Glossary of loan and lending terms
Every term you are likely to meet on a loan agreement, in plain English. If something you have been handed is not here, call us and ask before you sign it.
A
Amount financed
The dollar amount of credit provided to you, after any charges that are deducted at the start. It is one of the figures the Truth in Lending Act requires to be disclosed before you sign.
Annual Percentage Rate (APR)
The cost of credit expressed as a yearly rate, taking in the interest and certain fees. APR is the fairest way to compare two offers because it normalises cost across different loan terms and amounts.
Auto Pay
An arrangement where each scheduled payment is withdrawn automatically from the checking account you nominate on its due date.
C
Collateral
Property that secures a loan. On a vehicle-secured loan the collateral is your car, which is what makes repossession possible if you default.
D
Default
Failing to meet the terms of your loan agreement, usually by missing payments. What counts as default and what follows it are set out in your agreement.
F
Finance charge
The total dollar cost of credit on your loan: what you pay above and beyond the amount you borrowed. Disclosed in writing before you sign.
I
Installment loan
A loan repaid over time in scheduled payments rather than one lump sum. In Arizona ours are also called registration loans.
L
Lien
A legal claim recorded against property, such as your vehicle, that secures a debt. Ask whether a lien will be placed on your vehicle before you sign.
M
Matricula Consular
An identification card issued by a Mexican consulate. We accept it as valid identification alongside U.S. government-issued photo ID.
Military Annual Percentage Rate (MAPR)
A cost measure defined by the Military Lending Act, capped at 36% for active duty servicemembers and their covered dependents on certain consumer credit.
O
Origination fee
A charge for setting up a loan, where one applies. Any such fee forms part of your finance charge and must be disclosed.
P
Payday loan
A small short-term loan repaid in a single lump sum on your next payday. Availability is governed state by state. We do not offer payday loans in Arizona.
Pocket360
The online account where you can view active loans, check due dates, make a payment and apply again.
Principal
The amount you borrowed, separate from the interest and fees charged on it. Each scheduled payment reduces the principal by a little more than the last.
R
Registration loan
In Arizona, an installment loan secured using your current vehicle registration and proof of ownership. Often available while you are still making car payments.
Repossession
The lender taking possession of collateral after default. On a vehicle-secured loan this means your car, and you may still owe any balance left after it is sold.
Returned item fee
A charge that may apply when a scheduled payment cannot be withdrawn from your account, where state law allows.
Rollover
Taking a new loan to pay off an existing one that has come due. Each rollover adds charges without reducing the original balance. Many states restrict or prohibit it.
S
Secondary motor vehicle finance transaction
The term Arizona law uses for vehicle-secured consumer loans, governed by the Motor Vehicle Time Sales Disclosure Act at A.R.S. § 44-281 et seq.
T
Total of payments
The sum of everything you will pay over the life of the loan, assuming every payment is made on time. The single most useful number for comparing offers.
Truth in Lending Act (TILA)
The federal law requiring lenders to disclose your APR, finance charge, amount financed, total of payments and payment schedule in writing before you sign.
U
Underwriting
The process of assessing an application against income, banking history, collateral and credit to decide whether to lend and on what terms.
Something still unclear?
Ask before you sign, not after. Calling costs nothing and there is no obligation.