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Your Location: Home - Auto Loan Auto Loan Information CenterCar and Auto Terminology Dictionary
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Flat Rate of Interest
A method of calculating the interest rate based on the total outflow of money. The method does not take into consideration the time value of money and is thus a crude measure.
Flat rate of interest is the % paid in excess of the finance amount, and is calculated on per year basis.
Working:
(1)Finance Amount = A
(2)Total Outflow = B
(3)Finance Tenure = C
Flat Rate (per annum) = ((B-A) / (A)*(C)) x 100
Front-loaded lease
A lease agreement where the rental payments are higher in the initial period, going down towards the end of the tenure. Opposite of back-loaded lease (or rear-ended lease).
Hire Purchase Price
The total sum payable by the hirer under a hire-purchase agreement in order to complete the purchase of the goods to which the agreement relates. A total of cash-price & financing charge.
Hypothecation
A hypothecation is an equitable charge on the goods without possession, but not amounting to a mortgage. The contract is done to secure a debt. Banks that give you a loan to purchase a car, hypothecate the car in their name as security.
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