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- Amortizaton: The reduction of debt
by regular payments of interest and principal to off a loan by
maturity.
- Amortization Term: The length of
an amortized loan in months or years.
- Appraisal: An estimate of value
given by a trained professional.
- APR: (Annual Percentage Rate) The
annualized rate of interest assessed by a lender as the cost to
borrow money. If your APR is 9% and you borrow $10,000, you will
pay $900 in interest for the year.
- Base Price: The price of a vehicle
without any optional features such as air conditioning, power
steering, etc.
- Collateral: An asset pledged to
a lender until a loan is repaid. If the borrower defaults, the
lender has the legal right to seize the collateral and sell it
to pay off the loans.
- Depreciation: The loss in value
of the vehicle over time due to use and time.
- Equity: The difference between
the value of the vehicle and the total loan amount.
- Interest: The cost of using money,
expressed as a rate per period of time, usually one year.
- Liabilities: Claim on the assets
of a company or individual; money owed.
- Lien: Creditor's claim against
property. If interest and principal are not paid when due, the
assets may be seized to pay the bondholders.
- Monthly Payment: The payment you
owe for the term of the loan. The monthly payment is made up of
both principal and interest.
- Net Worth: The total assets less
the total liabilities.
- Principal: The amount of money you borrow, not including the
interest.
- Simple Interest: Interest calculation
based only on the original principal amount. For example, a $500
loan at 12% simple interest would yield $60.
- Term: The length of the loan, usually
quoted in months. Most auto loans terms are 36, 48, 60 months.
Source for most terms: Barron's Financial Guides,
Dictionary of Finance and Investment Terms
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