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Terminology Used in Auto Loans

It is stated that while signing a contract, lack of knowledge regarding even a single term can be dangerous as the user is going to sign for something that he has no knowledge of. This statement is also true in case of auto loans as the borrower is agreeing to a contract due to which he/she would have to pay a certain some of money every month for the next few years. Following are some of the basic terms used by lenders/dealerships while an applicant wishes to get approved for the loan:

Credit Score: this is one term which almost every loan borrower would be acquainted with and it is pretty much the main pillar on which the entire financing industry is based. This score, kept by the credit bureaus, is the rating which determines an applicant’s ability to pay back a borrowed auto loan. It is also known as credit worthiness or credit rating.

Credit History: these are a set of documents kept by the national credit bureaus and these record all the auto loans and payback transactions that an individual has undergone. One might have had heard about credit history being zero. It just states that an applicant has never borrowed a loan before which means that there aren’t any records and/or score of his/her payback ability.

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