GLOSSARY OF TERMS

Acceleration Clause:
When a loan is defaulted, this clause allows the lender to speed up the rate in which the loan is paid off. This can include the entire balance to be paid off immediately.
Agreement of Sale:
Known as the sale or purchase agreement, basically states that the seller is selling and the buyer is buying under the specified set of terms. Seller and buyer will sign the agreement.
Amortization:
Include the loan payment and interest on the outstanding balance to be paid off at the end of a fixed period.
Annual Percentage Rate (APR):
The cost of the loan for a period of one year expressed as a percentage, including the dealer’s financed income. The APR is also known as the “auto financing rate” or the “contract rate.”
Asset:
Any property that may be used to repay debt. Some examples are stocks, bonds, vehicles or a house.
Broker:
A person who assists clients in establishing or negotiation the contract for funding a loan. They do not loan the money themselves.
Certificate of Title:
Confirmation of vehicle ownership issued by the Department of Motor Vehicles. There is a fee to receive one as well as other possible registration fees.
Closing:
The meeting between the seller and buyer. This is arranged at the place where the funds legally change hands.
Collateral:
Property owned that is offered to support the requirements of a loan. This can be seized if one default’s on their loan.
Credit:
Reputation for entitling a person to be trusted for borrowing money to buy goods.
Credit Scoring System:
A system used to give a rating to a person’s credit. The higher the score the better the credit.
Debit Card:
A card similar in looks to a credit card used to make purchases, take out money and other electronic purchases. The difference is that you are not adding to any debt as it removes your own funds from your bank account.
Default:
Failure to meet the terms of your lending agreement. This includes failure to make payment on your loan.
Delinquency:
Failure to make payments on time on a loan.
Disclosure:
Information given to a customer pertaining to a vehicle’s history. This includes repairs that have been performed on the car, accidents or liens.
Down Payment:
An initial deposit made to lower the amount financed for any Canada Car loans.
Earnest Money:
Money given to seller from buyer to bind the transaction of the purchase.
Equity:
The residual value of a property / business beyond any mortgage or liability.
Finance Charge:
The total dollar amount the lending charge will cost.
Gross Monthly Income:
The total amount of money the borrower earns per month prior to any taxes or any other expenses.
Guarantee:
A promise made from one party to another to pay a debt or perform any obligation if the original party fails to comply with the contract. Guaranteed auto loans for bad credit is one example.
Hazard of Insurance:
A form of insurance in which the insured party is protected from specified losses such as weather or a fire.
Impound:
Also known as Reserves this pertains to the portion of monthly payment held by lender to pay for taxes, mortgage services, hazard insurance and other items as they come due.
Interest:
A charge expressed as a percentage of the total lien by the lender paid by the borrower.
Interest Rate:
The annual rate of interest on an auto financing loan expressed as a percentage of 100.
Joint Account:
A bank account in which two or more people share the account. All parties share legal responsibility to all debts or loans from this account.
Lessee:
The person temporary allowed use of a vehicle, usually signed by lead.
Lessor:
The company that supplies temporary use of a vehicle in return for a payment.
MSRP:
The Manufacturer’s Suggested Retail Price. This is the recommended selling price set by the manufacturer.
Net Effective Income:
The gross income of the borrower, minus the percentage removed for any taxes.
Point of Sale (POS):
The physical location at which the consumer made the purchase. This is also known as the electronic payment from a consumer.
Prepayment Penalty:
A fee imposed by a bank for early payment of any guaranteed auto loans for bad credit. This penalty is meant to protect from lost income generated by the set percentage interest on the loan.
Refinancing:
New financing provided for an existing loan. Usually the new loan is set a lower interest rate or has a longer term then previous loan.
Service Charge:
Additional charges added onto the completion of a defined service. This may relate to the financial aspects of the loan or be a charge included for the preparation of a vehicle.
Tax:
A percentage contributed to the government for continuation of services. This varies in some provinces. This is based upon the cost of the vehicle.
Term:
The period of time from the beginning of the loan to the end of the loan date where the balance of the loan would be due.
Title:
The legal document which proves the individuals ownership of property.
Trustee:
The person legally entrusted with property meant to benefit another individual. Also known as placing debtor’s wages, credits or property into the hands of a third party, in the interest of the creditor.
Variable Rate Financing:
Annual percentage rate that may change over the life of the Canada Car loans contract.