Use the
following car finance glossary to familiarize youself with the basic terms related
to car and auto finance.
Amortize: |
Paying off a loan or debt by monthly installments. Includes principal and interest.
|
Annual
Percentage Rate: |
The yearly rate of interest including all miscellaneous costs. Must be disclosed
by lenders as per the law.
|
Bad
debt: |
Debt
that can not be collected. Credit scores help prevent bad debt.
|
Bankruptcy: |
A
legal protection to a borrower against payment of debt.
|
Credit
history: |
A record of loans and credits over a period of time.
|
Credit
bureau |
A company that handles information about people’s credit history and report.
|
Delinquent: |
On a credit report means the person has not paid the minimum amount on time.
|
Default:
|
Inability
to repay a loan. Such a condition.
|
Down
payment: |
The
amount to be paid up front while going for a loan scheme with a dealer.
|
Direct
finance: |
The finance taken straight from a finance company.
|
FICO
score: |
The
most common credit score, named after Fair Isaac Company. |
Fair
Credit Reporting Act: |
The
law that regulates the behavior of credit bureaus.
|
Interest: |
The amount exceeding the principal borrowed that needs to be paid for borrowing
service. |
Indirect
finance: |
Finance taken from a dealer who in turn gets it from a finance company.
|
Mortgage: |
Keeping property with the lender for repayment of debt.
|
Principal: |
The amount of money borrowed on which interest is to be paid.
|
