With the terminologies
involved in the auto loan market on an increase, borrowers
are bound to be confused. Confusion cannot be the base of
any decision. Advanced Auto Loan has tried to explain certain
terms for a better understanding of auto loan terminologies.
Annual Percentage Rate
APR is the interest charged on loan. APR includes not only
the interest payable over the term but also other fees and
charges that a lender adds to the loan.
Balloon Payment
Balloon payment is due at the end of the loan term. The intention
behind making a balloon payment is to save on the interest
charges.
Base Price
By base price is meant the cost of the car with only the basic
options.
Blue Book
Blue book refers to a publication of Kelley Blue Book, Inc.
or one of the model references that is used to come to the
value of used vehicles. The value so obtained is also known
as the "Blue Book Value". Wholesale as well as retail
value of each vehicle can be obtained through this method.
Cosigner
Cosigner assumes responsibility for the payment of auto loan
if the borrower fails to repay it.
Down Payment
The payment that a borrower makes upfront at the time of drawing
auto loan. The amount of down payment will depend on the borrower’s
credit history, amount of loan being taken and the period
within which loan will be repaid.
Manufacturer’s Suggested Retail Price
Manufacturer’s suggested retail price is
referred to as MSRP in short. It is the price recommended
by the manufacturer for the vehicle. The price is also known
as list price or sticker price.
Upside-down
The phenomenon of upside down or negative equity is visible
when the balance that a borrower owes on an auto loan exceeds
the value of car.
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