Car Loan Glossary

AutomobilesCars.com has compiled a group of some important terms associated with car loans. We hope that you find this glossary helpful!

Accessories : An additional feature or extra item which is added to a basic car, like a sunroof, power windows, alarm, etc..

Amortization : The repayment of a loan or debt in regular payments. Each payment is split into a primary repayment and an interest fee.

Asset : Property and possessions that can be used to secure a debt.

Compound Interest : Interest payable on income and its accumulated interest. On the contrary, simple interest which is paid only on the principal.

Credit Profile : A picture of how you (as an individual) paid back the companies you have borrowed money from, or how you have met other financial obligations.

Depreciation : The decline in value of an asset over a period of time.

EMI : A fixed payment made monthly, known as Equated Monthly Installments.

Lease : Contract by which the owner of property allows another to use it for a specified time, usually in return for payment.

Lending Rate : The interest charged by the financier on the amount financed.

Loan Tenure : The time duration for which a loan has been provided.

Margin Money : Financiers do not fund the full value of the asset. They expect the customer to bring a certain % of the asset as margin. This is called Margin Money.

Principal : The capital sum as different from interest or income.

RC Book : Regional Transport Office (RTO), registers each car that exists in the United States and provides owners with a Registration Book (RC) which contains details on the Name of the Owner, address, technical specifications etc.

Registered Owner : Name of the person in whose name the vehicle is registered.

Rentals : The repayment amounts paid in a lease contract.

Sale Certificate : Certificate issued by the dealer on the sale of a car which is required to be submitted to the RTO for registration.

Stamp Duty : Government levies a duty on certain legal documents and financial contracts.

Standing Instructions : Instructions to a bank to debit a fixed amount from your account for your bad credit auto loans and pay your financier.

Statutory Charges : These are charges like stamp duty, sales tax etc which are imposed by the government.

Transfer Of Car : When a used car is bought or sold, the ownership of the car has to be transferred from the seller to the buyer.

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