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Auto Loan Glossary

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Annual Percentage Rate (APR)

The cost of a loan, including the interest rate and other loan fees, calculated for a year (annualized) and expressed as a percentage of the loan amount.


The person(s) who apply for the vehicle loan as the owner(s) and are responsible for making the payments.

Auto loan value

The value of your vehicle that is calculated and used in determining the maximum loan amount that can be taken on your vehicle.

Public website that provides a history report for vehicles once they leave the production factory by the vehicle identification number (VIN). This Site is not affiliated with Wells Fargo Bank.


A borrower’s pledge of specific assets to a lender to secure repayment of a loan.

Credit Score

An evaluation of your creditworthiness that reflects your financial history and ability to pay debts.

Dealer Purchase new

Purchasing a new vehicle from an auto dealership.

Dealer Purchase used

Purchasing a used vehicle from an auto dealership.

Debt to Income (DTI) Ratio

Often used in qualifying a consumer for a vehicle loan, DTI reflects the consumer's monthly debt and debt-related costs, such as taxes, fees, and insurance premiums as a percentage of their monthly gross income.


The amount of value your vehicle loses through wear, tear and passage of time.  

Documentation Fee

Administrative costs associated with registration and title. This fee can range from less than $50 to hundreds of dollars, depending on your state.

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Public website that provides online resources for automotive information. This Site is not affiliated with Wells Fargo Bank.

Guaranteed Asset Protection (GAP)

If you suffer a total loss or an unrecovered theft of your vehicle, normally your insurance will pay you the current market value of the vehicle, but not the total amount you owe on your auto loan. This leaves a gap in your coverage, and an amount that you would be responsible for paying to the lender. GAP protection, subject to certain limitations, may cover the difference between the value of the vehicle and the amount you owe.

Interest rate

The rate at which interest is paid by a borrower for the use of money that they borrow from a lender.

Invoice Price

The cost of the vehicle to the dealer, not including any manufacturing incentives.

Kelley Blue Book (

Public website that reports market value prices for new and used automobiles of all types. This Site is not affiliated with Wells Fargo Bank.


A legal claim on ownership on your vehicle used as security for payment of a loan.

Loan amount approved

The amount of money approved by the lender to loan to the borrower against collateral.

Loan amount requested

The amount of money requested to borrow against collateral.

Loan to Value (LTV)

The ratio of the amount of a potential loan to the value of the vehicle it is intended to finance, expressed as a percentage.

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Market Value

The most probable price which a ready, willing and able buyer would pay and a willing seller will accept, both being fully informed and under no pressure to act. The market value may be different from the price for which a vehicle may actually be purchased at any given time (market price).

Manufacturer's Suggested Retail Price (MSRP)

The suggested retail price from the vehicle's manufacturer.

Monthly Payment

The total amount of interest and principal you pay for a vehicle loan each month.

Payoff Amount

Cash amount required to pay off the remaining balance on the loan.


To acquire a vehicle by paying money for it.


A monetary incentive manufacturers provide to consumers to purchase a vehicle.


The repayment of a debt from the proceeds of a new loan using the same collateral as security.

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Sales/Use Taxes

Taxes that are assessed on both leased and purchased vehicles.

Term of loan

The duration of time, in months or years, over which payments will be made on the loan.


A document that proves the vehicle's ownership.

Trade-In Allowance

The amount the dealer agrees to pay for your trade-in when you buy a new car.

Vehicle Identification Number (VIN)

The unique 17-digit number that identifies every vehicle. This number can be found by looking at the dashboard on the driver’s side of the vehicle. It can also be found on the driver’s side door jamb of the vehicle or on the owner’s insurance card. 

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