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.
- Auto Score—A credit score built for vehicle lending; it can differ from the score in your app.
- 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.
- Deficiency Balance—What you still owe after a repossessed vehicle is sold for less than the loan balance.
- 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%.
- R7, R9 and I9 Credit Ratings—The account codes on a Canadian credit report: the letter is the account type, the number is how it is paid.
- 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.
Cars you could drive home
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2025 Kia K4 EX
$24,988$171 bi-weekly OAC
Get pre-approved6.49% APR · 84 months · $0 down · cost of borrowing $6,136
2025 Kia K4 EX
$24,988$171 bi-weekly OAC
Get pre-approved6.49% APR · 84 months · $0 down · cost of borrowing $6,136
2025 Hyundai Sonata Preferred w/ Trend
$27,988$192 bi-weekly OAC
Get pre-approved6.49% APR · 84 months · $0 down · cost of borrowing $6,872
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Find my car3 min · no credit impactOAC = on approved credit. Payments are examples at 6.49% APR over 84 months with $0 down, based on each vehicle's advertised price; GST extra. Your rate depends on your credit (4.99%–29.9% APR).
Learn More
- Bad Credit Car Loans in Alberta — how we work with every credit situation
- How Credit Scores Work in Canada — why the score you see is not the score a lender sees
- Our Lender Network — the lenders behind every approval