Glossary

Amortization
The method of paying a loan through monthly repayments is referred to as amortization.

Annual Percentage Rate (APR)
APR is the cost of credit as a yearly rate and expressed as a percentage. The percentage is computed in accordance with the total amount financed, the finance charges, and the term of the loan. APR is inclusive of interest rate.

Appraisal
A professional appraiser makes an estimate of the actual value of the property.

Certificate of Title
A written opinion by an attorney or certificate issued by a title company to certify that the seller’s title to the property that is offered for sale is marketable and insurable.

Collateral
It is an asset or property, which can be used for recovery of any unpaid amount on car loan.

Cosigner
A person who accepts equal responsibility for the payment of loan in the event of non payment of car loan is known as cosigner.

Credit Bureau
It is an agency that keeps the record of all credit transactions done by a person. Also known as credit reference agency.

Credit History
The credit record of borrower as revealed by the credit bureau forms the credit history of borrower.

Credit Scoring System
In order to decide the creditworthiness of borrower, a statistical system is used where applicants are rated according to various characteristics.

Default
A person is said to have defaulted when he does not pay the whole of the car loan or any other loan in full.

Down Payment
A certain payment made by the borrower at the commencement of the loan is known as down payment.

Interest
Interest is the charge paid by borrower for borrowing money.

Interest Rate
Interest rate is an annual charge made to the borrower and expressed in the form of percentage.

MSRP
Manufacturer's Suggested Retail Price in short is MSRP. The selling price recommended by manufacturer of a vehicle is known as MSRP.

Refinancing
Refinancing is the process where a borrower takes another car loan to pay off the other at different terms.

Renegotiable Rate car loan
Renegotiable rate car loan involves a regular change in the interest rate.

Term
Term is the term of repayment of car loan.