Auto Loan Terminology

Amount Financed:

The total amount of credit provided to you.


Annual Percentage Rate, or APR, is the cost of credit expressed as a percentage.

Down Payment:

The amount of cash or trade equity you apply to your purchase.


The difference between your trade payoff balance and its actual cash value. (It may be positive or negative.)

Finance Charge:

The total amount you pay to use credit.

Retail Installment Contract:

The finance agreement betwen you and the lending institution, allowing for payment over time at a fixed monthly payment amount and rate.

Simple Interest:

The finance charge calculation based on the unpaid principal balance, number of days between payments and the APR.


The additional documentation or action required to complete the transaction. (For example: a pay sub as proof of employment.)


The number of monthly payments provided for in the retail installment contract.

Total of payments:

The amount you will have paid after you have made all payments as scheduled in the retail installment contract.

Total Sales Price:

The total cost of your purchase on credit including finance charge, down payment and amount financed.