Car Loan and Consumer Credit Glossary
APR - The annual percentage rate is the yearly interest rate of a loan include fees.
Accrued Interest - Interest that builds on the unpaid balance of the loan.
Adjusted Capitalized Cost - The price of a vehicle after any discounts, down payment, and dealer participation.
Amortization - The gradual elimination of a liability such as a car loan by making payments that cover the principal and interest on a schedule.
Assignment - A transfer of a loan from one lender to another.
Bankruptcy - When someone's assess are turned over to a trustee to pay off outstanding debts.
Base Price - The cost of a car with standard equipment, warranty, and freight charge.
Bill of Sale - A document provided by a seller showing the purchaser and purchase price of a vehicle and issued to calculate taxes.
Buy Here, Pay Here - A car dealer who issues the loan to the buyer and the buyer typically makes payments to the dealer instead of a bank.
Certificate of Title - A legal document issued by a state that sows the owner’s name and vehicle mileage at the time of the sale.
Co-signer - A person that assumes responsibility for a loan if the borrower does not make payments.
Credit - Refers to the ability of someone to borrow money based on their financial history.
Credit Bureau - A company that deems the creditworthiness of consumers and provides information to creditors
Credit Profile - A report showing a person's financial history of money borrowed and other financial situations.
Credit Score - A formula based indicator of a person’s creditworthiness. This formula differs between credit bureaus.
Default - Failure to meet the terms of a loan.
Delinquency - Failure to make payments by a due date.
Franchised Dealer- An automobile dealer that is licensed to see a particular brand of new vehicles.
Gross Income - Income before taxes and expenses.
Independent Dealer - A used vehicle dealer who is not tied to a vehicle manufacturer.
Interest - A percentage charge for a loan.
Loan - A sum of money that is given from one party to another for a particular amount of time.
MSRP - Manufacturer's Suggested Retail Price is the price the vehicle manufacturer suggests and is also known as the Monroney sticker price.
Refinance - When a new loan is used to pay off and replace an existing loan, typically to take advantage of a lower interest rate.
Repossession - When a vehicle is reclaimed by the creditor for failure to meet the terms of the loan.
Term - The length of a loan or lease contract, typically 48, 60, or 72 months.
Underwriting - The process of verifying the accuracy of data provided to obtain a loan.
Upside-down - When the vehicles value is lower than the outstanding amount due on a loan.
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