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Credit Glossary
Some times deciding on a used car auto loan can be confusing. At other times, it’s hard to understand what the difference is between financing a used car and leasing a new car really means. Even the acronyms dealerships and lending institutions use can be discouraging, too, if you’re not sure what they mean. Here at
Nations Auto Lending, we want to make sure that you’re as knowledgeable about your car loan as we are, so we’ve taken some of the guess work out of it. Feel free to take a look, and please contact us if you have any further questions.
Acceleration Clause
This means that the lender is allowed to accelerate the rate of your own. In other words, the lender can demand that a loan be repaid in two months instead of five months, or that the lender can ask for the entire balance if you default on the loan.
Annual Percentage Rate
Commonly referred to as “APR.” It is a percentage and the cost of your yearly credit. It is computed by totaling the amount financed, the term of the loan, and the total finance charges.
Balloon Payment
A balloon payment is a payment that is due at the end of the loan. Normally, it is a fairly substantial payment. The advantage to a balloon payment is that they keep the monthly payments of a used car loan minimal throughout the rest of the term of the loan.
Base Price
This usually means that this is the cost of a car with basic or no options.
Blue Book
This is a pretty standard publication, completely titled “Kelley Blue Book,” which is a reference that dealerships use to determine what the value of a car is.
Cosigner
This is a person who signs your car loan and agrees to assume the same responsibility for your loan as you do.
Dealer Holdback
Money the deal is paid by the manufacturer so the dealership can purchase the car less than what they will sell it for.
Down Payment
This is the amount of money paid up front before your loan begins. Down payments are sometimes required, but the amount determination is dependent on your credit history, the amount of the loan as well as the term of the loan. Most are approximately 10 percent of the total cost of the loan.
List Price
Refer to Manufacturer’s Suggested Retail Price entry.
Manufacturer’s Suggested Retail Price
This is more commonly referred to as “MSRP.” What this means is that it is the price that the manufacturer recommends the dealer should sell the vehicle for. Normally, it is much higher than what a consumer will pay, and it may only be a base model (refer to “base model” entry above). Also called “list price” or “sticker price.”
Negative Equity
Refer to Upside-down entry.
Sticker Price
Refer to Manufacturer’s Suggested Retail Price entry.
Upside-down
This occurs when the balance that is owed on a loan is a bigger total than the value of the car. Also called “negative equity.”
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