Glossary

Amount financed
The amount of auto finance that a borrower draws for purchasing automobile is known as amount financed.

Amount owed on trade
The balance of the auto finance that is still remaining to be paid to the lender is known as amount owed on trade.

Amortization
Amortization is the process of repaying a loan in installments.

Cosigner
Cosigner is the person who assumes the responsibility of paying any balance of the auto finance if the principal borrower fails to do so.

Default
Default occurs when the borrower is not able to pay the auto finance in full.

Down payment
Down payment is a certain percentage of the value of the vehicle paid by the borrower.

Fixed rate financing
Borrower gets to pay rate of interest charged at a stable rate of interest on fixed rate financing.

Lien
The lender has a claim on an asset offered by borrower as collateral until borrower pays off the auto finance in full.

Monthly payments
A method of amortization of auto finance wherein borrowers get to make a certain monthly payment.

Negative equity
It is a situation where the amount owed on a vehicle increases the amount that the vehicle is worth.

Variable rate financing
According to this method, the interest rate on auto finance fluctuates along with the base rate in the financial market.

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