My Garage

Glossary Of Terms – Car & Truck Loans in Burnaby

Vehicle Financing and Subprime Car Loans – Glossary Of Terms
Car Loans Explained | Loan Qualification | Rebuilding Credit | Glossary of Terms | Credit Application – APPLY NOW!

Learn everything you ever wanted to know about car loans and auto refinance. We understand that some terms can be often confusing, so we’ve put together a useful car loan glossary to better help you understand the industry language.

  • Auto Equity Loan – Often referred to as a title loan, this type of loan uses the equity you have in your vehicle in exchange for your title. You receive a cash loan and upon repayment the lender returns your car title.
  • Balloon Payment – A balloon payment can make monthly payments lower on an auto loan but require a large payment to be made at the end of the car loan.
  • Bill of Sale – A document prepared by the seller or dealership to record the details of a vehicle sale.
  • Black Book – Similar to Kelley Blue Book, Black Book is a collection of information about the value of a car, truck or van. Black Book bases the value of the car on data collected from wholesale car auctions.
  • Blue Book – Also referred to as Blue Book Value, this is the value of a vehicle as determined by Kelley Blue Book, Inc. Read more here.
  • Buydown – When purchasing a new or used vehicle, the buyer may be offered an option to buydown the interest rate on their car loan.
  • Cash Back Refi – A type of refinance loan that allows you to use the equity you have in your vehicle to get cash back while refinancing your car.
  • Certificate of Title – A document provided by the Department of Motor Vehicles that proves ownership of a vehicle.
  • Cosigner – An additional party who assumes equal responsibility for an auto loan.
  • Credit – A term used to refer to your credit history, which may indicate whether you have the ability to repay an auto loan or not.
  • Credit Bureau – A company or agency that keeps record of your credit history.
  • Credit History – A record of your financial relationships that allows lenders to determine your ability to repay loans.
  • Credit Scoring System – A system used to determine a customer’s creditworthiness based on statistical data and credit history.
  • Creditor – A lender that finances a loan.
  • Creditworthiness – An individual’s ability to repay debts.
  • Dealership – A company that is authorized to sell certain vehicles by the vehicle manufacturer.
  • Debt-to-Income Ratio – Also known as DTI, this ratio expresses the percentage of a borrower’s debt compared to their total income.
  • Default – Breaching a credit agreement, usually due to failure to repay based on the terms of the agreement.
  • Delinquency – Making car loan payments late or past the due date.
  • Depreciation – The gradual decline of a vehicle’s value due to age, wear and tear.
  • Destination Charge: A fee charged to a dealership by the manufacturer for shipping a vehicle to their location. This fee is part of the MSRP or base sticker price of a vehicle.
  • Disclosures – Any information about a vehicle’s history that is provided to a customer, which may include damages, repairs or title issues.
  • Down Payment Money – required to lower the amount financed on an auto loan.
  • Electronic Fund Transfer (EFT) Systems – An electronic method of transferring funds from one bank account to another.
  • Equity – Based on funds you have paid on a loan, if your vehicle is valued at more than what you owe, you will have positive equity in your car.
  • F&I Office – Also known as finance and insurance, the F&I office is where auto loan customers fill out their contract and paperwork at a dealership before taking delivery on a new or used vehicle.
  • Finance Charge – The total amount of interest charges you will incur over the life of an auto loan.
  • Grace Period – A period of time from a payment due date in which you can be late without being charged a penalty fee.
  • Gross Monthly Income – The total monthly income of a borrower before any deductions have been removed such as insurance, child support and income tax.
  • Interest – Also known as finance charges, this is the amount a lender charges to provide a car loan to a borrower.
  • Interest Rate – Expressed as a percentage of 100, the annual rate of interest on an auto loan.
  • Invoice Price – The amount a dealerships pays for a vehicle when purchasing from the manufacturer.
  • Joint Account – An account with two parties who share equal responsibility to repay the loan.
  • Late Payment – A car loan payment that has not been made on or before the due date.
  • Lease – An alternative way to finance an automobile in which an individual borrows the vehicle for period of time while the leasing company remains the owner of the vehicle.
  • Lessee – The individual who has temporary use of a vehicle in a lease agreement.
  • Lessor – The company that provides temporary use of a vehicle during a lease agreement.
  • Lien – Ownership of a vehicle by a finance company until a debt has been repaid.
  • List Price – The manufacturer’s suggested retail price for a vehicle. Also called “MSRP” or “sticker price.”
  • Loan-to-Value Ratio – Also known as LTV, this ratio expresses the percentage of difference between a loan amount and a vehicle value.
  • Mark-up -The difference between the invoice price and the sales price set by the dealer.
  • Monroney Sticker – The price sticker required by federal law for all new vehicles. The Monroney Sticker lists all the vehicle’s options along with the manufacturer’s suggested retail price (MSRP).
  • MSRP Manufacturer’s Suggested Retail Price – This price is the recommended selling price from the manufacturer and may change when options are added or removed from a vehicle.
  • Net Income – A borrower’s total income minus federal and state taxes.
  • Payment-to-Income Ratio – Also known as PTI, this ratio details the percentage of an individual’s income that an auto loan payment will require. Most lenders have a maximum PTI they will allow to avoid offering consumers loans they cannot repay.
  • Poor Credit – Sometimes called bad credit, this is below average credit, which may include late pays, repossessions, foreclosures and bankruptcy. Poor credit does not mean you cannot be approved for an auto loan.
  • Power of Attorney – A legal document authorizing one person to act on behalf of another.
  • Proof of Income – Also known as POI, this includes paystubs, employment verifications and/or bank statements to prove a borrower’s income.
  • Proof of Residence – Also known as POR, this includes utility bills, driver license, lease agreement or any other documentation that displays proof of a borrower’s residence.
  • Refinancing – Financing an existing car loan with a new lender. This process is usually used when a borrower wants to lower their monthly payment, interest rate or change their auto loan term.
  • Repossess – Repossession occurs when a customer defaults on an auto loan and has no intent to repay the debt. Auto finance companies reclaim the vehicle when a customer fails to meet their financial obligation.
  • Service Charge – Charges that may include both costs incurred by the dealership to deliver the vehicle and the finance company to fund the loan.
  • Servicing – The services and operations performed by a lender to the borrower during the life of a loan, such as collections, statements and payment receipts.
  • Sticker Price – The manufacturer’s suggested retail price for a vehicle. Also called “list price” or “MSRP.”
  • Tax – The amount paid when purchasing a vehicle to satisfy state and other government tax requirements.
  • Term – The amount of time during a loan from beginning to end, in which a borrower makes payments to repay the debt.
  • Title Loan – A type of loan that uses the equity you have in your vehicle to lend you cash. The lender holds your title until the auto equity loan is paid in full.
  • Trade-in Value – The value of a used vehicle that you trade in to a dealership as part of a purchase.
  • Upside-down – When a balance owed on a vehicle is more than the current value of that vehicle.
  • Verification of Employment – A verbal or written verification of an individual’s employment. (source:

We’re committed to help you drive the vehicle you want, the vehicle you deserve!

Our trained credit specialists work alongside numerous financial institutions to provide you with the most favourable terms and repayment options – best suited to your circumstances! Learn more about our Fast Approvals and 99% Acceptance Rates (no matter your current credit status!) or complete our quick and easy credit application today!

Questions? Great! We’ve got answers! To learn more about our ‘easy car loan application process’ and ‘tailored credit services’ (including our credit rebuilding program), please call us directly to speak with one of our friendly, credit specialists (no obligation) at: (604) 670-9247