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Your Location: Home - Auto Loan Auto Loan Information CenterCar and Auto Terminology Dictionary
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Margin Amount
Most financiers finance upto 90% of the cars value. The balance has to be paid as downpayment which is also called the Margin Aomunt.
The resale values of cars differ and financier's fix up the extent of finance and the margin amount based on their perception of security of the asset.
Thus for smaller cars like the Maruti 800, Maruti Zen etc. the financiers demand only 10% as margin amount. For premium cars that have lower resale values, the financier hedge against future risk by collecting a bigger margin amount of 20 - 30% of the cars cost.
Minimum Payment Clause
A clause in hire-purchase agreement imposing a liability on the hirer to make a payment over and above the arrears of hire-rent, in the event of the agreement or the hiring being terminated before the property in the goods has been passed to the hirer. The payment may be expressed to be for depreciation of goods or by way of liquidated damages or compensation for loss of profit.
NPV(Net Present Value)
The value of cash flows discounted using the time and risk value of money. It is the real value of a receipt or payment in future, deflated because of interest. It is a method of evaluating investment proposals.
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