PowerPoint Presentation
Automobile Loans9th Grade BusinessAutomobileAutomobiles are
typically purchased with cash or loan/ creditAuto loan-borrowed
money to purchase an automobileLender- financial institution who
offers loans to consumersCredit rating- evaluation of ones credit
history
CosignerCosigner- person that is equally responsible for the
auto loanIt the borrower defaults on the auto loan, the co-signer
will be required to payParents usually co-sign for their
children
Secured LoanSecured loan- requires a cosigner or collateralIf a
loan has collateral, the lender has security interest in the
property pledged as collateralAutomobile loans are secured because
the automobile is the collateralIf the auto loan is not paid, the
lender has the right to seize the collateral by repossession or
retrieving the property
LendersCredit unionsSavings and loansCommercial banksAuto
dealers
LendersBorrowers usually pay lower APRs when their loans are
approved through credit unionsBorrowers have the option to finance
the car from auto dealers but may not receive a good auto loan
deal
Variables of LoanDown paymentAmount of money being paid for the
automobile at the time of purchaseNegotiated priceThe price being
paid for the automobile agreed upon by the seller and the buyer
Variables of a LoanPrincipal Loan AmountAmount of the loan for
the automobile after subtracting the down payment and/or trade-in
from the negotiated priceDoes not include interest and fees that
may apply Trade-inAmount of money received from trading in an
automobileSubtracted from the negotiated price of the
automobile
VariablesTime periodAmount of time the loan will be
repaidExpressed in monthsAPRMeasures the cost of credit on a yearly
basis expressed as a percentage
More VariablesTotal purchasing costDown payment, trade-in, loan
amountTotal cost of the loanTotal of principal loan amount,
interest, and other fees
