Glossary of Auto Loan Terms
At times, the car buying process can be overwhelming. One thing that doesn't help is getting to the dealership and having to scramble to figure out terms you may not be familiar with. We're here to help you stay prepared. Learn these terms before you get to the dealership to help make the car buying process smoother.
- Finance Charge – the total interest charges you will incur over the life of your loan.
- Loan-to-Value Ratio – divide the total dollar value amount of your loan by the actual retail value of the vehicle to get this ratio.
- Principal – the amount, not including interest, owed on the loan.
- MSRP/Retail Value – The manufacturers suggested retail price of the vehicle.
- Buyer’s Order (Bill of Sale) – a form used by the seller to document the sale of the vehicle.
- APR (Annual Percentage Rate) – this is the percentage paid each year the vehicle is financed. An individual person’s APR will depend on their credit.
- Delinquency - delinquent status can be met by failure to pay your loans.
- Kelley Blue Book and NADA – used to help determine the value of a vehicle.
- Prepayment Penalties – charges you could incur for paying a loan off early. If you think you could pay your loan off early, do not select a loan that penalizes you for this. Dominion Energy Credit Union does not assess prepayment penalties on our consumer loans.
- Dealership Fees – these fees can include fees such as vehicle preparation fees and documentation/ administration fees. In some cases, these fees can be negotiable.
- Invoice Price – the price the dealership paid for the vehicle from its manufacturer.
- Default – breaching of a credit agreement, resulting in failure to pay, or provide collateral.
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