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Loan Glossary

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Default
Default is when the borrower does not make the agreed payments on the loan or does not meet the conditions agreed upon in the contract.
Deferment
Deferment is getting permission from the lender to skip a payment which is then added on to the end of the loan causing the duration of the loan to be extended.
Deferred Interest
Deferred interest is when the monthly payment does not cover the interest owed and the unpaid interest is added to the unpaid balance of the loan. In some cases a borrower could owe more than the original amount borrowed. This is also called negative amortization.
Deficiency Balance
A deficiency balance is the amount that a borrower owes after the lender has repossessed their vehicle, sold it, and taken the amount that they received for it off of the loan.
Delinquency
Delinquency is when the borrower does not make payments on the loan by the dates agreed upon in the contract.
Depreciation
Depreciation is an automobile gradually loses its value.
Destination Charge
A destination charge is the amount that the dealership was charged from the manufacturer to have automobile sent to them. This amount is included in the cost of the vehicle.
Disability
Disability insurance pays a person’s debt if that person has been injured or is ill and cannot work.
Disclosures
Disclosures are pieces of information that are given to the consumer about a vehicle’s previous history like accidents or repairs.
Disclosure Statement
A disclosure statement is listed on the loan document showing the full amount financed and any additional charges or fees.
Discount Points
Discount points are purchased to lower the interest rate on the loan. Each point counts as one percent of the loan.
DMV
DMV stands for the Department of Motor Vehicles.
Down payment
The down payment is the amount of money paid at the time of purchase. The amount paid along with the loan amount equal the purchase price of the vehicle. Most of the time Conventional loans have a down payment of 10 to 20 percent of the sales price. FHA and VA loans normally either do not require a down payment or it is up to 5 percent of the purchase price.
Due Date
The due date is the date that the borrower agrees to pay the lender by each month.

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