Used Car Loans Glossary

Amortization
Loan payment calculated to pay off the debt at the end of a fixed period, including interest on the outstanding balance.

Annual Percentage Rate (APR)
The cost of credit as a yearly rate. The percentage results from an equation considering the total amount financed, the finance charges, and the term of the loan. Usually not the same as the interest rate.

Appraisal
An estimate of the value of property, made by a professional appraiser.

Appraisal Fee
The charge for estimating the value of property.

Asset
Property that can be used to repay debt, such as stocks and bonds or a car.

Billing Error
Any mistake in your monthly statement as defined by the Fair Credit Billing Act.

Business Days
Find out from your institution to find out what days it counts as business days under the Truth in Lending and Electronic Fund Transfer Acts.

Certificate of Title
A certificate issued by a title company or a written opinion by an attorney that the seller has good marketable and insurable title to the property which he is offering for sale. A certificate of title offers no protection against any hidden defects in the title which an examination of the records could not reveal. The issuer of a certificate of title is liable only for damages due to negligence.

Closing
The meeting between the buyer, seller and lender where the property and funds legally change hands. Also called settlement.

Collateral
Property offered to support a loan that can be seized if you default.

Commission
Money paid to a real estate agent or broker by the seller as compensation for finding a buyer and completing the sale.

Commitment
An agreement, often in writing, between a lender and a borrower to loan money at a future date subject to the stated conditions.

Cosigner
Another person who signs your loan and assumes equal responsibility for it.

Credit
The right granted by a creditor to pay in the future in order to buy or borrow in the present; also, a sum of money owed to a person or business.

Credit Bureau
An agency that keeps your credit record.

Credit History
The record of how you've borrowed and repaid debts.

Credit Scoring System
A statistical system used to rate credit applicants according to various characteristics relevant to creditworthiness.

Creditor
A person or business from whom you borrow or to whom you owe money.

Creditworthiness
Past and future ability to repay debts.

Default
Failure to repay a loan or otherwise meet the terms of your credit agreement.

Delinquency
Failure to make payments on time. This can lead to foreclosure.

Depreciation
Decline in value of a cardue to wear and tear, or any other reason.

Down Payment
Money paid to make up the difference between the purchase price and the loan amount.

Gross Monthly Income
The total amount the borrower earns per month, before any expenses are deducted.

Guarantee
A promise by one party to pay a debt or perform an obligation contracted by another if the original party fails to pay or perform according to a contract.

Impound
That portion of a borrower's monthly payments held by the lender or service to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due. Also known as reserves.

Interest
A charge paid for borrowing money.

Interest Rate
The annual rate of interest on the loan, expressed as a percentage of 100.

Late Payment
A payment made later than agreed upon in a credit contract and on which additional charges may be imposed.

MSRP
Stands for Manufacturer's Suggested Retail Price. It represents the manufacturer's recommended selling price for a vehicle and each of its options.

Principal
The amount of debt, not counting interest, left on a loan.

Rate
See Interest Rate.

Refinancing
The process of the same mortgagor paying off one loan with the proceeds from another loan.
Renegotiable Rate Mortgage (RRM)
A loan in which the interest rate is adjusted periodically. See Adjustable Rate Mortgage.

Tax
As applied to real estate, an enforced charge imposed on persons, property or income, to be used to support the State. The governing body in turn utilizes the funds in the best interest of the general public.

Term
The period of time between the beginning loan date on the legal documents and the date the entire balance of the loan is due.

Title
A document that gives evidence of an individual's ownership of property.