Auto Financing Glossary
Every term your lender uses — explained in plain language. Written for Alberta car buyers navigating bad credit, subprime loans, and dealership paperwork.
- Amortization—The schedule of equal monthly payments that gradually pay down principal and interest over the loan term.
- APR vs Interest Rate—APR includes the interest rate plus mandatory fees; it is always equal to or higher than the stated rate.
- Bankruptcy Trustee—A federally licensed professional who administers bankruptcy filings and consumer proposals in Canada.
- Consumer Proposal—A legally binding agreement filed through a Licensed Insolvency Trustee to repay a portion of unsecured debt.
- Cosigner—A creditworthy third party who signs the loan agreement and accepts full legal responsibility if the borrower defaults.
- Down Payment—The cash contributed upfront toward the vehicle price, reducing the amount you finance.
- Loan Term—The length of time you have to repay the loan, measured in months — typically 60, 72, 84, or 96 months.
- Loan-to-Value Ratio (LTV)—The loan amount divided by the vehicle value, expressed as a percentage. Subprime lenders cap LTV at 110–130%.
- Subprime Auto Financing—Auto loans for borrowers with damaged, thin, or no credit — typically carrying higher interest rates than prime loans.
- Trade-In Equity—The difference between your trade-in vehicle's appraisal value and the outstanding loan balance on it.
Learn More
- Bad Credit Car Loans in Alberta — how we work with every credit situation
- Our Lender Network — the lenders behind every approval