|
Terms
Debt
to Income Ratio
Monthly
Payments
Monthly
Income
*
The applicability and accuracy of these calculators are not
guaranteed. *
Annual
Percentage Rate (APR) -
The cost of credit as a yearly rate.
Assumption
-
An agreement between a seller and buyer where the buyer
takes over the loan payments from the seller.
Balance
-
An amount in excess especially on the credit side of an
account.
Billing
Error -
Any mistake in a monthly statement as defined by the Fair
Credit Billing Act.
Broker
-
An agent who negotiates contracts of purchase and sale.
Certificate
of Title -
A written opinion or a certificate issued by a title
company that states that the seller has a good marketable and
insurable title to the property being offered for sale. This
certificate offers no protections against hidden defects in the
title, which an examination of the records could not reveal.
Check
Draft -
An official approval package, containing a check draft
made out for the maximum amount, that is sent in the mail after
you have been approved. This is valid at any franchised auto
dealer. A customer simply fills in the exact amount of purchase.
Conventional
Loan -
A loan that is not insured by the government.
Credit
-
The balance (as in a bank) in a person’s favor.
Credit
History
- A
person’s record of how you have borrowed and repaid debts.
Credit
Scoring - A
system that is used to rate credit applicants.
Depreciation
-
The decrease or decline in the value of a vehicle.
Disclosures
-
Information that must be given to consumers about their
financial dealings.
Down
Payment -
The amount of money that is paid between the purchase
price and loan amount.
Earnest
Money -
The amount of money that is paid upfront as part of the
purchase price to bind a transaction that will ensure payment.
Equal
Credit Opportunity Act (ECOA) -
A federal law that requires lenders to loan without
discrimination based on race, color, religion, national origin,
sex, marital status or income from public assistance programs.
Lenders are able to discriminate against credit risks that are
known not to pay their bills.
Equity
- The
value of a property or of an interest in it in excess of claims
against it.
Guarantee
-
An agreement by which one person undertakes to secure
another in the possession of something.
Household
Income -
The total income of all members of a household. An
important yardstick used by credit card issuers evaluating
applications for joint credit.
Installment
Loan -
Monthly payments that are applied to the actual purchase
of the vehicle. A person will own the vehicle at the end of the
loan by making these monthly payments.
Interest
- A charge
for borrowed money that is generally a percentage of the amount
borrowed.
The
interest rate on a loan is the cost in repaying the amount you
borrowed, times a certain percentage that the bank charges you
for the time it takes you to pay it back. APR stands for Annual
Percentage Rate. The APR on a loan includes the costs involved
in securing the loan such as the interest rate, points and other
related fees you will be paying annually.
When comparing interest rates from lender to lender, you
want to look at the APR.
Jumbo
Loan -
A loan over $200,000.00
Liability
on an Account -
Legal responsibility to repay debt.
Lien
-
A legal claim on the property of another for the
satisfaction of a debt or duty.
Lien
holder - Is the institution (usually a bank) that has the
right to take and hold or sell the property of a debtor as
security or payment for a debt borrowed from them.
Market
Value -
The top dollar that would be paid for a vehicle.
Minimum
payment -
The minimum amount a card holder can pay to keep the
account from going into default. Some card issuers will set a
high minimum if they are uncertain of the card holders ability
to pay. Most card issuers require a minimum payment of 2 percent
of the outstanding balance.
MSRP
-
Manufacturer’s Suggested Retail Price that represents
the manufacturer’s recommended selling price for a vehicle and
each of its options.
Negative
Amortization -
This occurs when monthly payments are not large enough to
pay all the interest due on the loan. The unpaid interest is
added to the unpaid balance of the loan. This can result in the
borrower owing more than the original amount of the loan.
Net
Effective Income -
A person’s gross income minus federal income tax.
Open-End
Credit -
line of credit that can be used over and over again. This
includes overdraft credit accounts, credit cards, and home
equity lines.
Prime
rate -
The interest rate a bank charges to its best or
"prime" customers. Each bank will quote a prime
lending rate. The rate given to consumers on their credit cards
is often based on the prime rate plus a certain percentage,
which represents the lender's assessment of the risk in lending,
plus its profit margin.
Principal
-
The amount of money, minus interest, owned on a loan.
Refinancing
-
Paying off one loan with the proceeds from another loan.
Rule
of 72 -
Divide the number 72 by the percentage rate you are
paying on your debt or earning on your investment. This will
give you the time it will take in years to double your
investment or debt given you make no more deposits or no more
payments.
Security
-
Something given as a pledge of payment.
Security
Interest -
The creditor’s ability to take property offered as
security.
Service
Charge -
Finance charges such as the fee for triggering an
overdraft checking account into use, using balance transfer
checks, or credit card checks.
Servicing
-
The steps a lender performs to keep a loan in good
standing, such as payment of taxes, insurance, collection of
payment, etc.
Settlement
-
The closing of a loan agreement.
Title
-
A document that is evidence of an individual’s
ownership of property.
Verification
of Employment -
A document that is signed by the borrower’s employer
indicating that the borrower is employed with their company and
the dollar amount the borrower makes per year.
|
