Glossary of Auto Loan Terms
(F)
Fair Credit Reporting Act
The Fair Credit Reporting Act is a federal statute that requires all
credit reporting agencies adhere to specific guidelines. This law
requires credit reporters to give consumers free access to their
credit history on an annual basis and that the credit reporting
companies provide an avenue for correcting mistakes on the report.
In that case, the individual making the claim of an incorrect entry
must report the issue and the creditor must provide proof of their
records, otherwise the credit reporting company is required to
remove the information from the report.
Fair Market Value
The fair market value of a vehicle is the price a willing seller and
a willing buyer would agree on with all other conditions being
equal. For example, a new car on a dealer’s lot would have one fair
market value but the car’s value would decrease immediately upon
leaving the lot because it is now considered to be a used vehicle.
Finance Charge
The finance charge is that amount the buyer pays for the opportunity
to borrow money. Interest is part of that equation, but the finance
charge may also include other fees, such as the cost of paperwork to
establish the contract. A buyer should be aware that these charges
are in addition to the cost of the vehicle, therefore finance
charges will increase the cost of buying a car.
Finance Company
A finance company is any company that offers loans to an individual.
Some finance companies may specialize in a particular type of loan
and that company may be able to offer better terms than a
traditional bank or a lender that makes all types of loans.
Fixed Rate Loan
A fixed rate loan is simply a loan with a specific interest rate
that will not change over the course of the loan. The biggest
advantage is that the borrower knows the payment amount will remain
the same and can better budget for that amount. In comparison, the
payment on a variable rate loan will fluctuate as the interest rate
changes, with each month’s payment reflecting trends in national
interest rates.
Franchised Dealership
A franchise is simply one of a chain of stores with the same name
and the same or similar business practices. In the case of a car
dealership, all the cars offered are typically provided by a single
manufacturing company. It’s important to remember that a dealership
may have franchise rights to sell several kinds of car and that
other makes of used cars are sometimes offered, |
