100% Bad Credit Car Loan Application AcceptanceAuto Loans Glossary
Auto Loan Terms and Definitions
Title or Auto Equity Loan
This is a loan that requires the title of your vehicle to be turned over to cover the loan. The loan you get consists of cash, and your car title is returned to you when the loan is repaid.
This is often referred to as bad credit or poor credit. This is any credit score below the average score. This is the result of late payments, repossessions, foreclosures or bankruptcy. Although it is not good to have a low credit score, you can still be approved for an auto loan with bad credit.
Bill of Sale
A bill of sale is an official document, made by the dealer or seller, to record the sale of a vehicle.
Black Book is a list of information that determines the price or value of a vehicle. This method bases the value of a vehicle on information gathered from wholesale vehicle auctions.
Typically known as Blue Book Value, this is simple the value of a vehicle as determined by Kelley Blue Book, Inc.
This is an official document that can only be provided by your local DMV which states that you own the title to a particular vehicle. It is also referred to as a pink slip.
A cosigner is any person or party who uses their own credibility to help you be approved for a loan. If you do not pay on time, or if other issues arise, the matter becomes your cosigner’s responsibility as well as your own.
A term often used to mean credit history. Your credit history shows banks or potential lenders whether or not you are responsible enough to handle a loan.
Companies that keep track of your credit history and score.
Your credit history is a record, which displays your ability to handle loans or other debts responsibly.
A creditor is basically someone who loans funds to pay for another loan.
An auto dealership is a business that is authorized, by a car manufacturer, to sell their vehicles.
DTI, or Debt-to-Income Ratio
This is a ratio designed to compare someone’s debt, to the amount of income that they earn.
To default is to break a credit agreement, usually referring to not paying bills.
Delinquency is to miss or pay car payments late.
This is a term used to describe the loss of value in a vehicle as it ages and takes on typical wear and tear.
A disclosure is any information that is given to customers describing damage or incidents involving a vehicle that they wish to purchase.
This is an amount of money required to lower the price of a vehicle before beginning monthly payments.
This is the funds that have been paid on a loan. If your vehicle is more valuable than the remaining debt of your loan, you have positive equity; otherwise it is negative equity.
A finance charge is the calculated total amount of interest that you will pay for an auto loan.
A grace period is a stretch of time from a payment due date. During this time, you can be late on your payment with no penalty.
Gross Monthly Income
This is the total income gained monthly, without any deductions such as child support, tax payments, etc.
This is a charge added by lenders which causes the amount owed on a loan over time.
An interest rate is the percentage of increased charge on a loan, both the lender and borrower agree it upon before the loan agreement is completed.
A late payment is simple a payment that is made after the time dictated by the lender.
A lien is when a finance company takes possession of a vehicle until the debt has been paid.
The list price is the price suggested by the manufacturer. It is also known as “MSRP” or “Sticker Price.”
This is the amount a price is raised by the dealer from a manufacturer suggested price.
This is a price sticker that is required to be placed on all vehicles when sold by a dealer. It shows the vehicles various options and specifications, as well as the manufacturer’s suggested retail price (MSRP).
This is a borrower’s total yearly income, after subtracting federal and state taxes.
Payment-to-Income Ratio (PTI)
This is a calculation showing the percentage of a borrower’s income that they will need to fund a loan.
Proof of Income
A proof of income can be a bank statement or pay stub that proves the presence and value of a borrower’s income.
Proof of Residence
A proof of residence is any official document that shows the borrower’s current home or living space. A driver’s license is one of the more commonly used proofs of residence.
This is when a borrower renegotiates their loan with a new lender. This can help to lower payments and sometimes even lower the total cost of a loan.
Repossession usually occurs when a borrower defaults on their loan and seems to have no intention of paying their debts. The lender will seize the vehicle.
Stipulations are any documents that a lender may require to approve a loan. These may be proofs of income, proofs of residence, etc.
Vehicle taxes are funds paid to the state or federation, to satisfy the yearly financial requirements to own that vehicle.
A loan term is the entire duration of the time needed to repay the lender for that loan.
A title is a legal document that acts as proof that a citizen owns a specific vehicle.
This is the amount of money that a vehicle is worth when traded in at a specific dealership.
This term is used to signify when a vehicle is worth less than the remaining debt on the vehicle loan.