The following are eleven terms that you should know!
APR (Annual Percentage Rate): The annual rate of interest that gets charged to the consumer and paid to the investor.
LTV (Loan to Value): The amount you are allowed to borrow against a certain value of a vehicle credit union usually use NADA Retail Value X a certain percentage.
Guaranteed Asset Protection (GAP): Insurance that covers the difference between what the vehicle is worth (what the automobile insurance will give you) and what you owe on the car. It comes into play when your vehicle is deemed a total loss either from an accident or if it is stolen and not recovered (damaged to the point that the repairs would cost more than the car is worth) while the member is still paying payments.
Pre-Screen: A company request that a credit agency return names and address of all individuals in the credit reporting agency’s database that meet certain parameters or criteria so that a business/creditor, in this instance a Credit Union, can then extended a “firm offer of credit” to each of those consumers in the form of a mass mailing or emailing or telemarketing campaign.
Original Amount Financed: In Terms of the Truth in Lending Act, the amount financed is the entire loan amount minus interest; if you paid $25,000 and you put down $3,000 then the amount financed would be $22,000.
Vehicle Service Contract (VSC): A written contract entered into by a vehicle owner and an insurance provider which state that the insurance provider will pay for specific parts and labor cost associated with automobile repairs for a specific period of time and/or miles less a specific deductible in exchange for a premium paid by the vehicle owner.
Amount Financed: The total dollar amount the member is borrowing from a lender before interest expense is calculated, which in our line of refinancing is the following equation: Pay off of Vehicle + After Market Products + Any Cash Back to Member + Any Fees Charged – Any Money Down and/or Cancellation Refund Money = Amount Financed.
Debt To Income (DTI): The percentage of a consumer’s gross monthly income that goes toward paying debts.
Payment to Income (PTI): The ratio of an individual’s outstanding owed payment compared to their income; normally calculated on a monthly basis.
Retail Installment Contract: A financing agreement allowing for repayment of a loan over a specific period of time, at a fixed monthly payment and rate.
Term: The length of the loan.
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