Auto loan Modification
The term used for modifying a car loan
The term used for modifying a car loan. This is different from refinancing in the sense that you are taking your existing loan and rewriting it, not opening a new loan and paying off the old loan.SURRENDER-To voluntarily give possession of your vehicle back to the
finance company or dealer. This option will negatively affect your credit,
however, a slightly better option than repossession
MARKET VALUE- Market value is a concept distinct from market price,
which is "the price at which one can transact", while market value is "the
true underlying value" according to theoretical standards. Actually, this is
what your car is truly worth
CAPTIVE FINANCE COMPANY-A subsidiary whose purpose is to provide
financing to customers buying the parent company's product. The captive
finance company is usually wholly owned by the parent company. Although
there are numerous examples of these, the best ones occur in the
automotive industry. Each of the "big three" automakers has a captive
finance company. General Motors has General Motors Acceptance
Corporation (GMAC), Daimler Chrysler has Chrysler Financial, and the
Ford Motor Company has Ford Motor Credit Company (FMCC).
UPSIDE-DOWN-To owe more than what the vehicle is truly worth. For
example- I owe $22,984 for the total buy out of my car, but the market
value is only $16,500.
LOSS MITAGATION DEPARTMENT-The Loss Mitigation dept is where
the lender is willing to work with the consumer either by refinancing, limited
hardship, loan modifications etc. When trying to negotiate any principal
reduction or rate reduction this is the department you must contact, NOT
CUSTOMER SERVICE!!!
AMORTIZATION-The process of increasing, or accounting for, an amount
over a period of time. In other words, the allocation of a lump sum amount
to different time periods, particularly for loans and other forms of finance,
including related interest or other finance charges. Assume we sell 100
products at a $1 each + one off tooling charge of $50. The customer gets
billed $100 product + $50 tooling or we can amortize it and they pay $1.50
each for the 100 off. Costs them the same it is just a way of putting the charges onto the product that they actually belong too.
RE-FI - Short for refinance. Refinancing may be undertaken to reduce
interest rate/interest costs (by refinancing at a lower rate), to extend the
repayment time, to pay off other debt(s), to reduce one's periodic payment
obligations (sometimes by taking a longer-term loan), to reduce or alter risk
(such as by refinancing from a variable-rate to a fixed-rate loan), and/or to
raise cash for investment, consumption, or the payment of a dividend. In
essence, refinancing can alter the monthly payments owed on the loan
either by changing the loan's interest rate, or by altering the term to
maturity of the loan. More favorable lending conditions may reduce overall borrowing costs. Refinancing is used in most cases to improve overall cash
flow.
Auto loan Modification
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