Glossary of Terms

Administrative Fees
Additional charges added by some financing source or dealers to cover items such as overhead, documentation charges and security deposits.

Amount Financed
The dollar amount of the credit which is provided to you.

Annual Percentage Rate
The cost of credit for one year expressed as a percentage.

Assignee
The bank, finance company or credit union which purchases the contract from the dealer.

Credit Insurance
Optional insurance that pays the scheduled unpaid balance if you die or scheduled monthly payments if you become disabled.  As with most contract terms, the cost of optional credit insurance must be disclosed in writing, and if you want it you must agree and sign for it.

Depreciation
The value the vehicle loses during the time it is in your possession; the single largest cost of ownership.

Destination Fee
The fee charged by the manufacturer to ship a new vehicle from the factory to the dealer.

Documentation Charges
A fee charged by the dealer for preparing the paperwork on the sale or financing of a new vehicle.

Down Payment
An initial amount paid to reduce the amount financed.

Extended Service Contract
Optional protection on specified mechanical and electrical components of the vehicle available for purchase to supplement the warranty coverage provided with the new or used vehicle.

Finance Charge
The total dollar amount you pay to use credit.

Guaranteed Auto Protection (GAP)
Optional protection that pays the difference between the amount you owe on your vehicle and the amount you receive from the insurance company if the vehicle is stolen or destroyed before you have satisfied your credit obligation.

Interest
The money over and above the amount borrowed that you pay a lending source for use of their money during the duration of a loan or lease.

Monthly Payment Amount
The dollar amount due each month to repay the credit agreement.

MSRP
The Manufacturer’s Suggested Retail Price is a figure provided by the manufacturer by law and is found on window stickers of all new vehicles.

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

Principal
The amount you borrow, including any optional products and services before financing and other charges are added.

Term
Term is the scheduled length of time the contract is designed to be in effect.

Total Cost
The amount of money you agree to pay to purchase or finance the purchase of a new vehicle, including all optional products and service, finance charges and fees.  Federal law requires the cost be ‘prominently’ displayed on your financing contract.