Auto Credit Loan Glossary

Agreement of Sale
A contract of purchase, purchase agreement, or sales agreement according to location or jurisdiction. A written contract in which a seller agrees to sell and a buyer agrees to buy, under specific terms.

Amortization
Loan payment calculated to pay off a loan over a fixed period, including interest on the outstanding balance.

Annual Percentage Rate (APR)
The percentage results from an equation considering the total amount financed, the finance charges, and the term of the loan. Usually expressed as a yearly rate.

Appraisal
An estimate of the value of property.

Asset
Property that can be used to repay debt, including a home, car, stocks and bonds.

Commission
Money paid to a car salesman for making a sale.

Cosigner
Another person who signs your loan and assumes equal responsibility for it.

Depreciation
A decline in value usually due to wear and tear of the property.

Down Payment
Money that is paid to the dealership so that the amount financed is less.

Gross Monthly Income
The total amount the borrower earns per month, before any expenses are deducted.

Interest
A charge paid for borrowing money.

Interest Rate
The annual rate of interest on the loan, expressed as a percentage of 100.

Late Payment
When a payment is not made by a set time, the lender may impose a fee.

MSRP
Stands for Manufacturer's Suggested Retail Price. It represents the manufacturer's recommended selling price for a vehicle and each of its options.

Principal
The amount of debt, not counting interest, left on a loan.

Term
The period of time between the beginning loan date on the legal documents and the date the entire balance of the loan is due.

Title
A document that gives evidence of an individual's ownership of property.