There are several terminologies and issues involved in a car loan. Unless the borrower isn’t well conversant with them, he will not be able to make good decisions. Consumer Car Loan, which is a responsible car loan lender, encourages informed decisions from borrowers. This glossary goes a long way in imparting knowledge of some of the most important terms used in car loan.
Annual Percentage Rate
Earlier loan providers would put a low rate of interest on the car loan. On the other hand, they would include several fees and charges. To give a more actual data of interest for comparison, the use of APR is made.
Balloon Payment
certain borrowers, instead of making a payment through monthly instalments over the specified term, pay the car loan as a lump-sum. This is known as balloon payment.
Base Price
Base price is the cost of the car with only the basic options included.
Blue Book
Blue book is used to come to the value of used vehicles. Kelley Blue Book, Inc. or one of the model references began to be used for finding the value of used vehicles. The value obtained through this method is known as the "Blue Book Value".
Cosigner
Cosigner is the guarantor who agrees to take up the responsibility for the payment of auto loan if the borrower doesn’t pay.
Down Payment
down payment is the payment that borrower will have to make from his side. The car loan provider will state the percentage which borrower will have to make from his side. Down payment depends on several factors like the borrower’s credit history, the amount of car loan applied for and the period for repayment of car loan.
Manufacturer’s Suggested Retail Price
The price recommended by the manufacturer for the vehicle is known as manufacturer’s suggested retail price. It is commonly referred to as MSRP in short. The price is also known as list price or sticker price.
Upside-down
When the value owed by the borrower on the car loan exceeds the value of car, the phenomenon is known as upside down or negative equity.
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