Before signing any documents, whether at a dealership or lending institution understanding the following finance terms will only benefit you
Additional Product or Services – Products or services that the dealer may offer in a sale, financing or lease. Examples include extended service contracts, credit insurance. These products are sometimes optional.
Amount Financed – The dollar amount of the credit provided to you
Annual Percentage Rate (APR) – The cost of credit expressed at a yearly rate. Factors that influence your APR: Your credit history, current finance rates, market conditions and special offers are among the factors that affect your APR.
Assignee – The bank, finance company or credit union that buys the contract from the dealer
Credit Insurance – Optional insurance that pays the scheduled unpaid balance if you die or the scheduled monthly payments if you become disabled. The cost of the optional credit insurance must be disclosed in writing. If you decide you want it, you must agree to it and sign for it.
Credit Report – A document that includes information on where you live, how you pay your bills, whether you have been sued, or have filed for bankruptcy. Nationwide consumer reporting agencies sell the information in your report to creditor, insurers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home
Credit Score – A number that reflects the credit risk you present based on information in your credit file. The better your history of credit, the higher your score. Your credit score may be used to help decide the rate and other terms you are offered.
Down Payment – The initial amount you pay to reduce the amount you finance.
Extended Service Contract – Optional protection on specified mechanical and electrical components of the vehicle that may be available for purchase. It supplements any warranty coverage provides with the vehicle.
Finance Charge – The cost of credit expressed as a dollar amount.
Guaranteed Auto Protection (GAP)– Optional protection that pays the difference between the amount you owe on your vehicle and the amount you would get from your insurance company if the vehicle is stolen or destroyed before you have paid off your credit obligation.
Monthly Payment Amount – The dollar amount due each month of the loan, finance contract, or lease agreement
Negative Equity – The amount owed on a vehicle above its market value. For example, if your credit pay off is $18000 and your vehicle’s market value is $15000, you have negative equity of $3000
Negotiated Price of the Vehicle – The purchase price of the vehicle agreed on by the buyer and the seller. The price should reflect any rebates, discounts, or special offers that you get at the dealership of you meet certain qualifications, which would be clearly disclosed.
Repossession – If you do not make timely payments on you vehicle, your creditor (the bank) may have the right to repossess it without going to court or warning you.
Total of Payments – As disclosed on the loan or finance contract, the total amount you will have paid after you have made all the payments as scheduled. For a lease, this is the amount you will have paid by the end of the lease.