead of the consumer leasing without ownership, the consumer receives legal title immediately (unlike traditional leases) while the finance company secures its interest through the retained future interest. This inversion allows consumers to obtain both low monthly payments and legal title ownership simultaneously.

Inventive Principle:

Principle #13The other way round (Inversion)

3Adaptability or versatility

If a vehicle finance company maintains separate business operations for ownership and leasing programs, then the company can serve different consumer needs, but the company experiences business inefficiencies due to duplicative functions

Engineering Contradiction:

Improveservice coverageVSAvoidbusiness efficiency

Core Design Contradiction:

Adaptability or versatilityVSProductivity

Solution Approach 1:

The patent merges the ownership and leasing business operations into a single integrated structure. By using the same legal title transfer mechanism with retained future interest for both what were previously separate ownership (RIC) and leasing programs, the finance company eliminates duplicative functions while maintaining the ability to serve different consumer needs. The unified approach allows the company to operate more efficiently while preserving service versatility.

Inventive Principle:

Principle #5Merging (Combining)

4Ease of operation

If a vehicle finance company engages in leasing arrangements, then the company can offer lower payment options, but the company must file cumbersome reports with state and local jurisdictions

Engineering Contradiction:

Improvepayment optionsVSAvoidreporting requirements

Core Design Contradiction:

Ease of operationVSDevice complexity

Solution Approach 1:

The patent extracts the future interest component from the traditional leasing model and retains it with the finance company while transferring legal title to the consumer. By structuring the transaction as a present interest sale with retained future interest rather than a traditional lease, the finance company can offer low monthly payments similar to leasing but avoid the cumbersome reporting requirements that accompany traditional leasing arrangements where the finance company owns the vehicle as a physical asset.

Inventive Principle:

Principle #2Taking out (Extraction)

Data Source

PatentUS7689484B2Method and system for financing acquisition of vehicles

Publication Date: 2010.03.30 FORD MOTOR CO

AI summary

In one embodiment of the present invention, a method for financing acquisition of a vehicle is disclosed. The method comprises receiving a future interest in a vehicle in consideration for a future interest price upon transfer of a legal title in the vehicle in consideration for a legal title price.