Debt
to Income Ratio
Monthly
Payments
Monthly
Income
*
The applicability and accuracy of these calculators are not guaranteed. *
Annual
Percentage Rate (APR) -
The cost of credit as a yearly rate.
Assumption
-
An agreement between a seller and buyer where the buyer takes over
the loan payments from the seller.
Balance
-
An amount in excess especially on the credit side of an account.
Billing
Error -
Any mistake in a monthly statement as defined by the Fair Credit
Billing Act.
Broker
-
An agent who negotiates contracts of purchase and sale.
Certificate
of Title -
A written opinion or a certificate issued by a title company that
states that the seller has a good marketable and insurable title to the
property being offered for sale. This certificate offers no protections
against hidden defects in the title, which an examination of the records
could not reveal.
Check
Draft -
An official approval package, containing a check draft made out for
the maximum amount, that is sent in the mail after you have been approved.
This is valid at any franchised auto dealer. A customer simply fills in
the exact amount of purchase.
Conventional
Loan -
A loan that is not insured by the government.
Credit
-
The balance (as in a bank) in a person’s favor.
Credit
History
- A person’s record
of how you have borrowed and repaid debts.
Credit
Scoring - A
system that is used to rate credit applicants.
Depreciation
-
The decrease or decline in the value of a vehicle.
Disclosures
-
Information that must be given to consumers about their financial
dealings.
Down
Payment -
The amount of money that is paid between the purchase price and
loan amount.
Earnest
Money -
The amount of money that is paid upfront as part of the purchase
price to bind a transaction that will ensure payment.
Equal
Credit Opportunity Act (ECOA) -
A federal law that requires lenders to loan without discrimination
based on race, color, religion, national origin, sex, marital status or
income from public assistance programs. Lenders are able to discriminate
against credit risks that are known not to pay their bills.
Equity
- The
value of a property or of an interest in it in excess of claims against
it.
Guarantee
-
An agreement by which one person undertakes to secure another in
the possession of something.
Household
Income -
The total income of all members of a household. An important
yardstick used by credit card issuers evaluating applications for joint
credit.
Installment
Loan -
Monthly payments that are applied to the actual purchase of the
vehicle. A person will own the vehicle at the end of the loan by making
these monthly payments.
Interest
- A charge for
borrowed money that is generally a percentage of the amount borrowed.
The
interest rate on a loan is the cost in repaying the amount you borrowed,
times a certain percentage that the bank charges you for the time it takes
you to pay it back. APR stands for Annual Percentage Rate. The APR on a
loan includes the costs involved in securing the loan such as the interest
rate, points and other related fees you will be paying annually.
When comparing interest rates from lender to lender, you want to
look at the APR.
Jumbo
Loan -
A loan over $200,000.00
Liability
on an Account -
Legal responsibility to repay debt.
Lien
-
A legal claim on the property of another for the satisfaction of a
debt or duty.
Lien
holder - Is the institution (usually a bank) that has the right to
take and hold or sell the property of a debtor as security or payment for
a debt borrowed from them.
Market
Value -
The top dollar that would be paid for a vehicle.
Minimum
payment -
The minimum amount a card holder can pay to keep the account from
going into default. Some card issuers will set a high minimum if they are
uncertain of the card holders ability to pay. Most card issuers require a
minimum payment of 2 percent of the outstanding balance.
MSRP
-
Manufacturer’s Suggested Retail Price that represents the
manufacturer’s recommended selling price for a vehicle and each of its
options.
Negative
Amortization -
This occurs when monthly payments are not large enough to pay all
the interest due on the loan. The unpaid interest is added to the unpaid
balance of the loan. This can result in the borrower owing more than the
original amount of the loan.
Net
Effective Income -
A person’s gross income minus federal income tax.
Open-End
Credit -
line of credit that can be used over and over again. This includes
overdraft credit accounts, credit cards, and home equity lines.
Prime
rate -
The interest rate a bank charges to its best or "prime"
customers. Each bank will quote a prime lending rate. The rate given to
consumers on their credit cards is often based on the prime rate plus a
certain percentage, which represents the lender's assessment of the risk
in lending, plus its profit margin.
Principal
-
The amount of money, minus interest, owned on a loan.
Refinancing
-
Paying off one loan with the proceeds from another loan.
Rule
of 72 -
Divide the number 72 by the percentage rate you are paying on your
debt or earning on your investment. This will give you the time it will
take in years to double your investment or debt given you make no more
deposits or no more payments.
Security
-
Something given as a pledge of payment.
Security
Interest -
The creditor’s ability to take property offered as security.
Service
Charge -
Finance charges such as the fee for triggering an overdraft
checking account into use, using balance transfer checks, or credit card
checks.
Servicing
-
The steps a lender performs to keep a loan in good standing, such
as payment of taxes, insurance, collection of payment, etc.
Settlement
-
The closing of a loan agreement.
Title
-
A document that is evidence of an individual’s ownership of
property.
Verification
of Employment -
A document that is signed by the borrower’s employer indicating
that the borrower is employed with their company and the dollar amount the
borrower makes per year.
