Understanding The Terms: Your Wheelchair Accessible Vehicle Loan

Buying a wheelchair accessible vehicle may be one of the biggest purchases you make. Understanding the terms regarding how you pay for your vehicle can save you a lot of headache...and money!

Let's start by getting familiar with some common terms you will come across throughout the loan process.

Annual percentage rate (APR) – APR is the amount you’ll pay to borrow the money, including interest and fees, given as a yearly percentage. This is based on your credit worthiness.

Dealer Fees – These fees can consist of Processing Fees and Documents Fees.

Down payment – This is a payment you make upfront toward the cost of the vehicle. It can be cash, the value of a vehicle trade-in or a combination of both. The down payment helps lower the overall amount you need to finance – which can mean lower monthly payments.

Loan term – Describes the number of payments you will make to pay your loan in full. Keep in mind the longer your loan term is the longer you are likely paying interest.

Monthly payment – The monthly payment is the amount you owe each month. It’s made up of principal, interest, and other fees, if applicable.

Principal – This is the amount that you are borrowing to finance the vehicle.

Total cost – Total cost refers to the total loan amount, or overall principal and interest, you’ll pay over the life of your car loan.

Simple Interest – This is calculated by multiplying the daily interest rate by the principal, and then by the number of days that lapse between payments. The more time you allow to lapse between payments, a greater amount of your payment will be applied to principle. Simple interest loans benefit consumers who pay their loans on time or early each month.

Default - Not making your payments or abiding by the terms of the lease or buying agreement. If you default on your loan your credit will take a major hit. You want to avoid going into default on any financial obligation you make. There are also Default Fees that can be charged to your account if you don’t make your payments as the lease or loan stipulate. Defaulting on your loan can also result in repossession of collateral.

Gap Insurance or Protection - Gap insurance covers the difference between a vehicle's depreciated value and the amount you owe to a lender if the car is stolen or totaled. Without gap insurance you will end up paying the difference to the lender out of your own pocket. 

VSI Insurance – This is required by most auto lenders in order to protect the lenders’ interest on the collateral. This is a one-time charge and will appear on your contract.

Prepayment Penalties - These are penalties you may have to pay if you pay off you loan early. Mobility does not charge these penalties, so you won't have to worry about this fee!

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