Agreement
A negotiated and generally legally enforceable understanding between two or more parties.
Balloon Payment
A final payment on a loan that needs to be made in order to get full ownership of a vehicle. The final payment is usually larger than the preceding monthly instalments.
Borrower
A person who obtains credit from a lender with the understanding that repayment is expected within a certain period.
Contract
An agreement drawn up between two or more parties which is usually legally binding.
Contract Period
The period of time for which the contract between the borrower and lender is valid. A longer contract period can reduce the monthly instalments but can attract more interest.
Comprehensive Car Insurance
Provides cover for damage caused to other parties and their property but also covers you for damage to your car or theft of your vehicle.
Credit
The system of doing business by trusting that a customer will pay at a later date for goods or services supplied.
Credit History
A record of your current and fully repaid debts. Your credit history helps lenders like banks and other financial services providers decide whether you have a history of repaying debts in a timely manner.
Credit Rating/Score
A points system based on your credit history. Your credit rating/ score is used by creditors to determine whether to give you a loan and also to determine the interest you will pay for the loan.
Credit Report
A summary of your financial behaviour that provides insight into your current credit status. Potential lenders make use of a Credit Report to determine the risk involved in providing you with Vehicle Finance.
Creditworthiness
A consumer's eligibility to receive financial credit based on the consumer’s credit history.
Debt
A sum of money owed.
Deposit
A payment made as a first instalment in buying something.
Depreciation
Gradual decrease in the value of an asset (e.g., a vehicle) over time.
Equity
The ownership of an asset after the amount owed on it has been paid off. For example, if your vehicle is worth R200 000 but you still owe R50 000, the vehicle represents R150 000 equity.
Extended Warranty
Provides prolonged coverage in addition to the warranty that comes standard with the vehicle.
FICA
The Financial Intelligence Centre Act (FICA) aims to prevent money laundering, tax evasion, and terrorist financing activities.
Fixed Interest Rate
The interest rate remains stable meaning that the interest rate does not change throughout the loan term.
Inspection
The mechanical and physical assessment of a vehicle.
Interest
Money paid for the use of money lent.
Interest Rate
The amount of interest charged on a loan, usually expressed as a percentage per year.
Lender
The individual or company that allows someone the use of a sum of money under an agreement to pay it back later.
Linked Interest Rate
A linked interest rate is linked to the prime rate and fluctuates as the prime interest rate goes up or down. Also called a variable interest rate.
Loan
A financial agreement between a lender and a borrower, where the lender lends money to a borrower who is required to repay the money, with interest, over an agreed period.
Loan Balance
The amount owed on a loan after deducting the payments made.
Loan Contract
The written agreement between a borrower and a lender, which states the terms of the loan.
Manufacturer
The original producer of a vehicle.
Market Value
The market value of a vehicle is almost always lower than the retail value and takes into account the vehicle’s age, make, and condition. It is the current price at which you can sell your vehicle, if you were to sell your car privately.
Monthly Instalment
The monthly amount due to the financial institution to repay the initial loan which consists of capital and interest.
Payment Holiday
A period of time, usually one to two months, in which you don’t have to pay an instalment on your vehicle.
Prime Rate
The most favourable interest rate charged by lenders on a short-term loan to qualifying customers.
Rate
The annual rate of interest on a loan, expressed as a percentage.
Refinance
Refinancing refers to when an old loan is replaced with a new loan offering different terms. Vehicle Refinance can decrease your monthly instalments or shorten the term of the loan.
Repossession
Your creditor can retake possession of your vehicle if you fail to make the required payments.
Residual
Balance due at the end of the financial agreement.
Retail Value
The official value of a vehicle. The retail value is the price you would pay if you buy the vehicle new from a dealer. The retail value is the closest in price to your car’s replacement value.
Term
The length of a loan, usually expressed in months or years.
Third Party Fire and Theft Car Insurance
Provides cover if your car is stolen or damaged by fire. Also includes cover for damage caused to other parties and their property.
Third Party Only Car Insurance
Provides cover for damage caused to other parties and their property.
Trade Value
The average amount a car dealer will pay to buy your vehicle. This amount is usually less than the retail value. The trade value is also known as the book value.
Variable Interest Rate
A variable interest rate is linked to the prime rate and fluctuates as the prime interest rate goes up or down. Also called a linked interest rate.
Vehicle Identification Number (VIN)
This is your vehicle’s unique fingerprint expressed as a 17-digit alphanumeric number.
Warranty
A written guarantee from a dealer or manufacturer promising to repair or replace parts of a vehicle, if necessary, within a specified period. A Motor Warranty provides cover for specific mechanical or electrical problems for a certain mileage or period, for example, 100 000 km or a 5-year manufacturer’s warranty.
