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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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- Late charge
Lenders impose late fees on borrowers who don't pay in a timely fashion.
- Lease
An agreement to allow a consumer to use property for a set period. In car leases, consumers pay to use up a portion of a vehicle's useful life.
- Lease extension
A lease that continues beyond its original expiration date. The conditions of the continuation may be set down in law or by negotiation between the parties to the lease.
- Lease option
In real estate, a written agreement to let a person live somewhere in exchange for rent, and also gives that individual the right to buy the property later. In some lease options, a portion of the rent goes toward a down payment.
- Lessee
The person who signs a lease.
- Lessor
The person who grants a lease.
- Liabilities
Debts and legal obligations. Liabilities can limit the amount of credit you can use.
- Liability insurance
In auto insurance, coverage for property damage and personal injuries you cause. In homeowners insurance covers claims by other parties for injuries that occur on your property.
- Lien
A legal claim against property for payment of a debt. Liens must be paid or settled before property can be sold because they cloud the legal title.
- Line of credit
Up to a certain maximum, consumers may borrow any amount for a specified time under a line of credit. Revolving credit accounts such as credit cards and home equity lines of credit are examples of lines of credit.
- Liquidation
When a debtor's property is liquidated, it is sold and the money raised goes to creditors.
- Liquidity
The easier to convert an asset to cash, the more liquid it is. A savings account is more liquid than a one-year CD, a one-year CD is more liquid than a five-year CD.
- Loan application
A document on which a prospective borrower lists details about his or her finances. Used by lenders to check credit and decide whether to grant a loan.
- Loan commitment
A promise by a lender to give a borrower a certain amount of money at a certain rate.
- Loan origination fee
The underwriting charge from a lender. The charge is often expressed in points, and a point is 1 percent of the loan amount.
- Loan term
The period of time you have to pay back a loan. It will be spelled out in loan documents.
- Loan-to-value ratio (LTV)
The loan divided by property value. If the house is valued at $200,000 and the loan is $180,000, the LTV is 80 percent. Borrowing above 80 percent LTV is considered risky by lenders, and they charge some sort of premium for it. In mortgages, borrowing more than 80 percent of the home's value usually triggers the need for private mortgage insurance. In ome equity borrowing, you must pay a higher rate.
- Lowball offer
A bid or offer far below market value.
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| National
auto loan rates |
| 11/21/2009 6:48:47 AM
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