Glossary of Auto Loan Related Terms

Dealer Holdback

An allowance paid by the manufacturer to the dealer to allow the dealer to purchase a vehicle for less than the invoice price.

Dealer Incentive

A special payment from the manufacturer to the dealer to help the dealer sell slow-selling models.

Dealership

 A company authorized by a manufacturer to sell that manufacturer's products.

Debit Card (EFT Card)

A plastic card, looks similar to a credit card, that consumers may use to make purchases, withdrawals, or other types of electronic fund transfers.

Default

Failure to repay a loan or otherwise meet the terms of your credit agreement.

Deferred Interest

See Negative Amortization.

Delinquency

Failure to make payments on time. This can lead to foreclosure.

Depreciation

Decline in value of a vehicle due to wear and tear or any other reason.

Destination Charge

The fee charged by the manufacturer to ship the vehicle to the dealership. This fee is passed on to the customer, and is included on the sticker.

Disclosures

Information that must be given to consumers about their financial dealings.

Discount Points

Prepaid interest assessed at closing by the lender. Each point is equal to 1 percent of the loan amount (e.g. two points on a $100,000 mortgage would cost $2,000).

Documentary Stamps

A State tax, in the forms of stamps, required on deeds and mortgages when real estate title passes from one owner to another. The amount of stamps required varies with each State.

Down Payment

Money paid to make up the difference between the purchase price and mortgage amount. Down payments usually are 10 percent to 20 percent of the sales price on Conventional loans, and no money down up to 5 percent on FHA and VA loans.