Car Credit Finance Glossary - A, B, C

A

Agreement

A short term used to describe a hire purchase or conditional sale (car credit finance) agreement

Agreement Term

The length of time a hire purchase agreement will run for

Annual Percentage Rate (APR)

is an expression of the effective interest rate that will be paid on a car credit finance agreement, taking into account one-time fees and charges. In other words the APR is the total cost of credit to the customer expressed as an annual percentage of the amount of car credit granted. APR is intended to make it easier to compare lenders and loan options though only on products with indentical terms. Therefore comparing the APR's of loans of different values or agreement terms can be misleading.

B

Baloon payment

Often found on a PCP (Personal contract purchase) agreement. A large amount of the loan will be differed untill the end of the agreement resulting in small monthly payments throughout the term with a final large payment needed to clear the outstand balance.

C

Cooling off period

Most personal loan agreements that are signed off trade premises included a short cancellation period. Car credit finance agreements (hire purchase) generally do not as by the nature of the agreement they must be signed on the supplying dealers premises. Think carefully before signing any finance agreements and ensure that you will be able to maintain the required payment.

Credit file

Looking at your credit file is one of the processes car credit finance compaines will go through when making lending decisions. Different lenders look at your credit files in different ways, some finding certain things more important than others. Its important that you know exactly what is listed on your credit file - which you can now do online free here.

Other terms