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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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- Periodic rate
The interest rate for a set period of time. In other words, the daily periodic rate is the cost of credit per day.
- PIP
Also known as personal injury protection or medical payments coverage. This part of an auto insurance policy pays for medical expenses and lost wages to you and any passengers in your vehicle after an accident.
- Policy (insurance)
A written contract detailing your insurance coverage and the premium you agree to pay.
- Pre-qualification
A letter of opinion from a lender stating how much a borrower can borrow. Usually free, not backed up by any credit report.
- Premium
How much you get charged for an insurance policy.
- Preparation charges
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.
- Prepayment penalty
A lender's charge to the borrower for paying off the loan before the end of the term. It is present in some mortgages, preventing borrowers from rapidly refinancing.
- Prime for life
A type of line of credit loan coveted by consumers that fixes the interest at the prime rate for the life of the loan.
- Prime rate
Formerly, it was the interest rate a bank charged its best or prime customers. Now, it's simply an index used by banks to set consumer interest rates. (Prime customers get loans at below prime rate.)
- Principal
The amount you borrowed.
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| National
auto loan rates |
| 11/21/2009 6:58:24 AM
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