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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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- Dealer charges
What the dealer adds to the price of a car. Can include such items as extra warranties and rust-proofing. Often, these are negotiable.
- Dealer holdback
A portion of the manufacturer's suggested retail price provided to dealers by manufacturers.
- Dealer incentives
When vehicles aren't moving off the car lot quickly enough, manufacturers add incentives, which the dealer may pass along to buyers as inducements for a sale.
- Dealer invoice
The amount of the invoice that a dealer gets from the manufacturer for a vehicle.
- Dealer preparation, or dealer prep
Often negotiable, and usually pure profit for a car dealer, it is an additional charge that dealers try to impose on buyers. Manufacturers already pay dealers to prepare cars for sale.
- Dealer sticker price
The price on the sticker that gives most of the details of what the price includes. It's required on new cars under the federal Monroney Act of 1958, so it's sometimes called the Monroney sticker.
- Debt
Money owed by one person or entity to another.
- Debt consolidation
Replacing several loans with one. These loans can be secured by home equity, which make them a wise choice for people who have run up high-interest credit card debt -- if they can train themselves to stop using the cards.
- Debt-to-income ratio
A ratio used by lenders to decide whether to offer a loan, and at what rate. It calcultes how much of a potential borrower's before-tax earnings are spent to pay loans.
- Debtor
A person who or entity that owes.
- Declarations page
In auto insurance parlance, it's the front page of the policy, where the insurance company's and the insured person's policy number are listed. It also identifies the vehicle covered and summarizes the policy's coverage, cost and any deductibles.
- Deductible amount
A sum that the holder of an insurance policy must pay before the insurance company contributes.
- Default
What takes place when you don't pay a loan or lease debt in a timely fashion. The contract for that loan or lease will set out what happens when you go into default.
- Demand deposit
Deposits that can be withdrawn at any time. The most common demand deposit accounts are statement savings and checkbook accounts.
- Deposit
Something of value, usually money, that a potential buyer gives to make a formal offer and induce the seller to withdraw the property from open bidding.
- Depreciation
The opposite of appreciation, depreciation is the loss of value over time. Depreciation is most sudden in new cars, whose value drops sharply the moment they are driven off the showroom lot. That results in buyers being upside down in their loans, owing more than they are worth.
- Destination charge
A charge passed along to consumers on a new car for moving it to the dealer's lot.
- Direct deposit
Putting your wages or other income directly and automatically into your bank account.
- Discount rate
A very low interest rate at which Federal Reserve Bank member institutions may borrow money from the central bank on a short term basis.
- Disposition fee
A fee in some leases that charges consumers to give back their leased vehicles.
- Down payment
Used in loans with collateral, it is a partial payment for an asset. The loan covers the remainder. The larger the down payment, the smaller the loan.
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| National
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| 11/21/2009 6:20:05 AM
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