Posted: Friday, March 25th, 2016
Financing a car can be confusing enough without having to wade through all of the industry jargon. That’s why we here at Green Light Auto Credit have taken it upon ourselves to create a basic glossary of car loan terms to help our clients make sense of their next purchase. Read it through, then give us a call to schedule an appointment with one of our counselors to get on the road to car ownership today.
Most Commonly Used Terms
There are dozens of financial terms you may encounter when buying a car. These are some of the most frequently used:
- APR – The annual percentage rate, or interest rate, on a loan.
- Bad Credit – A poor history of honoring credit obligations.
- Blue Book – The value assigned to a vehicle by the experts at Kelley Blue Book.
- Credit Scoring System – The system that determines a consumer’s credit-worthiness based on past performance.
- Debt-to-Income-Ratio – The ratio comparing the borrower’s income to total debt.
- Default – Failure to meet the terms of the credit agreement.
- Delinquency – Making credit payments past the due date.
- Disclosures – Information about the vehicle, including, known service information, damages, and sales.
- Equal Credit Opportunity Act – A federal statute that states that a consumer cannot be denied access to credit based on race, color, religion, sex, national origin, age, or receipt of public assistance.
- Finance Charge – The amount of interest incurred over the life of the loan.
- Grace Period – The amount of time between a payment’s due date and the assignment of a penalty fee.
- Gross Monthly Income – Total income before taxes and deductions.
- Lease – A contract which allows a consumer to borrow a vehicle in exchange for a monthly fee.
- List Price – The Manufacturer’s Suggested Retail Price (MSRP) or sticker price of a vehicle.
- Payment to Income Ratio – The percentage of a borrower’s income required to make the monthly installment payment.
- Stips – Stipulations to the contract that must be met before funding.
How to Get a Great Loan Rate
Use These Car Loan Terms to Secure a Great Deal at Green Light Auto Credit
Once you’ve learned these common car loan terms, visit Green Light Auto Credit. Contact us today at (800) 200-5551 to find a location near you.
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