The term used for modifying a car loan. This is different from refinancing in the sense that you are taking your existing loan and rewriting it, not opening a new loan and paying off the old loan. SURRENDER-To voluntarily give possession of your vehicle back to the finance company or dealer. This option will negatively affect your credit, however, a slightly better option than repossession MARKET VALUE- Market value is a concept distinct from market price, which is â€the price at which one can transactâ€, while market value is â€the true underlying value†according to theoretical standards. Actually, this is what your car is truly worth CAPTIVE FINANCE COMPANY-A subsidiary whose purpose is to provide financing to customers buying the parent company's product. The captive finance company is usually wholly owned by the parent company. Although there are numerous examples of these, the best ones occur in the automotive industry. Each of the "big three" automakers has a captive finance company. General Motors has General Motors Acceptance Corporation (GMAC), Daimler Chrysler has Chrysler Financial, and the Ford Motor Company has Ford Motor Credit Company (FMCC). UPSIDE-DOWN-To owe more than what the vehicle is truly worth. For example- I owe $22,984 for the total buy out of my car, but the market value is only $16,500. LOSS MITAGATION DEPARTMENT-The Loss Mitigation dept is where the lender is willing to work with the consumer either by refinancing, limited hardship, loan modifications etc. When trying to negotiate any principal reduction or rate reduction this is the department you must contact, NOT CUSTOMER SERVICE!!! AMORTIZATION-The process of increasing, or accounting for, an amount over a period of time. In other words, the allocation of a lump sum amount to different time periods, particularly for loans and other forms of finance, including related interest or other finance charges. Assume we sell 100 products at a $1 each + one off tooling charge of $50. The customer gets billed $100 product + $50 tooling or we can amortize it and they pay $1.50 each for the 100 off. Costs them the same it is just a way of putting the charges onto the product that they actually belong too. RE-FI - Short for refinance. Refinancing may be undertaken to reduce interest rate/interest costs (by refinancing at a lower rate), to extend the repayment time, to pay off other debt(s), to reduce one's periodic payment obligations (sometimes by taking a longer-term loan), to reduce or alter risk (such as by refinancing from a variable-rate to a fixed-rate loan), and/or to raise cash for investment, consumption, or the payment of a dividend. In essence, refinancing can alter the monthly payments owed on the loan either by changing the loan's interest rate, or by altering the term to maturity of the loan. More favorable lending conditions may reduce overall borrowing costs. Refinancing is used in most cases to improve overall cash flow.
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