Glossary

A

Add-ons
Products or services sold by dealerships that can be added on to the automobile and the cost of which can be financed along with the price of the car by including the amounts/costs/fees in the amount to be repaid. Some examples include rust-proofing, upholstery treatments, alarm systems, and extended warranties. Remember that these add-ons will increase the price, and your monthly payment.

Amortization
The reduction of debt by regular payments of principal and interest over a period of time.

APR
Annual Percentage Rate. A way of expressing the cost of credit on a loan. Under federal law, all consumer loans must disclose the Annual Percentage Rate.

Application
The information you provide to us to see if we can offer you a loan.

Application Type
Single - Only you can be listed on the title to the vehicle. If you wish to share title with another person or you want CitiFinancial Auto to consider another person's income, please complete a joint application. Note: a married person may apply for an individual account.

Joint - If you are applying with another person, please complete a joint application.

Back To Top

B

Balance
The amount in an account or owed on a loan.

Balloon Loan
A type of loan that features smaller monthly payments, with the balance of the loan due in one large “balloon” payment at the end of the loan term.

Balloon Payment
A large payment due at the end of a loan. Using a balloon payment, the individual monthly payments can be smaller.

Bankruptcy
A legal action, whether voluntary or involuntary, that generally is made based on an inability to pay debts when due.

Base Price
The cost of a car without options.

Bill of Sale
A document that shows the details of a sale. In most states, your dealership will prepare a bill of sale to document your purchase.

Blue Book
A publication of Kelley Blue Book, Inc. and one of several standard references used to determine the value of used vehicles. The value is sometimes called the "Blue Book Value." Blue books typically show a wholesale value and a retail value for each automobile.

Back To Top

C

Captive Finance Company
A separate company owned by an auto manufacturer to finance product sales. Examples include General Motors Acceptance Corporation (GMAC) and Ford Motor Credit Corporation (FMCC).

Collateral
Property that you pledge to give up if you default on a loan. Your automobile is the collateral for your auto loan.

Compound Interest
An interest method that calculates interest on interest earned in prior periods.

Credit
A loan granted by one party to another party.

Credit Bureau
A private company that collects information about consumers from public records and reports from banks and other companies.

Credit Report
A report about an individual's payment history that is supplied by a Credit Bureau.

Customer Incentive
A special payment from the manufacturer to the customer to promote sales of slow-selling models. Also called a "Rebate".

Back To Top

D

Dealer Incentive
A special payment from the manufacturer to the dealer to help the dealer sell slow-selling models.

Debt
An obligation resulting from borrowing money.

Depreciation
A reduction in the value of an asset. Most cars begin to depreciate the moment they are sold. Some depreciate much faster than others.

Destination Charge
The fee charged by the manufacturer to ship the automobile to the dealership. This fee is passed on to the buyer, and is included on the sticker.

Down Payment
Money you pay at the time of the purchase to reduce the amount that will be financed.

Back To Top

E

Back To Top

F

Finance Contract
The legal document that specifies the terms of a loan. Sometimes called the retail installment contract.

Franchise Dealer
A company that is authorized by an automobile manufacturer to sell that manufacturer's products. Independent used car lots, automobile brokers, and leasing companies are not franchise dealerships.

A franchise dealership normally has an affiliation with the manufacturer included in its name. For example: Downtown Ford or Los Angeles Saab.

Back To Top

G

Grace Period
The period of time after the due date before a penalty is charged.

Back To Top

H

Back To Top

I

Insurance
A contract with a company that agrees to reimburse you in the case of damage or theft. We require that you maintain insurance on the automobile you purchase or you are in default under the loan agreement.

Interest
The amount paid or charged for the use of money. Interest is expressed as a percentage rate per period of time.

Invoice Price
The price the dealer pays to buy a car from the manufacturer, exclusive of other discounts.

Back To Top

J

Back To Top

K

Back To Top

L

Lease
A form of financing in which you can use an automobile for a period of time in exchange for making payments to the leasing company. In a lease, the leasing company continues to own the automobile.

Lien
The finance company's security interest in your automobile.

List Price
The manufacturer's suggested retail price for a vehicle. Also called "MSRP" or "Sticker Price."

Loan
A form of financing in which you borrow money.

Loan Amount
This amount is to cover all of the costs (tax, title, license fees, etc.) of the loan.

Back To Top

M

Mark-up
The difference between the invoice price and the price the dealer sells the car for.

Monroney Sticker
The price sticker required by federal law for all new vehicles. The Monroney Sticker lists all the automobile's options along with the manufacturer's suggested retail price (MSRP).

Monthly payment
The amount of principal and interest you are obligated to pay each month.

Mortgage
A contract under which a borrower gives a lender a lien on real estate (typically a home) as collateral for a loan of money.

MSRP
Manufacturer's Suggested Retail Price. The price the manufacturer recommends for a vehicle. Also called "List Price" or "Sticker Price."

Back To Top

N

Back To Top

O

Odometer
An instrument, usually connected to the speedometer, that records the automobile’s elapsed mileage.

Optional Equipment
Equipment not included in an automobile's base price. Optional equipment may include such items as air conditioning, automatic transmission, passenger-side air bags, or high-quality sound systems.

Back To Top

P

Payment
The amount of principal and interest you pay each month.

Pink Slip
An automobile's title certificate.

Principal
The amount of the original loan made to the borrower by the lender. Also called amount financed.

Product Recall
The process by which automobile manufacturers notify owners of defects; especially safety or emissions-related defects that will be repaired at the manufacturer’s expense.

Back To Top

Q

Back To Top

R

Rate
The amount used to calculate the amount of interest on a loan expressed as an annual percentage of the principal.

Rebate
A special payment from the manufacturer to the customer to promote sales of slow-selling models. Also called a "Customer Incentive".

Refinancing
New financing for an existing auto loan. The existing auto loan is paid off with the proceeds from the new loan. Typically, the new loan is at a lower rate or has a longer term than the previous loan.

Repossession
The situation where a lender or other party holding a valid lien on an automobile takes physical possession of that automobile due to default.

Retail Blue Book Value
The approximate value of a used car if sold privately or by a dealership. A publication of Kelley Blue Book, Inc. and one of several standard references used to determine the value of used automobiles. The value is sometimes called the "Blue Book Value." Blue books typically show a wholesale value and a retail value for each automobile.

Back To Top

S

Salvage Value
A title designation used when an insurance company purchases an automobile that has been severely damaged (totaled), and then resells it. Each state has different regulations on the sale of salvaged automobiles.

SSL or Encryption
SSL encrypts your order information to avoid the decoding of that information by anyone other than the Web site sponsor. To check the security of your connection, look at the lower left-hand corner of your browser window after accessing the server. If you see an unbroken key or a closed lock (depending upon your browser), then SSL is active. You can also double-check by looking at the URL line of your browser. When accessing a secure server, the first characters of the site address will change from "http" to "https."Some versions of browsers and some firewalls don't permit communication through secure servers. In that case, you'll be unable to connect to the server so you won't have to worry about mistakenly placing an order through an unsecured connection.

Sticker Price
The manufacturer's suggested retail price for a vehicle. Also called "List Price" or "MSRP."

Back To Top

T

Term
The period covered by an automobile loan or lease, typically 24, 36, 48, or 60 months.

Title
A certificate issued by the state's department of motor vehicles that proves ownership. Sometimes called a "pink slip."

Trade-in Value
The value of a used automobile that you trade in to a dealership as part of a purchase. The trade-in value will usually be approximately equal to the wholesale blue book value.

Back To Top

U

Upside-down
Describes a situation where the balance owed on a loan is greater than the current value of an automobile.

Back To Top

V

VIN
Vehicle Identification Number — A 17-character code that uniquely identifies each vehicle manufactured in the world. An automobile's VIN can usually be found mounted on the dashboard of the driver's side, visible through the windshield, or stamped on the firewall.

Back To Top

W

Wear and Tear
Damage above allowable limits; assessed when a lease or balloon loan automobile is returned. Finance companies typically charge fees for excess wear, tear, and mileage on returned lease and balloon loan automobiles.

Wholesale Blue Book Value
The approximate price that a dealership will pay to purchase a used automobile. A publication of Kelley Blue Book, Inc. and one of several standard references used to determine the value of used automobiles. The value is sometimes called the "Blue Book Value." Blue books typically show a wholesale value and a retail value for each automobile.

Back To Top

X

Back To Top

Y

Back To Top

Z

Back To Top