APR

The "Annual Percentage Rate" is a yearly rate of interest that includes fees and costs paid to acquire the loan. Lenders are required by law to disclose the APR, and the rate is used to compare various loans available, making even simple interest and compound interest loans comparable.

Application

An initial statement of personal and financial information required to approve your loan.

Certificate of Title

A legal document issued by the state showing the owner’s name and the vehicle’s mileage at the time of sale.

Co-Signer

This person assumes equal responsibility for the loan if the borrower does not pay.

Credit Report

A credit document that shows credit or loan account, balances, employment and financial transactions.

Credit Scoring

Banks and lending institutions use different scoring systems to decide your creditworthiness.

Debt Ratio

Your earnings compared to how much you owe.

Disclosure Statement

The total amount of the loan; the loan amount, interest and other financial charges.

Down Payment

The difference between the loan amount and the purchase price; usually paid immediately upon purchase in the form of cash or trade-in value.

Fair Market Value

The current value of a particular vehicle in the marketplace, based on mileage, exterior and interior condition, mechanical fitness, etc.

Gross Income

For qualifying purposes, the income of the borrower before taxes or expenses are deducted.

Interest Rate

The percentage of a sum of money charged for its use.

Term

The length of time that payments will be made on a loan. Typical car loans have terms of 24, 36 or 48 months.

Title

A legal document issued by the state showing the owner’s name and the vehicle’s mileage at the time of sale.

Trade-in

A vehicle that is sold to a car dealer as part of the purchase of another.

Trade-in Value

The amount a dealership credits the buyer for the vehicle provided as partial or full payment for another vehicle.