Glossary of Auto Loan Terms

Many people purchasing a new or used car/truck often times leave the dealership scratching their head, asking “Did I really get a good deal? Before you start your next auto purchase take time to go over our glossary of purchasing and financing

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Glossary of Auto Loan Terms (A)

Accrue Accrue literally means to accumulate. In the case of a car loan, accrual refers to that amount that is built up, especially the interest. Add-Ons Add-ons are those options or features that don’t come standard on a vehicle. For example, a

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Glossary of Auto Loan Terms (B)

Bankrupt A business or individual will usually declare themselves bankrupt when they are unable to meet current debts and requirements. Bankruptcy A business or individual may declare bankruptcy if they are unable to meet financial obligations. While a bankruptcy gives the credit

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Glossary of Auto Loan Terms (C)

Caps (Interest) A cap on an interest rate is the highest interest rate that can be charged. This is typically seen when the borrower takes out a loan with a variable interest rate. Cash Price The amount that a buyer will pay

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Glossary of Auto Loan Terms (D)

Dealer Charges Dealer charges are those fees above the manufacturer’s price to the dealer. Those charges will typically reflect the cost of shipping. Dealer holdback The dealer holdback is an amount that could be used to provide additional purchase incentives. Dealers pay

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Glossary of Auto Loan Terms (E)

Effective annual interest rate The effective rate does not include one-time costs, such as closing costs. The effective interest rate is calculated using the nominal interest rate and the number of times interest is compounded. Effective Gross Income This is a term

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Glossary of Auto Loan Terms (F)

Fair Credit Reporting Act The Fair Credit Reporting Act is a federal statute that requires all credit reporting agencies adhere to specific guidelines. This law requires credit reporters to give consumers free access to their credit history on an annual basis and

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Glossary of Auto Loan Terms (G)

Grantee The buyer. Grantor The seller. Gross income The amount earned before taxes and other fees. The gross income may include child support, alimony, pay from a job or other earnings. The gross income is one of the factors used by lenders

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Glossary of Auto Loan Terms (I)

Impound The term “impound” refers to the holding of a vehicle for a specific purpose. For example, a vehicle might be impounded if the buyer fails to meet the terms of the lender. Indirect Financing Indirect financing is accomplished by going through

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Glossary of Auto Loan Terms (K)

Kelley Blue Book The Kelley Blue Book is the authority on the market value of vehicles. The value is derived based on an array of details, including overall condition, number of miles and options. Most car dealers use the book to help

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