Canada Car Loans Glossary

Acceleration Clause:
If the loan is defaulted, this clause allows the lender to speed up the rate in which the loan is paid off.  This may include the entire balance to be paid off immediately.

Agreement of Sale:
Known as the sale or purchase agreement, which basically states that the seller is selling and the buyer is buying under a specified set of terms. Both parties would then sign the contract.

Amortization:
Included 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.”

Appraisal Fee:
A service fee charged for estimating the value of property.

Asset:
Any property that may be used to repay debt.  A few examples are stocks, bonds, vehicles or a house.

Automated Teller Machines:
Basically a computer terminal in which customers may withdrawal and deposit or receive balance statements of their bank accounts or credit cards.

Broker:
A person who assists clients in establishing or negotiation the contract for funding a loan.  They do not loan the money themselves.

Business Days:
The period of time given during a work week that a company conducts business.  National holidays are not considered business days.

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 buyer and the seller.  This is arranged at the property 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.

Commission:
Money paid for services rendered by a broker or agent on a completed sale.

Credit:
Reputation for entitling a person to be trusted for borrowing money to buy goods.

Credit Card:
A card used to buy goods or borrow money and services on credit.  A few examples are American Express, Visa and MasterCard.

Credit Scoring System:
A system used to give a rating to one’s credit.  According to various conditions relevant to one’s credit worthiness.

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 all 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 timely payments on one’s loan.

Disclosure:
Information given to a customer pertaining to a vehicle’s history.  This includes repairs that have been performed on the car.

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.

Electronic Fund Transfer:
An electronic transfer of funds rather than by check.

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 borrow 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 an obligation if the original party fails to comply with the contract. Guaranteed auto loans for bad credit is an 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 lean 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.

Verification of Employment:
Written verification of employment sent by one’s current employer.  This may include salary information and one’s job description.