contact Tristate Auto Champs. Amount Financed: The dollar amount of the credit provided to you. Annual Percentage Rate (APR): Also called a finance rate, this is the interest rate on a loan; a percentage of the amount borrowed that a lender charges annually for the use of its money. Assignee: The bank, finance company or credit union that buys the contract from the dealer. Buy Rate: The rate at which a car dealer acquires financing. The dealer can profit by offering the financing to a consumer at a higher cost (Sell Rate) and keeping the difference (Spread). Cost of Funds: An APR, this is the charge for using the bank’s—or another lender’s—money to acquire the car. Also known as financing costs. Credit Insurance: Optional insurance that pays the scheduled unpaid balance if you die or the scheduled monthly payments if you become disabled. The cost of optional credit insurance must be disclosed in writing. If you decide you want it, you must agree to it and sign for it. Credit Report: A document that includes information on where you live, how you pay your bills, and whether you have been sued, or have filed for bankruptcy. Nationwide consumer reporting agencies sell the information in your report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home. See how to get yours for free here! Credit Score: A number that reflects the credit risk you present based on information in your credit file. The better your history of credit, the higher your score. Your credit score may be used to help decide the rate and other terms you are offered. Default: Failure to make payments or otherwise abide by the terms of a financing contract. Down Payment: Cash paid up-front by a borrower to reduce the amount financed in a lease or loan. While a large down payment can reduce your monthly payments, it also likely will be forfeited in the event of a totaled or stolen vehicle. Extended Service Contract: Optional protection on specified mechanical and electrical components of the vehicle that may be available for purchase. It supplements any warranty coverage provided with the vehicle. Finance Charge: The cost of credit expressed as a dollar amount. You may be able to negotiate this figure. Fixed Rate Financing: Financing where the finance rate stays the same over the life of the contract. Guaranteed Auto Protection (GAP): Optional protection that pays the difference between the amount you owe on your vehicle and the amount you would get from your insurance company if the vehicle is stolen or destroyed before you have paid off your credit obligation. Monthly Payment Amount: The dollar amount due each month on the loan, finance contract, or lease agreement. MSRP: Acronym for Manufacturers Suggested Retail Price. This is what’s listed for the base price and all options on the Monroney sticker. Negative Equity: The amount owed on a vehicle above its market value. For example, if your credit payoff is $18,000 and your vehicle’s market value is $15,000, you have negative equity of $3,000. Negotiated Price of the Vehicle: The purchase price of the vehicle agreed on by the buyer and the seller. The price should reflect any rebates, discounts, or special offers that you can get at the dealership if you meet certain qualifications, which should be clearly disclosed. Prepayment Penalties: Charges for paying off a loan early. Because early payment minimizes your total cost of interest, paying off your principal early is usually a good idea. People with good credit and who qualify for good loans shouldn’t have to accept prepayment penalties. Repossession: If you do not make timely payments on a vehicle, your creditor may have the right to repossess it without going to court or warning you. Subprime Loans: Loans given to borrowers who represent a particularly high risk to the lender either because of spotty credit or because the vehicle being leased or bought is more expensive than the borrower can reasonably afford. Subprime loans typically include higher interest rates and down payments and end up costing the borrower a lot more. Term: The length of a lease or loan. Total of Payments: As disclosed on a loan or finance contract, the total amount you will have paid after you have made all the payments as scheduled. For a lease, this is the amount you will have paid by the end of the lease. Variable Rate Financing: Financing where the finance rate varies and the amount you must pay changes over the life of the contract. This is not typical in vehicle finance transactions.