Loan Glossary

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.