Car Financing Terminology
Amount Financed:
The amount of credit provided to you.
APR:
Annual Percentage Rate, or APR, is the cost of credit expressed as a percentage.
Down Payment:
The amount of cash or trade equity you apply to your purchase.
Equity:
The difference between your trade payoff balance and its value. It may be positive or negative.
Finance Charge:
The total dollar amount you pay to use credit.
Retail Installment Contract:
The finance agreement allowing for payment over time at a fixed monthly payment amount and rate.
Simple Interest:
Finance charge calculation based on the unpaid principal balance, number of days between payments and the APR.
Stipulation:
Additional documentation/action required to complete the transaction, like proof of income.
Term:
The number of monthly payments provided for in the retail installment contract.
Total of Payments:
The amount you will have paid after you have made all payments as scheduled in the retail installment contract.
Total Sales Price:
The total cost of your purchase on credit including finance charge, down payment and amount financed.