By Tim Kelly

Amortization

Calculates the entire loan payment including interest on the outstanding balance which is to be paid off at the end of a fixed period.

Annual Percentage Rate (APR)

APR is the interest rate charged on the loan. It is the cost of credit on a yearly basis expressed as a percentage.

Bad Debt

A debt which is unlikely to be paid

Collateral

Property put as a security against the amount borrowed.

Credit Score

A numerical value used by creditors to predict how likely an individual is to repay a new loan.

Creditworthiness

Past and future ability of a borrower to repay debts.

Dealer Charges

Amount charged for features sold separately by auto lender such as undercoating or service offered in warranty period.

Default

Failure to repay a loan or failure to meet the terms of the loan agreement.

Down Payment

Amount paid by the customer in cash or trade-in value to get an auto loan in order to finance the remaining of the purchase price.

Equity

Difference between market value of a property and the outstanding mortgage on it.

Late Payment

A payment made later than agreed upon

Loan Application

Is the primary step in obtaining a loan. It involves filling of the loan application form.

Loan Calculator

It determines the amount of monthly payment that a borrower has to pay on the loan borrowed.  

Prepayment Penalty

Penalty imposed by the bank on the early payments.

Term

Specified period of time for which the loan is provided by the lender.

Title

A document which gives evidence of an individual’s ownership of a property

Upfront Costs

Any fees or charges that are collected in advance, before a loan is advanced.