Auto Bank Loan: Definitions You Need to Know
A Credit Article Contributed by Brandie King
Auto Bank Loan: Definitions You Need to Know
Before you run out and try to get an auto bank loan you need to take the time to learn what the different terms are that you will likely hear, as well as taking the time to understand what they mean. The following article contains some of the terms that you might come across. This article is not intended to teach you every term that might come up when you are shopping for an auto bank loan, it is just a starting place.
If you wish to know more about any of these words or to find more words regarding getting an auto bank loan, you can search for an auto bank loan, finance, or leasing glossary on the Internet.
Auto Bank Loan: Financing Terms
- APR: the rate you will be charged for the privilege of using the finance company's money; also know as Annual Percentage Rate, Interest Rate, Loan Rate
- Lien: A claim upon the vehicle for the payment or satisfaction of the debt.
- Loan Term: the amount of time you have to pay back the loan
- Term Loan: loan that is paid back in a lump sum when the loan term ends
Auto Bank Loan: Leasing Terms
- Capitalized Cost: selling price of vehicle, options, insurance, warranties, and rust-proofing or other add-ons; value of vehicle at the beginning of the lease
- Captive Finance Company: the auto manufacturer's (GMAC, Ford, Chrysler, etc.) financing companies
- Closed End Lease: lease that allows you to return the vehicle when the lease term is up; you can buy the vehicle at the residual value but are not obligated to
- Disposition Fee: the fee you will pay for the dealer to "dispose" of your trade-in vehicle
- Early Termination Charges: the fees you will pay if you turn your vehicle in before the end of the lease term
- Excess Wear and Tear: damage or wear on the vehicle that is beyond normal wear and tear; make sure you read your lease carefully to find out exactly what the dealer's standards of excess wear and tear are
- Excess Mileage Charge: fee you will pay if the mileage on your leased vehicle exceeds what was specified in the lease agreement
- Gap (Gap Insurance): insurance that will pay off the leasing company your car is stolen or totaled during the term of the lease; When a car is stolen or totaled during the term of a lease the lease becomes an early termination. When you have Gap Insurance it will pay the leasing company.
- Lease Term: length of the lease contract
- Lessee: you
- Lessor: the finance company
- Residual Value: value of vehicle at the end of the lease
Auto Bank Loan: Other Terms
- Acceleration Clause: a clause that lets the lender speed up the rate at which the loan comes due
- Extended Warranty: a contract that will cover the repairs on a car after the manufacturer's or dealer's warranty expires
