Auto Refinance
Key Terms

The process of paying off a debt (such as an auto loan) over time through regular payments. A portion of each payment goes toward the principal amount borrowed, and the remaining portion goes toward interest.

Annual Percentage Rate (APR) is the total cost of borrowing money for a year. It includes the interest rate plus any fees or additional costs associated with the loan.

An individual who agrees to sign a loan or credit agreement alongside the primary borrower, taking on legal responsibility for the debt if the borrower fails to pay.

The process of improving your credit score by consistently making on-time payments and managing debt responsibly, often using specific financial products designed for this purpose.

A numerical representation of a borrower's creditworthiness, based on their credit history. Lenders use this score to determine whether to approve a loan and what interest rate to offer.

The decrease in a vehicle's value over time due to factors like age, wear and tear, and market conditions.

The difference between the current market value of your vehicle and the remaining balance on your auto loan.

Also known as a hard inquiry, this occurs when a lender reviews your credit report as part of a loan application. It can slightly lower your credit score for a short period.

The percentage of the loan amount charged by a lender for the use of borrowed money. It does not include fees, which are included in the APR.

A legal claim or right that a lender has on your vehicle until the loan is fully repaid.

The financial institution or entity that holds the lien on your vehicle until the loan is paid off.

The ratio of the loan amount to the appraised value of the vehicle. Lenders use this to assess the risk of the loan.

The amount you are required to pay each month toward your auto loan, which typically includes both principal and interest.

Manufacturer's Suggested Retail Price. It is the price the manufacturer recommends that a dealer sell a vehicle for.

Often referred to as being 'underwater' or 'upside down,' this occurs when you owe more on your auto loan than the vehicle is currently worth.

An initial assessment by a lender to determine how much you might be able to borrow, usually based on self-reported information and a soft credit check.

The original amount of money borrowed in a loan, or the remaining balance excluding interest.

The process of replacing an existing auto loan with a new one, typically to get a lower interest rate, lower monthly payments, or different loan terms.

The total amount of money still owed on a loan at a specific point in time.

Also known as a soft inquiry, this occurs when your credit report is checked for non-lending purposes, such as a pre-qualification. It does not affect your credit score.

The length of time you have to repay your loan, usually expressed in months (e.g., 60 months).

The legal process of transferring ownership of a vehicle from one party to another.

A vehicle that you give to a dealership as part of the payment for a new or different vehicle.