123-MotorcycleLoans.com has compiled a group
of some important terms associated with motorcycle loans and bad
credit motorcycle loans. We hope that you find this financing
glossary helpful!
Adjustable Rate or Variable Rate:
A loan arrangement which allows the interest rate to change
(up or down) based on Prime Rate over the course of the loan.
Amortization:
The repayment of a loan or debt in regular payments. Each
payment is split into a primary repayment and an interest fee.
Annual Percentage Rate (APR):
The annual percentage rate of interest charged by the lender
on the total amount of the loan, or the cost of having credit
expressed as a yearly rate.
Asset:
Property and possessions that can be used to secure a debt.
Collateral or Security:
Items you own or are purchasing (such as a motorcycle, car,
or home) that a lender may ask to use to secure your loan.
Compound Interest:
Interest payable on income and its accumulated interest. On
the contrary, simple interest which is paid only on the
principal.
Co-Signer:
A person with good credit history and adequate income who
agrees to make your loan payments if you don't make them.
Credit Profile:
A picture of how you (as an individual) paid back the
companies you have borrowed money from, or how you have met
other financial obligations.
Deposit:
This payment, usually small, is made to your dealer to hold
your motorcycle while financing is arranged.
Depreciation:
The decline in value of an asset over a period of time.
Down Payment:
The amount of money you pay in cash toward the purchase of
your motorcycle (usually 10 to 20 percent). A down payment may
not always be required.
EMI:
A fixed payment made monthly, known as Equated Monthly
Installments.
Finance Charge:
The dollar amount you will pay to borrow money to buy your
motorcycle.
Fixed-Rate Loan:
A loan arrangement where the interest rate stays the same
for the length of the loan. Most motorcycle loans are fixed-rate
loans.
Interest Rate:
The charge for borrowing money, usually expressed as a
percentage, and based on the loan amount and terms.
Lease:
Contract by which the owner of property allows another to
use it for a specified time, usually in return for payment.
Lending Rate:
The interest charged by the financier on the amount
financed.
Loan Tenure:
The time duration for which a loan has been provided.
Margin Money:
Financiers do not fund the full value of the asset. They
expect the customer to bring a certain % of the asset as margin.
This is called Margin Money.
Monthly Payments:
The amount paid every month to your lender, including both
principal and interest.
Principal:
The portion of your loan that represents your motorcycle's
cost (including accessories, parts and other fees) less the down
payment.
Registered Owner:
Name of the person in whose name the bike is registered.
Retail Installment Contract and Security Agreement:
This legally binding contract identifies the motorcycle
you're buying and states the total amount financed, APR, terms
of the contract, amount of monthly payments, finance charges,
and total of all items.
Stamp Duty:
Government levies a duty on certain legal documents and
financial contracts.
Standing Instructions:
Instructions to a bank to debit a fixed amount from your
account and pay your financier.
Statutory Charges:
These are charges like stamp duty, sales tax etc which are
imposed by the government.