Auto Loan Learn the Terms

Car Talk
Below are some terms you may hear when shopping for a new or used vehicle or auto loan. Some words may have more than one meaning. Only those meanings relating to this site will be used.

Definitions A - Z

A/C
Air Conditioning. A cooling system which controls the temperature and humidity of the air in the passenger compartment of a vehicle during hot weather conditions.

All Wheel Drive
Also known as full time four wheel drive. All Wheel Drive is automatic power to all four wheels at all times to improve on road traction year round. Usually confused with Four wheel drive (4WD), which is temporary power to all four wheels by manually engaging, good for driving off road and rough terrain.

Amount Financed
The dollar amount of the credit that is provided to you.

Annual Percentage Rate (APR)
The APR is a measure of the cost of credit expressed as a yearly interest rate. The APR of a loan is the total finance charge, including interest, points, broker fees and certain other credit charges that the borrower is required to pay. Lenders are required by law to disclose the APR. Usually, the lower the APR, the better for you. Be sure to check the fine print to see if your offer has a time limit. Your APR could be much higher after the initial limited offer.

Anti Lock Brakes
Also known as ABS, Anti lock Brake System, Anti lock Braking System, anti skid brakes. If you have had to slam on the brakes suddenly and experienced skidding caused by the brakes locking up the wheels, your vehicle didn't have anti lock brakes. The anti lock brake system pumps your brakes at a very high rate to prevent wheel lock up so you can maintain steering control of your vehicle and prevent skidding. Be aware when driving on certain surfaces, anti lock brakes can make the braking distance even longer. Example, gravel or snow on hard road surfaces.

As Is - No Warranty
When the car dealer offers a vehicle as is, the box next to the "As Is - No Warranty" disclosure on the Buyers Guide must be checked. It will say: "As Is - No Warranty You will pay all costs for any repairs. The dealer assumes no responsibility for any repairs regardless of any oral statements about the vehicle."
If the dealer promises to repair the vehicle or cancel the sale if you're not satisfied, make sure the promise is written on the Buyers Guide. Some states don't allow as is sales for many used vehicles.

Asset
Everything of value an individual owns, cash, securities, investments, real estate, etc.

Assignee
The bank, finance company or credit union that purchases your loan contract from the car dealer.

Federal Laws
Major laws that govern financial institutions and protect individuals in their financial dealings

Organizations

Fannie Mae
Freddie Mac
Ginnie Mae
Nellie Mae
Sallie Mae

Consumer Info

Credit Bureau
Credit Report
Directory of Federal Agencies
Federal Trade Commission (FTC)
Identity Theft
Predatory Lending
Repair Your Bad Credit
Truth in Lending Act
Borrowers Beware

Miscellaneous

Private Mortgage Insurance (PMI)
Prepayment Penalty

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