Terms and Definitions
- DEAL FOLDER
- A folder kept in the Finance and Insurance office that contains copies of documents pertaining the potential sale of a vehicle to a customer.
- DEALER RESERVE
- Income a dealership earns from participating Lenders on the sale of finance contracts to those financial institutions.
- DECREASING TERM
- This is the type of Credit Life sold most of the time to debtors on auto loans which are repayable in equal monthly installments over a specified period. The amount of insurance reduces monthly in equal installments.
- DEDUCTIBLE
- Amount on a warranty or vehicle service contract that a customer must pay to remedy a mechanical breakdown.
- DEFERRED PAYMENT PRICE
- Amount shown on the Retail Installment sales contract that is the sum of the cash price, all other back-end products (credit insurance, vehicle service contract, etc.) included in the amount to be financed, and the total amount of the finance charges.
- DEPOSIT
- An amount of money asked by the dealer to hold a vehicle until the paperwork is complete - then the amount of the deposit is applied toward the down payment.
- DIRECT LOAN
- A loan made on a direct basis between a borrower, and a financial institution that does not involve participation by the dealership's Finance and Insurance Department.
- DISCOUNT RATE
- Finance rate at which a lending source will purchase a retail sales contract from a dealer. This rate will vary according to the customer's credit history.
- DOCUMENTARY FEE (DOC FEE)
- This fee is charged to the customer to cover the cost of processing the paperwork and sales contract. In the event of a prepayment or repossession, the DOC Fee is deducted from the total contract charge before applying any rebate formulas.
- DOWN PAYMENT.
- Net trade-in allowance and/or cash in partial payment of a time purchase.
- DUAL INTEREST.
- Physical Damage insurance placed by the lienholder on the car loan which protects the interests of both the lienholder and the customer.
- DUE DATE
- The date on which the customer is required to submit his/her monthly installment payment.
- EARNED PREMIUM
- The part of the total premium which an insurance company has earned over an elapsed period of time.
- ELIMINATION OR WAITING PERIOD
- The number of consecutive days insured must be disabled before the A&H coverage takes effect. (See CREDIT DISABILITY INSURANCE).
- EXCLUSION
- Acts or illness which are not covered under credit life or credit H&H policies.
- EXTENDED WARRANTY
- A misleading and erroneous term used by many to describe a VEHICLE SERVICE CONTRACT. The term "warranty" must apply to a benefit program that is part of the price of the vehicle sold; e.g., a warranty is offered, while a service contract is sold.
- EXTENSION
- An agreement between both the lending institution and the borrower to lengthen the term of the finance contract, normally when the borrower runs into temporary financial difficulty.
- FINANCE CHARGE
- The amount charged to a customer by a dealer for the privilege of paying for a vehicle purchase over a period of time.
- FINANCE CONTRACT
- The Retail Installment Sales Contract that is purchased by a lender on a contract submitted by a dealer.
- FINANCE RESERVE
- Income dealer makes on a finance contact and is the amount between the discount rate and the finance charge to the customer.
- FINANCE SOURCES
- See LENDING SOURCES.
- FLAT CANCELLATION
- A finance contract or insurance policy canceled within thirty (3) days without charge to the customer.
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