Below is s list of some terms related to auto loans and the
financing procedure. If you have any questions regarding our
funding process, contact us. We recommend that you read the auto
purchasing tips page as well as the FAQ page to better educate and
familiarize yourself about auto financing and how our car buying
services works.
Amortization
The reduction and retirement of a debt through periodic payments
of interest and principal.
Accrued Interest
Interest which accumulates on the unpaid balance of loan
principal.
Assignment
The transfer of your loan from one lender to another. Or from the
automobile dealership to the lender.
Buyers Order
This form is the legal contract between the Buyer and the Seller.
Buyers Guide
The Federal Trade Commission's (FTC) Used Car Rule requires
dealers to post a Buyers Guide in every used car they offer for
sale. The Buyers Guide must tell you:
1) Whether the vehicle is being sold "as is" or with a warranty.
2) What percentage of the repair costs a dealer will pay under the
warranty.
3) That spoken promises are difficult to enforce.
4) To get all promises in writing.
5) To keep the Buyers Guide for reference after the sale;
6) The major mechanical and electrical systems on the car,
including some of the major problems you should look out for.
7) To ask to have the car inspected by an independent mechanic
before you buy.
Co-Buyer
Unlike a Co-Signer a Co-Buyer's income is combined with the
Buyer's. This option is normally limited to a spouse or a person
closely related residing at the same residence.
Co-Signer
Someone who assumes legal responsibility for repayment of a loan
in the event the borrower does not pay. A Cosigner may be
considered for a Buyer who does not comply with all the credit
requirements. The income of the Buyer, however, must meet all the
income and budget guidelines without reliance upon the income of
the cosigner.
Credit Bureau
An agency that compiles, maintains and provides credit and other
personal information to creditors. There are three major credit
reporting agencies:
1) Equifax®
P.O. Box 740241
Atlanta, GA 30374-0241
Phone: (800)-685-1111
2) Trans Union®
P.O. Box 1000
Chester, PA 19022
Phone: (800) 916-8800
3) Experian® (formerly TRW)
P.O. Box 2002
Allen, TX 75013
Phone: (888) 397-3742
Credit Report
A historical document that may include payment habits, number of
credit or loan accounts, balance of those accounts, place and
length of employment, and records of financial transactions. The
following items normally appear within the credit report.
1) Credit Score - A statistical formula that assigns a
numerical value to your credit worthiness. There are many
different score models. When you apply for an auto loan the lender
is most likely viewing your "Car Enhanced Score". This score may
be higher or lower than your regular credit score. Scores can vary
widely among all three credit bureaus.
2) Applied for Credit - Items on your credit report
that you actually initiated the request for credit.
h Installment Credit - Loans that have
a fixed monthly payment for a fixed period of time. These items
are the most important items on your credit report when you apply
for an auto loan. Examples include car loans and mortgages.
h Revolving Credit - Loans that do not
have a fixed monthly payment nor a fixed period of time. Examples
include credit cards and home equity lines of credit.
h Open Credit - Loans that must be
paid in full each month.
3) Unapplied for Credit - Items that you did not initiate a
request for credit. These items only show up on your credit report
if you don't pay them. Example include utility and medical bills,
bad checks, and collection agency accounts.
4) Charge Off / Write Off - Items that the original
creditor has given up on trying to collect. Often these Charge
Offs will show up twice on a credit report, once from the original
creditor as Applied for Credit, and once from a collection agency
as Unapplied for Credit.
5) Judgments - A court order to repay a debt. A creditor
with a judgment in their favor may request a wage garnishment to
repay the debt.
**It is always a good idea to get a copy of your credit report
before applying for good and bad credit auto loans. You want to
make sure that all of your information is up to date. Having
erroneous information on your credit report can negatively affect
the interest rate you obtain with your automobiles financing.
Credit Scoring
A system used by banks and other lending institutions to determine
whether or not you are creditworthy. Each lender uses their own
score card to determine if they will approve an auto loan. The
following items are normally contained in a lender score card:
h Credit Report Score
h Time in Credit File
h Time on Job
h Monthly Income
h Debt to Income Ratio
h Payment to Income Ratio
h Loan to Value
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