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Auto loan glossary
Was it the gleam of the chrome on that shiny new car that dazzled you? Or the bright cheery smile and baffling terms tossed around by the car salesperson? Before you sign a loan or lease contract for a car, know what you're getting into with our glossary of terms about auto loans and leasing. Bookmark this glossary so you'll always have a quick reference at hand. |
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- Cancellation clause
The terms in a contract that spells out the conditions under which one party or the other may cancel the deal.
- Capitalized (cap) cost
In auto leasing, the capitalized or cap cost is the same as the price of the car. Consumers can and should negotiate the cap cost, just as they would negotiate the price of the car in a purchase deal.
- Captive finance company
A finance company that is owned at least in part by a manufacturer or car dealer. Example: GMAC, the General Motors financing arm.
- Cashier's check
A check that draws from a financial institution's account rather than a consumer's. Because a financial institution's check is less likely to bounce than a consumer's, cashier's checks are sometimes required by sellers for expensive transactions.
- Caveat emptor
Latin for let the buyer beware.
- Certificate of title
A title company or attorney's document attesting to the ownership of property. Clean title means the investigation has found no conflicting ownership claims.
- Chapter 13
A consumer bankruptcy that reorganizes debts into a court-approved repayment plan with a specified length.
- Chapter 7
A bankruptcy that provides for the liquidation of debts under a court-approved plan. To qualify, the debtor must in sell nonexempt property and give the proceeds to creditors.
- Closed-end lease
The common type of car lease, in which the lender sets the end-of-lease (residual) value of a leased car. It lets the people leasing cars be certain of what they will face at the end of the lease.
- Co-signer
One who agrees to pay a debt. Co-signing is often used when one party has poor credit or no credit. If that person can't or won't pay, the co-signer is on the hook for the outstanding debt.
- Collision
In auto insurance, it's the portion of the policy that pays to get your car repaired.
- Compounding method
The periodic addition of interest. All other things being equal, the more frequent the compounding, the larger the interest payment. Therefore, monthly compounding pays more than yearly, daily compounding pays more than monthly, etc.
- Comprehensive
In auto insurance terms, it is the portion of a policy that covers damages to your vehicle. There is often a deductible amount the consumer must pay before the comprehensive coverage kicks in.
- Consumer Credit Counseling Service
A name for a consumer credit counseling that is reserved for counselors associated with the National Foundation for Credit Counseling.
- Consumer Credit Protection Act
A federal law passed in 1968 that set out basic consumer credit protections in lending. It includes provisions that force lenders to state borrowing costs clearly.
- Consumer Leasing Act
A federal law requiring leasing companies to spell out lease costs and terms in a standard way.
- Cost-of-funds index
A common interest rate used for setting variable rate loans. This particular index tracks the interest rates at savings & loan institutions in the San Francisco Federal Home Loan Bank District.
- Counteroffer
In real estate, a counter offer is the rejection of one offer and the substitution of another as part of the negotiation for property.
- Credit
Granted by a borrower to a lender, with a promise of repayment in a stipulated period. Often tied to property as collateral, so if payments are not made as agreed, the collateral can be seized by the lender.
- Credit bureau
A private firm that collects information about how people handle credit, and then sells that information to other private firms. Regulated by the Fair Credit Reporting Act. Also called a credit reporting agency.
- Credit life insurance
Life insurance that offers repayment of debt under certain conditions involving the consumer becoming disabled.d into the loan principal amount.
- Credit report
A record of an individual's record of handling credit. Consumers have the right to view their credit reports once a year from each of the three major credit reporting agencies.
- Credit reporting agency
A private firm that collects information about how people handle credit, and then sells that information to other private firms. Regulated by the Fair Credit Reporting Act. Also called a credit bureau.
- Credit score
Also know as a FICO or Beacon score, it is an individual's credit record distilled into a three-digit number, roughly between 300 and 800. The higher the number, the less of a risk that person is in handling credit in the eyes of the lending industry.
- Credit union
A nonprofit, cooperative financial institution that tends to offer lower rates on car loans and higher rates on deposits than commercial banks.
- Creditor
A person who or institution that is owed money.
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auto loan rates |
| 11/21/2009 6:37:41 AM
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