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Car Loan Terminologies
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•Terms Starting With ‘A’ Acceleration Clause In case the borrower does not repay his loan, the lender has a choice to speed up the rate of loan. This clause helps the entire amount of loan to be paid off immediately.
Agreement of Sale It determines the terms and conditions under which the buyer is buying and the seller is selling. Later, both the parties sign the contract. Amortization The process of writing off or liquidating an asset or loan periodically on an installment basis is called Amortization. Appraisal The estimation of the value of a property is called Appraisal. A professional appraiser makes it. Asset It is a valuable resource owned by a business that can be used to repay any debts. Automated Teller Machine (ATM) It is an electronic terminal through which customers can withdraw, check balance, and deposit money in a much easier and quicker way. •Terms Starting With ‘B’ Base Price Base Price is the cost of a car. It is also called “Sticker Price”. Billing Error It refers to error or mistake in the monthly billing statements of a customer. Broker A Broker is one who assists in the arrangement of funding and in the negotiation of contracts. Business Days These refer to days when a company is open for trading purposes. •Terms Starting With ‘C’ Certificate of Title A certificate of ownership issued by the Department of Motor Vehicles is called Certificate of Title. Closing When the buyer, the seller and the lender negotiate on property and funds, it is called ‘closing’ or ‘settlement’. Cloud (On Title) Cloud refers to an outstanding claim, which has a negative impact on the marketability of
title. Collateral Properties or assets that are offered to secure a loan or other credit is known as Collateral. Commission A charge assessed by a real estate agent or a broker for a service rendered is called Commission. Consignor A consignor is one who signs on behalf of the borrower of the loan and shares equal responsibility for it. This actually happens when the principal borrower does not have enough credit to take on the loan responsibility himself. Credit Analysis This refers to the process of determining whether an applicant satisfies the credit standards of a firm and the amount of credit that should be extended to him. Credit Bureau An organization to which business firms apply for credit information on prospective customers is known as Credit Bureau. Credit Card It is a plastic card having a magnetic strip issued by a bank, which authorizes the holder to buy goods or services on borrowed money. For e.g. Visa, MasterCard, etc. Credit Period This refers to time given to a buyer to make full payment for credit purchases beyond the expiry of which the payment becomes outstanding. Credit Policy This entails norms and guidelines to determine whether and how much credit is to be extended to a customer. Credit Scoring System This system provides a rating for all credit applicants on the basis of various characteristics in regards to creditworthiness. Credit Terms These terms represent the repayment terms extended by a firm to its debtors. Creditor A person to whom money is owed is called a ‘Creditor’. •Terms Starting With ‘D’ Debit Card A Debit Card is a card that enables the holder to withdraw money or to have the cost of purchases charged directly to the holder's bank account. In case of debit cards, customers do not require going to the bank to remove the cash from their account and can just go any ATM for the same. Default Failure of repayment of loan is known as Default. Dealer Holdback This is offered by the manufacturer to the dealer allowing the latter to purchase a vehicle at a lower price as compared to the invoice price. Down Payment Payment made at the time of purchase of a vehicle is called Down Payment. The balance is to be paid later. Disclosure Disclosing relevant information about the vehicle to the consumer is called Disclosure. •Terms Starting With ‘E’ Electronic Fund Transfer Systems It refers to a system whereby funds can be transferred electronically rather than by cheque. Equal Credit Opportunity Act According to this Act, all kinds of borrowers should be treated equally. Escrow Holding of assets or securities by another party is called Escrow. •Terms Starting With ‘F’ Financial Analysis Evaluation of the financial position of a firm is known as Financial Analysis. Financial Leverage The extent to which interest on debt magnifies changes in operating income into even greater proportionate changes in earnings after taxes is called Financial Leverage. It is also known as ‘Trading on Equity’. •Terms Starting With ‘G’ Gas Guzzler Tax An additional tax on the sale of vehicles that have poor fuel economy is termed as Gas Guzzler Tax. Gross Monthly Income The total monthly income before taking taxes or deductions into account is called Gross Monthly Income. Guarantee It refers to a pledge whereby one person assumes responsibility for paying another’s debts. •Terms Starting With ‘H’ Hazard Insurance In this type of insurance, the insurer protects the insured against losses such as fire, windstorm and the like. •Terms Starting With ‘I’ Impound This means taking temporary possession of as a security by legal authority. Interest It refers to charge by the lender on the borrowing money, typically expressed as an annual percentage rate. •Terms Starting With ‘J’ Joint Account It is an account shared by two or more people to share legal responsibilities in the repayment of loans or debts. •Terms Starting With ‘L’ Lessee One that holds a lease is termed as Lessee. Lessor One that lets property under a lease is termed as Lessor. •Terms
Starting With ‘M’ Manufacturer’s Suggested Retail Price •Terms Starting With ‘N’ Net Effective Income Income after all expenses and taxes have been deducted is called Net Effective Income. •Terms Starting With ‘P’ Point-of-Sale (POS) A
physical location where the consumer makes a purchase is called
Point-of-Sale (POS). Prepayment Penalty Those who make early payment of loans are required to pay penalty imposed by a bank called Prepayment Penalty. •Terms Starting With ‘R’ Rescission Rescission means the cancellation of a contract. Refinancing This refers to a process whereby an existing loan can be paid from the proceeds of a new loan at a lower interest rate. •Terms Starting With ‘S’ Service Charge These charges are related to the financial aspects of processing a loan. Solvency The capacity of a firm to meet its pecuniary obligations is called ‘Solvency’. •Terms Starting With ‘T’ Tax It is a charge levied on the cost of a vehicle. Title Search It refers to a proper examination of municipal and public records to confirm the legal ownership of a property. Trustee A trustee is responsible for managing assets for the benefit of someone else. •Terms Starting With ‘U’ Underwriting The process of issuing insurance policies is called Underwriting. Upside-down When the loan amount is greater than the present value of a vehicle, it is termed as Upside-down. •Terms Starting With ‘V’ Verification of Employment It refers to a written verification by the employer to his employee giving the salary and job details in it. Related Articles: »Home
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