Glossary of Auto Loan Terms
(A)
Accrue
Accrue literally means to accumulate. In the case of a car loan,
accrual refers to that amount that is built up, especially the
interest.
Add-Ons
Add-ons are those options or features that don’t come standard on a
vehicle. For example, a particular vehicle may come with a radio but
if you want a different type of radio, you’ll be charged for that
feature as an “add-on.” Other items that might be added include
remote start, keyless entry, sunroof, special rims or power seats.
Adverse Action Notice
A borrower who hasn’t met the terms of a loan agreement may find
themselves the recipient of an adverse action notice. This simply
means that the lender is considering repossession.
Agreement of Sale
The agreement of sale is one of the first pieces of paperwork
involved in the purchase of a vehicle. The document simply outlines
the specifics of the deal, including the car being purchased and the
price.
Amortization
Amortization is the process by which a borrower reduced the amount
owed over a specific period of time.
Amortization Table
The amortization table is a spreadsheet that details the amount of
payments, the amount of that that goes to interest and principal,
and could include the amount still owed.
Amortization Term
The amortization term is the period of time over which the payments
are to be made. Typically the term ends when the table reaches a
balance of “zero,” but could be at some negotiated point at which
the borrower has agreed to refinance the loan.
Amount Financed
The amount financed simply refers to that amount of principal on a
particular loan. The amount will not be the same as what a borrower
pays over the course of the loan because interest and other fees
will likely be added.
Annual Percentage Rate (APR)
The annual percentage rate is that amount the borrower will pay to
the lender for the privilege of the loan. APRs remain constant with
a fixed rate loan but will fluctuate with market trends in the case
of a variable rate loan. |
