Glossary

Whether you get your auto loans from a dealership or another party, like Hawaii Auto Loans, it’s important to have a clear understanding of the proceedings. If you’ve never purchased a vehicle with a loan before, you would probably think lenders were speaking a different language with all their terms. You can prepare yourself for the auto loan process by learning the definitions of these vital auto loan terms:

Amortization - Refers to the process of paying off a loan through regularly scheduled payments.
Annual Percentage Rate(APR) - The total cost of a loan in the form of a yearly percentage. It includes the amount financed, the interest rate, and the loan’s terms.
Balance - This is the total amount a borrower is required to repay on a loan.
Base Price - The cost of a vehicle that does not include any extras or options.
Default - The failure of a borrower to repay a loan or meet the loan’s terms.
Delinquency - The failure of a borrower to make loan payments on time.
Interest - The charge paid for borrowing a loan, usually expressed in the form of an APR.
Lease - A type of financing that allows a borrower to use a vehicle for certain period of time, as specified in the lease terms.
On-Site Financing - Financing a vehicle through the dealership it is being purchased from.
Off-Site Financing - The act of financing a vehicle through a lender other than the dealership, such as Hawaii Auto Loans.
Term - Refers to the period of time during which a borrower can make payments on a loan. The loan’s balance is due when the term ends.
Title - A legal document that provides evidence of an individual's ownership of a vehicle.
Underwriting - A lender’s process of determining whether to make a loan to a potential borrower. The decision is based on the borrower’s income, credit, and other financial factors.

The process of taking out an auto loan can be overwhelming. Visit FAQ to see answers to important questions about financing your car.