| Add-ons |
Products
or services sold by dealerships that can be added on to
the vehicle. Some examples include rustproofing, upholstery
treatments, alarm systems, and extended warranties. Remember
that these add-ons will increase the price of the vehicle,
and your monthly payment. |
| Amortization |
The
reduction of debt by regular payments of principal and
interest over a period of time. A loan is amortized so
that with each payment the amount of interest paid decreases,
and the amount of principal paid increases. |
| APR |
Annual
Percentage Rate. A way of expressing the cost of credit
on a loan. Under federal law, all consumer loans must
disclose the Annual Percentage Rate. |
| Application |
The
information you provide to us to see if we can offer you
a loan. |
| Assets |
Things
you own |
| Balance |
The
amount in an account or owed on a loan. The balance in
a checking account is the amount of money in that account.
The balance on a loan account is the amount remaining
to be paid back. |
| Balloon
Loan |
A
type of loan that features smaller monthly payments, with
the balance of the loan due in one large "balloon"
payment at the end of the loan term. |
| Balloon
Payment |
A
large payment due at the end of a loan. Using a balloon
payment, the individual monthly payments can be smaller. |
| Bankruptcy |
A
legal action, whether voluntary or involuntary, that generally
is made based on an inability to pay debts when due. |
| Base
Price |
The
cost of a car without options. Also called the "sticker
price" or "MSRP." |
| Bill
of Sale |
A
document that shows the details of a sale. Your dealership
will prepare a bill of sale to document your purchase |
| Blue
Book |
A
publication of Kelley Blue Book, Inc. and one of several
standard references used to determine the value of used
vehicles. The value is sometimes called the "Blue
Book Value." Blue books typically show a wholesale
value and a retail value for each vehicle. |
| Captive
Finance Company |
A
separate company owned by an auto manufacturer to finance
product sales. Examples include General Motors Acceptance
Corporation (GMAC) and Ford Motor Credit Corporation (FMCC). |
| Cash
Flow |
A
measure that compares your income and your expenses. |
| Collateral |
Property
that you pledge to give up if you default on a loan. Your
vehicle is the collateral for your loan. |
| Compound
Interest |
An
interest method that calculates interest on interest earned
in prior periods. |
| Credit |
A
loan granted by one party to another party |
| Credit
Bureau |
A
private company that collects information about consumers
from public records and reports from banks and other companies. |
| Credit
Report |
A
report about an individual's payment history that is supplied
by a Credit Bureau. |
| Customer
Incentive |
A
special payment from the manufacturer to the customer
to promote sales of slow-selling models. Also called a
"Rebate." |
| Dealer
Holdback |
An
allowance paid by the manufacturer to the dealer to allow
the dealer to purchase a vehicle for less than the invoice
price. |
| Dealer
Incentive |
A
special payment from the manufacturer to the dealer to
help the dealer sell slow-selling models. |
| Debt |
An
obligation resulting from borrowing money. |
| Depreciation |
A
reduction in the value of an asset. Most cars begin to
depreciate the moment they are sold. Some vehicles depreciate
much faster than others. |
| Destination
Charge |
The
fee charged by the manufacturer to ship the vehicle to
the dealership. This fee is passed on to the customer,
and is included on the sticker. |
| Down
Payment |
Money
you pay at the time of the purchase to reduce the amount
that will be financed. |
| Finance
Contract |
The
legal document that specifies the terms of a loan. |
| Franchised
Dealer |
A company that is authorized by an automobile manufacturer
to sell that manufacturer's products. Independent used
car lots, automobile brokers, and leasing companies
are not franchise dealerships.
A franchise dealership normally has an affiliation
with the manufacturer included in its name. For example:
Downtown Ford or Los Angeles Saab. |
| Grace
Period |
The
period of time after the due date that's allowed before
a penalty is charged. |
| Insurance |
A
contract with a company that agrees to reimburse you in
the case of damage or theft. The lender requires you to
maintain insurance on the vehicle you purchase. |
| Interest |
The
amount paid or charged for the use of money. Interest
is expressed as a percentage rate per period of time. |
| Invoice
Price |
The
price the dealer pays to buy a car from the manufacturer,
exclusive of holdbacks or other discounts. |
| Lease |
A
form of financing in which you can use a vehicle for a
period of time in exchange for making payments to the
leasing company. In a lease, the leasing company continues
to own the vehicle. |
| Lien |
The
finance company's security interest in your vehicle. |
| List
Price |
The
manufacturer's suggested retail price for a vehicle. Also
called "MSRP" or "Sticker Price." |
| Loan |
A
form of financing in which you borrow money to allow you
to purchase a vehicle. With a loan, you own the vehicle. |
| Odometer |
An
instrument, usually connected to the speedometer, that
records the vehicle's elapsed mileage. |
| Optional
Equipment |
Equipment
not included in a vehicle's base price. Depending on the
vehicle, optional equipment may include such items as
air conditioning, automatic transmission, passenger-side
air bags, or high-quality sound systems. |
| Margin |
See
profit margin |
| Mark-up |
The
difference between the invoice price and the price the
dealer sells the car for. |
| Monroney
Sticker |
The
price sticker required by federal law for all new vehicles.
The Monroney Sticker lists all the vehicle's options along
with the manufacturer's suggested retail price (MSRP). |
| Monthly
Payment |
The
amount of principal and interest you are obligated to
pay each month. |
| Mortgage |
A
contract under which a borrower gives a lender a lien
on real estate (typically a home) in return for a loan
or money. |
| MSRP |
Manufacturer's
Suggested Retail Price. The price the manufacturer recommends
for a vehicle. Also called "List Price" or "Sticker
Price." |
| Payment |
The
amount of principal and interest you pay each month. |
| Pink
Slip |
A
vehicle's title certificate. |
| Prime
Rate |
The
interest rate charged by banks to their most credit-worthy
customers. |
| Principal |
The
amount of the original loan paid to the borrower by the
lender. Also called amount financed. |
| Product
Recall |
The
process by which vehicle manufacturers notify owners of
vehicle defects; especially safety or emissions-related
defects that will be repaired at the manufacturer's expense. |
| Profit
Margin |
The
return received on an investment after all operating expenses
have been met. A dealership's profit margin is the difference
between what they paid for the car (including business
expenses), and what you pay them. |
| Rate |
The
amount of interest on a loan expressed as an annual percentage
of the principal. |
| Rebate |
A
special payment from the manufacturer to the customer
to promote sales of slow-selling models. Also called a
"Customer Incentive." |
| Refinancing |
The
process of obtaining a new loan to replace an existing
loan or lease. |
| Repossession |
The
situation where a lender takes physical possession of
a vehicle due to default. |
| Retail
Blue Book Value |
The
approximate value of a used car if sold privately or by
a dealership. A publication of Kelley Blue Book, Inc.
and one of several standard references used to determine
the value of used vehicles. The value is sometimes called
the "Blue Book Value." Blue books typically
show a wholesale value and a retail value for each vehicle. |
| Salvage
Value |
A
title designation used when an insurance company purchases
a vehicle that has been severely damaged (totaled), and
then resells the vehicle. Each state has different regulations
on the sale of salvaged vehicles. |
| SSL
or Encryption |
SSL
encrypts your order information to avoid the decoding
of that information by anyone other than the lender. To
check the security of your connection, look at the lower
left-hand corner of your browser window after accessing
the server. If you see an unbroken key or a closed lock
(depending upon your browser), then SSL is active. You
can also double-check by looking at the URL line of your
browser. When accessing a secure server, the first characters
of the site address will change from "http"
to "https." Some versions of browsers and some
firewalls don't permit communication through secure servers.
In that case, you'll be unable to connect to the server
so you won't have to worry about mistakenly placing an
order through an unsecured connection. |
| Sticker
Price |
The
manufacturer's suggested retail price for a vehicle. Also
called "List Price" or "MSRP." |
| Term |
The
period covered by a vehicle loan or lease, typically 24,
36, 48, or 60 months. |
| Title |
A
certificate issued by the state department of motor vehicles
that proves ownership of a vehicle. Sometimes called a
"pink slip." |
| Trade-in
Value |
The
value of a used vehicle that you trade in to a dealership
as part of a purchase. The trade-in value will usually
be approximately equal to the wholesale blue book value. |
| Upside-down |
Describes
a situation where the balance owed on a loan is greater
than the current value of a vehicle. |
| VIN |
Vehicle
Identification Number - A 17-character code that uniquely
identifies each vehicle manufactured in the world. A vehicle's
VIN can usually be found mounted on the dashboard of the
driver's side, visible through the windshield, or stamped
on the vehicle's firewall. |
| Wear
and Tear |
Vehicle
damage above allowable limits; assessed when a lease or
balloon loan vehicle is returned. Finance companies typically
charge fees for excess wear, tear, and mileage on returned
lease and balloon loan vehicles. |
| Wholesale
Blue Book Value |
The
approximate price that a dealership will pay to purchase
a used vehicle. A publication of Kelley Blue Book, Inc.
and one of several standard references used to determine
the value of used vehicles. The value is sometimes called
the "Blue Book Value." Blue books typically
show a wholesale value and a retail value for each vehicle. |
