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Glossary of Definitions

Amount Financed
The dollar amount of the credit that is provided to the buyer.

Agreed-Upon Selling Price
The dollar amount the buyer agrees to pay the dealer for the vehicle.

Amount Financed
The dollar amount of the credit that is provided to the buyer.

Annual Percentage Rate (APR)
The cost of credit for one year expressed as a percentage.

Assignee
The bank, finance company, credit union, or other financial institution that purchases the finance contract from a dealer.

Bank or Credit Union Financing
(also Off-Site Financing)
The financing a buyer gets from his or her bank, credit union, or other financial institution to pay for a new or used auto.

Budget
A tool commonly used to measure expenses against income, to help people prioritize their spending and manage their money.

Buy Rate
The wholesale rate offered to a dealership at which the “assignee” (finance company, bank or credit union) will purchase the contract.

Co-Buyer
An individual who assumes equal responsibility for the contract. The account history will be reflected on the co-buyer’s credit history as well as the buyer’s. For this reason, consumers should exercise caution if asked to be a co-buyer for someone else. Since some co- buyers are eventually asked to repay the obligation, individuals need to be sure that they can afford to do so before agreeing to be a co-buyer.

Collateral
An asset pledged to the creditor until the financing is paid off. For example: If you own your home, it may be used as collateral to secure automobile financing.

Credit Application
The information that a buyer submits when applying for credit. It typically requires such items as name, Social Security number, date of birth, current and previous addresses and length of stay, current and previous employers and length of employment, occupation, sources of income, total gross monthly income, and financial information on existing credit accounts. This can be done in person, over the phone, or electronically via the Internet.

Credit Insurance
There are two common types of credit insurance. Credit life insurance is optional insurance that pays the scheduled unpaid balance if the buyer dies. Credit disability insurance (sometimes called credit accident and health insurance) is optional insurance that pays the scheduled monthly payments if the buyer becomes disabled. As with most contract terms, the cost of optional credit insurance must be disclosed in writing, and if the buyer wants it, the buyer must agree to it and sign for it.

Credit Report
A report containing information about the buyer’s current and past credit obligations, payment record, and data from public records (e.g., a bankruptcy filing obtained from court documents). For each account, the credit report shows the applicant’s account number, type and terms of the account, credit limit, most recent balance, and most recent payment. The comments section describes the current status of the applicant’s account, including the creditor’s summary of past-due information and any legal steps that may have been taken to collect.

Credit Reporting Agency
A firm that collects, sorts, maintains, and sells information about an individual’s credit history.

Credit Score
A numerical score that reflects the credit risk you present based on information contained in your credit file. The better your history of credit, the higher your score.

Creditor
A person or organization that regularly extends credit, subject to a finance charge.

Creditworthiness
The ability of a consumer to satisfy a credit obligation.

Dealer Financing
(also On-Site Financing)
Financing that a consumer obtains from the dealership rather than directly from a bank, credit union, or other financial institution to buy a new or used auto. The consumer enters into a contract with the dealership agreeing to pay the amount financed, at an agreed-upon finance rate, over a specified period of time.

Dealer Finance Income
A portion of the finance charge that is paid to or retained by the dealer as compensation for the dealer’s participation in providing financing to the buyer.

Delinquent Accounts
Credit accounts that are past due. They usually are classified as 30, 60, 90 and 120 days past due.

Depreciation
The amount by which a vehicle is expected to decrease in value over a specific period of time.

Down Payment
An amount paid at time of purchase that reduces the amount financed. This includes any combination of cash, trade-in value of a previously-owned vehicle, rebates, and other non-cash credits.

Extended Service Contract
Optional protection on specified mechanical and electrical components of the vehicle. It is available for purchase to extend and/or supplement the warranty coverage provided when purchasing or leasing a new, or in some cases, a used vehicle.

Finance Charge
The dollar amount that the credit will cost the buyer.

Fixed Rate Financing
An annual percentage rate that remains the same over the life of the finance contract.

Guaranteed Auto Protection (GAP)
Optional protection that pays the difference between the amount the buyer owes on the auto and the amount the buyer receives from his insurance company if the auto is stolen or destroyed before the buyer has satisfied the credit obligation. In some cases, the buyer may be responsible for the insurance deductible.

Installment Sale
A contract with a dealership to buy a vehicle by paying the amount financed, plus an agreed upon finance charge, over a certain period of time in installments, which are typically monthly payments.

Length of Contract
The total number of months the borrower has to pay his or her credit obligation.

Lien
A legal claim on ownership of the vehicle stemming from a debt. If the buyer does not make the payments, the lienholder can repossess and sell the vehicle as full or partial payment of the debt.

Off-Site Financing
(also Bank or Credit Union Financing) The financing a buyer gets a from his or her bank, credit union or other financial institution to pay for a new or used auto.

On-Site Financing
(also Dealer Financing)
Financing that a consumer obtains from the dealership rather than directly from a bank, credit union, or other financial institution to buy a new or used auto The consumer enters into a contract with the dealership agreeing to pay the amount financed, at an agreed-upon finance rate, over a specified period of time.

Repossession
In the event that a credit obligation is not satisfied, the legal right a creditor has to take the asset pledged as collateral (typically the automobile) and sell it to pay off the credit obligation. Depending on state laws, this process is typically subject to rights to redeem (pay off the entire balance and get your vehicle back) or reinstate (pay any delinquent payments and get your vehicle back to start the contract again).

Secured Credit
Financing for which some form of acceptable collateral, such as a house or automobile, has been pledged.

Trade-in Allowance: The amount the dealer agrees to pay for a trade-in vehicle, which consumers often apply towards the purchase of a new vehicle.

Unsecured Credit
Credit for which no collateral has been pledged.

Variable Rate Financing 
With a variable financing rate, the annual percentage range may change over the life of the contract.

1. Sign up for our 6 hour Car Dealer Pre-Licensing Class. Follow the steps that you are taught, and then get approved by the California DMV as a wholesale dealer.
   www.gotplates.com
2. Utilize the Web. Did you know that most wholesale dealers search the internet prior to purchasing a vehicle? A good wholesaler will recognize a low priced car at auction buy it and resell it a week later at the same auction.
3. Keep in mind that delivery of the vehicle to the buyer must occur at the sellers licensed location. Some wholesalers will buy seasoned stock ( vehicles which are front line ready on a retailers lot but approaching 60 days in inventory ) and swap them out for vehicles freshly obtained. This allows the used car sales manager to restart the clock on that seasoned stock. These deals are often done book for book, the wholesaler ends up with added value. In a front line ready car the wholesaler can sell to another dealer, but it will often take a series of these book for book trades before you can actually see profits. Many small used car lots do not have the time to go to auction. A good wholesaler can stock these smaller lots and make a small profit on each car.
4. Don’t ever consign a vehicle to another dealer. The wholesale license is a good starting place for the beginner; lesser bond, easier zoning and access to the market. Dealer plates and insurance are included in the wholesale package but as a wholesaler one can only buy and sell within the industry. That means as a wholesaler you can sell only to other dealers, there is no buying off the street. If and when a wholesaler has a vehicle to sell to the public he/she may draft that sale through a licensed retailer, this is call this a drafted sale.
5. Remember the drafted sale creates liability for the retailer. Typical draft fee is $ 500. We advise the following: no loss selling ( wholesaler must sell higher than acquisition cost ), smog safety and verification provided by wholesaler, wholesaler as contact person on the buyers guide, statement from wholesaler assuming all liability if customer is not happy. Then the retailer collects and pays all taxes and fees, and sends the documents to DMV for processing.

Tips

Related wikiHows

Sources and Citations

• “How to Get Your Wholesale Dealer License”
• http://www.howtobecomeacardealer.com
• http://www.gotplates.com

YES

July 1 all car dealers must make a vehicle history available

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YES

All vehicles with history must have a red sticker posted on the car

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YES

GotPlates.com is the only provider of Red Stickers for

VERIFIED CLEAN TITLE cars

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YES

Any car buyer can run a DMV Approved Vehicle History Report for $ 10.

YES

July 1 all car dealers must make a vehicle history available

+++++

YES

All vehicles with history must have a red sticker posted on the car

+++++

YES

GotPlates.com is the only provider of Red Stickers for

VERIFIED CLEAN TITLE cars

+++++

YES

Any car buyer can run a DMV Approved Vehicle History Report for $ 10.

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