When you set out to buy or lease a vehicle, you ought to understand the following key auto finance terminologies:

  • Underwriting – This is the method by which a financial organization determines whether or not to grant credit to a prospective borrower.
  • Unsecured Loan – A loan that doesn’t require any collateral to get accepted. Income of the borrower and the credit history are used to determine whether a borrower is eligible for the loan.
  • Warehouse Facility – this is a short-term revolving credit offered by a financial institution to a retail lender that is secured by the loans being originated. In the interim, before they can sell the loans on the secondary market, lenders will use this source of funding to raise money.
  • Dealership – this is a dealership that is allowed to sell a specific type of vehicle by the automaker.
  • Debt-to-income Ratio – Also abbreviated as DTI, this is a measure of how much a borrower’s total income is used to repay their debts.

 

Categories: Finance