A few weeks ago, we introduced some basic auto financing terms to help you know what sales representatives and lending institutions are talking about when getting a car loan. Here are some more of those terms that may come up when you decide to finance your next used vehicles.
Book Value
The book value refers to the used car’s actual value in a certain market. Values often change depending on where the vehicle is being sold and the book value also takes into consideration the mileage, age and condition of the vehicle.
Cash Price
This is the actual price of the car if you decide not to finance and just pay for it up front.
Certificate of Title
This is the documentation that proves the ownership of the vehicle. It also lists any lien holders that have a security interest in the vehicle. This certificate is typically issued by the state.
Co-Signer
The co-signer is a person who becomes legally responsible for the payments and financing terms if the person buying the vehicle stops paying. The buyer must find someone who is willing to take on that responsibility if their credit is poor.
Default
This term refers to a borrower’s failure to comply with the financing terms after taking possession of the vehicle. When a buyer defaults, the dealer may seize the vehicle or take other measures to regain their money.