Vehicle Financing Terms

Amount Financed – The amount of the credit that is provided to you.

Annual Percentage Rate or “APR” – The cost of credit for one year expressed as a percentage.

Assignee – The bank, finance company or credit union that purchases the contract from the dealer. The dealer sells you the car, but a finance company etc., loan you the money to do so. The dealer merely acts as a middleman between you and the finance company.

Credit Insurance – Insurance to cover the outstanding amount of the loan, or the monthly payments in the event you are unable to meet your obligations to service the loan under certain circumstances.

Down Payment (Deposit) – A sum of money to be paid by the purchaser against the vehicle separate from the financed amount.

Extended Service Contract – Optional protection for mechanical faults that goes beyond the normal warranty supplied by the manufacturer of the vehicle.

Finance Charge – The total cost of the loan.

Fixed Rate – The finance interest rate remains fixed (doesn’t go up or down) during the entire life of the contract.

Negotiated Price of the Vehicle – The purchase price of the vehicle agreed upon by the buyer and the dealer.

Monthly Payment Amount – The amount due each month to repay the loan.

Variable Rate – The finance interest rate can go up or down depending on market conditions. This will have a direct effect on how much you must pay each month. If the interest rates go up, you will pay a higher monthly payment. If they go down, you pay less.